Matching grant schemes and systemic approaches for private sector development

Differences and complementarities

Donor Committee for Enterprise Development (DCED)

Although matching grant mechanisms and systemic approaches look very similar on the ground, they start and end in very different ways. Given that both approaches are supported by donor agencies, sometimes even in parallel by the same agency, there seems to be clear scope for enhancing their complementarity as well as incorporating the lessons of systemic approaches into the design of matching grant mechanisms. 

The matching grant schemes referred to in this paper include challenge funds and other mechanisms that have clearly defined strategies for sharing the costs and risks of private investments in a developing country, based on proposals from businesses. They are a common form of initiating partnerships with the private sector, and are frequently referred to as ‘partnership mechanisms’.