Are we, as a development sector, ready to engage with the language of profit, investment, returns and markets?

As aid budgets come under increasing pressure and attention shifts toward private capital, terms such as investment, profit, returns and leverage are becoming more common in development conversations.

For many years, development was associated with inclusion, equity, sustainability and support for vulnerable populations. Business was associated with profit, efficiency, competition and financial returns. This distinction was never entirely accurate, but it shaped much of the thinking within both sectors.

The reality has always been more nuanced than that. And increasingly, the boundaries are disappearing.

The experience of InElam demonstrates why.

Between 2021 and 2024, InElam supported 1,769 entrepreneurs, generated 5,140 direct jobs, and created more than two million employment days across Karnali and Madhesh Provinces. Approximately 66% of supported entrepreneurs were women, while the majority of jobs created benefited disadvantaged populations. These outcomes did not emerge through direct implementation alone. They emerged through partnerships with enterprises, cooperatives, financial institutions, municipalities and market actors. The issue, therefore, is no longer whether development should engage with markets. It already does.

The more important question is whether we are prepared to engage with markets without losing sight of development.

Development practitioners are often uncomfortable with the language of profit. But profit itself is not the problem. In fact, it is the necessity for a private sector to engage with development outcomes.

The challenge is that businesses are designed to pursue commercial opportunities. They are not primarily designed to address exclusion, reduce inequality or reach populations that face structural barriers to participation.

Nor should we expect them to.

Private capital naturally flows towards opportunities that offer attractive returns relative to risk. The question, therefore, is not at all about the private sector becoming more developmental. The question is who ensures that development priorities remain visible within increasingly market-driven systems.

One of the most important lessons emerging from InElam is that the contribution of a development program cannot be measured solely by the amount it spends. For evidence, the project's final evaluation estimates that project-supported interventions generated approximately NPR 735.3 million (CHF 4.0 million) in investments. According to the evaluation, around 81% originated from private actors, 11% from government, and only 8% from direct project contributions, estimated at NPR 59.2 million (CHF 321,000).

While the exact methodology behind these leverage estimates deserves further discussion, the finding points to an important reality is that development projects can influence investments far larger than their own financial contribution.

But the real story is far more interesting that these leveraged percentages as it explains what happened before those leveraged occurred.

InElam conducted Area Potential Surveys, value chain assessments, rapid market appraisals and partnership analyses to identify sectors that were commercially viable while offering opportunities for women, disadvantaged groups and rural entrepreneurs. The project deliberately entered sectors and business ideas before there was clear evidence that they would succeed commercially.

For example, InElam supported innovations such as bio-paint produced from cow dung, recycled-plastic shoe sole production, cocopeat enterprises, tissue-culture banana production, improved potato seed systems and climate-smart agricultural enterprises. These were not sectors attracting mainstream investors at the time. The project's role was to test business models, generate evidence, connect actors and demonstrate viability before larger investments entered.

In other words, InElam’s role was more focused on helping create investable opportunities than simply funding businesses.

This is an important distinction.

As development finance evolves, the role of development organizations may increasingly lie on shaping the markets than financing them.

Additionally, one of the most revealing findings from the final evaluation is that private actors were generally willing to invest once opportunities had been proven but were far less willing to invest during stages of experimentation, testing and uncertainty.

This is where development organizations continue to play a unique role.

Markets are often willing to scale solutions but development programs can be the actors that help create them.

Many of the enterprises supported by InElam were first-generation ventures operating in sectors with limited market evidence. Before investments became commercially attractive, the project invested in market research, technical assistance, mentoring, business development services and ecosystem building.

Somebody had to absorb the uncertainty before private investment arrived. Somebody had to generate evidence before markets could price risk. Somebody had to support entrepreneurs before they became investment-ready.

Historically, that has been one of development's most important functions, and it remains one of the clearest areas where development organizations continue to add value.

Perhaps the most compelling example of InElam's evolving role comes from its cooperative model.

Traditionally, cooperatives are viewed primarily as providers of savings and credit. Through InElam, several cooperatives evolved into local enterprise support systems, combining finance with entrepreneurship training, business planning, mentoring, coaching and market linkages.

The research findings are telling. Ninety percent of entrepreneurs reported that business improvements resulted from the combination of finance, training and mentoring, rather than access to credit alone.

This challenges one of the most common assumptions in development finance: that lack of finance is the primary barrier to entrepreneurship.

The evidence suggests otherwise.

Entrepreneurs repeatedly identified the value of coaching, confidence-building, business planning support, technical guidance and market connections. The project was not merely moving money. It was helping people use finance productively.

The transformation was visible among entrepreneurs and also within the cooperatives themselves.

Yes, the project provided capital. But along with that, it strengthened the institutions through which capital could continue to flow.

The strongest argument for the continuing relevance of development organizations is inclusion. Private investment follows opportunity. That is both rational and necessary. But inclusion does not automatically generate the highest or fastest returns.

Women entrepreneurs, first-generation entrepreneurs, remote communities and vulnerable households often face barriers that make them less immediately attractive investment opportunities despite their economic potential.

InElam deliberately worked to address these gaps. Approximately 66% of supported entrepreneurs were women, while 81% of direct jobs created benefited disadvantaged groups. Specific approaches, such as LEAP, were designed to reach households and communities that were unlikely to benefit from market-led growth alone.

This may be the clearest example of the stewardship role. The private sector provided investment. But the project influenced who was included in that investment process, who gained access to opportunities and who ultimately benefited from growth.

Inclusion did not happen automatically. It was intentionally designed into the system.

The emerging lesson from InElam is that the future role of development organizations is changing. Historically, development programs were often judged by how much they delivered directly.

But increasingly, their value may lie elsewhere.

They identify opportunities before markets recognize them. They help entrepreneurs become investment-ready. They test innovations before investors believe in them. They strengthen institutions before commercial actors arrive. And they ensure that women, disadvantaged groups and underserved communities remain part of the growth story.

In short, they act as market stewards.

Private actors bring capital, scale and efficiency.

Development organizations bring evidence, trust, inclusion, local knowledge and a willingness to take risks that markets often avoid.

The future of development, therefore, is not a choice between grants and markets, nor between development actors and the private sector.

It is about understanding how the strengths of grants and markets complement one another. And, how to use the strengths of development actors and the private sector so that we can increase the capital flow, create more enterprises, jobs, and increased income.

As more capital flows into development spaces, the most important question will be whether development organizations continue to shape where investment flows, who benefits from it, and whether inclusion, resilience and sustainability remain the destination.

That, ultimately, is the shift from funding to steering. And it may be one of the most important contributions development organizations make in the years ahead.