Progressive private sector-led development programmes today promote economic development by creating space for unexpected and innovative solutions from the private sector. Challenge funds are breaking ground in this way, leveraging development funds alongside private investment to support untested business ideas that aim to bring products, services and higher paying jobs into poor communities. These initiatives recognize that pro-poor economic development is hard, and donors do not have all the answers. By supporting the private sector, donors get the opportunity to challenge businesses to be more innovative in the way they interact with low-income consumers, employees and business partners. IDAS’s work with the Africa Enterprise Challenge Fund, the Financial Sector Deepening Challenge initiative in Kenya, and the East and Southern Africa Staple Foods Programme offers many examples of this exciting approach to innovation in development.