Private Sector Promotion in Conflict Environments

In recent years much has been published on the subject of private sector promotion in post-conflict countries. However, very few experiences have been documented with regard to private sector development operations in on-going conflicts. This short paper describes how the Nepal-German Private Sector Promotion Project (PSP) tries to address the ideology-based conflict between the government of Nepal and the Maoist rebels. There may be a number of lessons to be learned for other similar projects in conflicts around the world.

The paper explains how sub-sector or value chain analysis can be used to get a better understanding of an on-going conflict and to design conflict transformation activities for the private sector. The value chain mapping exercise is typically conducted in a workshop with stakeholders and various questions can be addressed, e.g. which actors are affected by the conflict and how are they affected; what kind of risks are they facing; what role do natural resources play in the conflict; what are or can they do to influence the situation. The key to conflict-sensitive, value chain upgrading is dialogue and win-win improvements. The authors describe a project intervention in the hand-knotted carpet sub-sector which shifted from an export performance oriented approach to a conflict sensitive approach. By analysing the impact of the conflict and opportunities to address some of the root causes of the conflict in the value chain, they expect to contribute more to the improvement of people’s livelihoods.

The PSP-Project in Nepal also found that a Local Economic Development (LED) approach, including use of a participatory appraisal method to analyse competitive advantages (the PACA tool), is a good way to work in conflict situations. LED enables actors from institutions in a given location (municipalities, local chambers, etc.), as well as national level bodies, to jointly analyse competitiveness of localities and implement actions to stimulate the local economy. It combines business promotion and business location development with regional or urban development planning. The transparent, action-oriented and participatory approaches contribute to crisis prevention and conflict transformation.

The paper is written in a succint manner and contains a number of useful diagrams and checklists to explain the important lessons being derived from the project in Nepal.

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