The problems facing humanity and the planet are now acknowledged as being too large to be tackled by public institutions only. Achievement of sustainable development relies on all actors of society. All stakeholders: governments, civil society, the private sector, and others, are expected to contribute to the realization of the new agenda. The private sector plays a vital role in the economy by creating jobs, providing goods and services, and stimulating economic growth. It is an important source of tax revenue for governments. Businesses pay taxes to help to fund public services and enable governments to invest in infrastructure and other important projects.
The private sector increasingly plays an important role as an engine of economic growth and job creation. It provides goods and services, generates tax revenues to finance essential social and economic infrastructure, develops new and innovative solutions that help tackle development challenges and it is a central actor in addressing climate change. The role that the private sector plays in development is also broadening from the conventional approach of supporting economic development to more inclusive and elaborated public-private partnerships. As such, the private sector has become an important strategic partner for public institutions in achieving its vision to help countries eradicate poverty and reduce inequalities and exclusion within broader sustainable development.
Some different types of business structures in the private sector include the following:
- Sole proprietorships. These are businesses owned and operated by one person and usually funded by personal finance. An individual who owns and runs a small firm is a sole proprietor. There are businesses owned by two or more private individuals. Law firms and advertising agencies are often set up as partnerships.
- Small and midsize enterprises. Small to midsize businesses are defined by their revenue, assets, ownership structure, and the number of employees.
- Corporations and multinationals. A corporation is a separate legal entity from its owners. Corporations are owned by shareholders and elect a board of directors to supervise the organization’s activities. Multinationals operate in multiple countries.
Nevertheless, the role of the private sector is not limited to financing and investment. The innovative capacities, human resources, know-how, and technological inputs are potentially other contributions. The private sector is an actor in development, which drives sustainable economic growth by bringing with its opportunities for value creation. It is also a fact that achieving sustainable development will improve the environment for doing business and building markets. Millions of dollars in public and private funds are to be redirected towards the SDGs, creating huge opportunities for responsible companies to deliver solutions in the Somali community.