Private Sector Investment and Job Creation in Fragile States

Event Format:

A high level dialogue event to be held in connection with the International Dialogue Global Meeting and in the margins of the Spring Meetings of the World Bank Group and the International Monetary Fund.


IFC, g7+, and the Ministry of Foreign Affairs of Denmark

Target Audience:

g7+, bilateral donors, UN, NGO’s, IFC, WB, MIGA, investors, and academia.


Media representatives will be invited to the event.


To foster dialogue amongst fragile state ministers, investors, and development partners on how to attract responsible private sector investments that will create jobs and spur economic growth through sustainable development and contribute to peacebuilding and statebuilding in countries affected by fragility and conflict.


A vibrant and responsible private sector is recognized as one of the key drivers out of fragility. Responsible private sector development can provide jobs and livelihoods and contribute – not only to economic growth – but to inclusive and sustainable development, social cohesion and peace. Jobs are among the most pressing issues in countries affected by fragility and conflict. They are critical for restoring the livelihoods of individuals and families affected by war and violence, reintegrating ex-combatants, and rebuilding the social fabric.

Fragile and conflict-affected countries can offer unique untapped opportunities for business and trade with benefits for both local economic growth and foreign investors. These countries need to attract private investment to create jobs and economic growth. Equally, private sector actors need to be more aware of how their business practices impact upon fragile country contexts and what can be done to ensure that their investments contribute as effectively as possible to sustainable peace and development. Many large scale investments in these countries are in the extractives industries (oil, gas and mining) that have the potential to generate significant revenues to support statebuilding efforts, while boosting local employment. However, if mismanaged, private investments can have a negative impact on cohesion and stability. Partnerships between the public and private sectors, donors, and civil society can help build trust and identify priorities to rebuild markets and investor confidence, while ensuring that private sector practices strengthen the local economy and support the livelihoods of the people through responsible investment.

In fragile states with weak capacity and often multiple needs it is crucial to identify sectors that can have a transformational impact on the country’s development. Access to finance is fundamental for small and medium enterprises (SMEs) that are the key sources of job creation. Lack of access to infrastructure – especially power – is a key constraint to private sector growth in fragile states. Roads, ports, airports, and railroads are also critical, and improving telecom and IT connections may be even more transformational. The private sector can help to bring an entrepreneurial, results-driven approach to infrastructure.

The g7+ group of fragile states, development partners and international organizations have agreed on a “New Deal for Engagement in Fragile States” that sets out a new way of working in fragile states, guided by the Peacebuilding and Statebuilding Goals (PSGs): Legitimate Politics; Security; Justice; Economic Foundations; and Revenues & Services. The private sector cuts across all five goals, but private sector investments are especially critical to the last two PSGs (Economic Foundations and Revenues & Services). The g7+ and development partners are strengthening their focus on private sector development as an important part of implementing the New Deal; thus highlighting the potential role of the private sector in the broader peacebuilding and statebuilding agenda.

Key Issues:

The challenging business environment in fragile and conflict-affected states can be a hindrance to private investments. A Doing Business report that compares business environments in g7+ countries will be launched at the event. The report will be the basis for a discussion on the investment climate in countries affected by conflict and fragility.

If mismanaged, private sector activities can be a negative factor contributing to fragility instead of having a positive effect on stability and growth. A dual approach that looks at the internal environment and factors external to the country should be considered. Key questions for fragile states governments to address are:

• How can we identify priority sectors that will have a transformational impact on job creation?
• How can we ensure that private sector actions support peacebuilding and statebuilding, including generation of sustainable tax revenues and corporate social responsibility?

Engaging with private sector actors is crucial to identify what it takes to stimulate investment – domestic and foreign – and create jobs in challenging environments in FCS. Equally, private sector actors need to engage with the governments of fragile states to understand how their investments can best contribute to broader peacebuilding and statebuilding processes. Public-Private Dialogue can help build trust between key stakeholders and can aid the identification of mutual objectives. A focus on job creation implies involving private sector actors in early development planning and prioritization. Key questions for private sector representatives to address are:

• What can we learn about how to create business and jobs in fragile and conflict situations, and what do investors see as key constraints to doing this?
• How can private sector actors create shared value in fragile and conflict affected countries, while minimizing the risks on both sides?

International development partners can provide valuable support to the country-led efforts by fragile states in eradicating poverty and generating sustainable development through green growth, increased earnings and more jobs, not least for the youth. IFC is a leading actor in private sector development and is significantly increasing its engagement in FCS as part of the World Bank Group. A new strategic approach aims at increasing private sector investments in FCS. The strategy focuses on the creation of an enabling business environment, and providing access to infrastructure, finance and markets– especially for small and medium enterprises with the biggest potential for growth and job creation, including for women, displaced people and ex-combatants. Key questions for international development partners to address are:

• How can international development partners support the country-led efforts by fragile states?
• How can IFC and the WBG strengthen their support to private sector investments in basic infrastructure and provide critical financing for SMEs to create jobs and growth?
• How can international development partners, including IFC and WBG ensure that investments contribute not just to economic growth, but to inclusive peacebuilding and statebuilding?