Unloading of goods in the early morning in the port of Dar es Salaam.
Photo: Johan Bergqvist
Economic growth is needed to reduce the world poverty. But growth alone is not enough - it must also benefit the poor. We therefore promote market development by supporting development of the private sector, trade, financial systems and job-creation in our partner countries.
Contributing to poverty reduction is a fundamental goal of Swedish development cooperation. Every Sida’s intervention helps, in different ways, lay foundation for economic development that also benefits the poor – especially women – by promoting changes in legislations, administration, environment, health care, infrastructure, democracy and sustainable development. However, it can often be difficult for poor people to draw a long-term benefit from markets or create opportunities for income. Their vulnerability becomes even more obvious in the event of financial crises, which clearly shows the need for financial stability.
In order to create sustainable economic development, it is important to have an efficient framework with functioning institutions and a clear set of rules. The formal and informal rules that exist within a society affect people's ability to act, and it is through interplay between individuals and the framework that preconditions for growth can be met.
People getting education and working for their own livelihood is not only a prerequisite for economic development but also for any individual's ability to decide over their own life. In the long-term, this also helps increase the country's tax revenues, so that more money can be invested in health care, infrastructure and education, which in turn fosters economic growth and reduces poverty. This creates an upward spiral for positive development. Sida works to help more countries benefit from such development.
In March 2014, the Swedish government adopted a new aid policy framework. One of six goals set in the framework is to achieve: Improved opportunities for poor people to contribute to and benefit from economic growth and obtain a good education. The focus of Swedish aid shall therefore be to improve poor people's ability to contribute to the economy, and also themselves benefit from economic growth. Particularly important results for achieving this goal include:
- More and better jobs,
- More inclusive and efficient markets, and
- Free trade.
Contributing to more productive and decent jobs in the poor part of the world is not only about supporting business development or simplifying trading. Sida's development aid for Job-creation also includes giving people access to vocational training, supporting employment services and job-matching, supporting effective social dialogue and strengthening of labour market parties, as well as making sure that working conditions are good or developing the necessary infrastructure.
In order for the private sector to be able to contribute to economic growth, it is necessary to create more inclusive, transparent and effective markets that can provide access to jobs, products, opportunities to sell goods and financial services. This is why Sida also supports, among others, reforms that help improve business climate, strengthening of value chains and development of small businesses.
Sweden’s contribution shall help poor countries integrate into the international trade, as well as in regional markets. Free trade also means fewer restrictions on trade, increased transparency, non-discrimination and trading on equal terms. This requires, among others, countries' active participation in the WTO and implementation of its regulatory framework, as well as regulations that exist within regional organisations. It also requires greater regional economic integration, and efficient trade procedures, i.e. reducing bureaucracy and costs relevant in the trade and supply chain. Production of goods that can be exported and a functional trade-related infrastructure are also important prerequisites for trade.