Discussion paper
This discussion paper analyses how donor financing supports the enabling environment for private sector development, and how this form of aid fits alongside other approaches to catalysing private investment, such as blended finance. It defines the enabling environment as the policy, institutional and market conditions needed for domestic businesses to operate and for international trade and investment to take place, and presents a framework to situate this type of support within wider donor strategies.
Using OECD Creditor Reporting System data, the paper examines the scale, distribution and delivery channels of official development assistance targeting the enabling environment. It assesses which countries and sectors receive support, how funding differs across development and fragility contexts, and whether allocations respond to indicators of need. The paper highlights important gaps in definitions, reporting and targeting, and outlines implications for donors seeking to strengthen the effectiveness and accountability of catalytic aid.