Poverty and entrepreneurship

The NEPAD, a development strategy developed by the African leaders with a view to the fight against poverty in their continent, gives a major role to the private sector. The development of that sector is one of the five basic elements of such initiative. The NEPAD has been approved by the African Union and underlies the new partnership with the developed countries.
The EU also reserves a central position to the development of the private sector in its cooperation with the ACP countries. Among the five pillars of the Cotonou Agreement signed in 2000 between the European Union (EU) and the ACP States, one finds specifically the following commitments:

• Have the private sector and economic and social partners profiting directly by financing via subsidising contracts established between the European Union and the organisation in question ;
• Reinforce the export activities ;
• Support and develop inter- and intra-ACP countries trade, and with third countries ;
• Comply with the WTO rules ;
• Allow the ACP States to participate fully in the international trade (new commercial agreements) ;
• Give access with duty-free treatment to the enterprises of the ACP countries, for nearly all their products on the EU market.

Even if all these commitments were not yet implemented, the EU approach aims at fighting against poverty while encouraging the participation of the ACP countries in the world economy by developing their private sector. The important role of the private sector in the development process is curently reflected in the political objectives of most developing countries, of the most important donors and of the multilateral financial organisations.

This huge consensus relies on the following logic: the private sector is the fundamental actor of the economic growth, whereby the latter plays a crucial part in the fight against poverty.
The authorities are duty bound to allow that sector to develop and to guarantee that the growth will effectively contribute to the reduction of poverty.

The contribution of the private sector to the fight against poverty occurs in various ways. That sector is an important source of jobs and productivity and income growth. It introduces new actors in the development process and contributes to the formation of a tax basis, while offering a potential of political tools that can face the social and environmental challenges.

An important role is reserved within that framework to the SME's and VSE's. These enterprises are the main actors of the private sector in the developing countries. They are the motor of the creation of jobs and income. Their impact on poverty is a direct one, as they are usually the employers of poorer population groups. By doing so they contribute also to a wider distribution of the income, also outside of the big cities.