Business for Development - the Embassy of Sweden´s collaboration with the private sector

The private sector drives innovation, investment and growth, thus playing a crucial role in development. Supporting and collaborating with the private sector in win-win partnerships that promote inclusive and sustainable business models is therefore vital for the Embassy of Sweden Maputo, in our efforts to help create conditions for poor people to improve their lives.

The Embassy of Sweden can collaborate with the private sector in many thematic areas, stimulating private sector development, entrepreneurship and corporate responsibility. As a way of encouraging private sector contribution to poverty reduction, we offer different types of engagement and support. This form of collaboration is open to private sector actors from all over the world, provided that it brings clear benefits to people living in poverty in Mozambique. The goal is to find ways to better leverage the skills and resources of the private sector, and using development assistance as a catalyst, bring about more and faster change. Collaboration between the Embassy of Sweden and the private sector is based on risk- and cost-sharing and on the private sector being the driving force of the partnerships.

 

Forms of Collaboration

 

Public Private Development Partnerships (PPDP)

In the Embassy of Sweden’s public private development partnership, the Embassy and a partnering company or cluster / consortium of companies make a joint investment in a project, usually implemented by third party. The partnerships focus on collaboration with large companies and covers initiatives in which private and public actors share a common interest in creating opportunities and achieving development goals. In other words, win-win situations where projects are commercially driven, while generating significant positive impacts for people in poverty. We welcome PPDP initiatives emerging from the business sector which, together with a local partner, address local development constraints. A company, cluster or a consortium in harness with local partners are the drivers of the projects. Companies usually contribute at least 50% of the project investment. Partnerships are not tied to Swedish business interests and can, for example, focus on value chain development, improved agriculture practices, research and development, vocational training and infrastructure investment.

 

Challenge Funds

Swedish supported challenge funds invite companies, entrepreneurs, organizations or institutions working in a targeted field to submit proposals or business plans to win funding. Proposals are submitted during pre-announced challenge rounds and assessed against transparent and pre-determined criteria. Successful applicants must usually match a certain percentage of the grant with own financing. Sweden currently supports several challenge funds, in many cases together with other donor countries.

 Innovations Against Poverty

The Innovations Against Poverty challenge fund provides matching grants of maximum 50% to entrepreneurs and companies with innovative products, services and business models that served create opportunities for and benefit people living in poverty. The grants serve as a catalyst to develop and scale up innovations and are aimed at companies based or operating in poor countries, companies can compete for small grants of maximum € 20,000 or big grants up to € 200,000. The Fund is open to applicant from all over the world and is fully funded by the Swedish International Development Cooperation Agency.

http://www.inclusivebusiness.se/projects/innovations-against-poverty-phase-ii/

The Africa Enterprise Challenge Fund

Fund which provides grants and interest free loans to businesses to implement innovative projects in agriculture, financial services, renewable energy and technologies for adapting to climate change all over Africa. Competition cycles or rounds are organized for specific sectors and countries and award a minimum of U$250,000 and a maximum of U$1.5 million. The competition is open to companies from anywhere in the world provided the business is implemented in Africa and funding for different rounds come from several donors, including Sweden, UK, USA and the Dutch Government. In 2013, the AECF launched REACT Mozambique designed to catalyze private sector investment and innovation in low cost, clean energy and climate change technologies. For more information on current application rounds see:

http://www.aecfafrica.org // http://react.aecfafrica.org/r/

Powering Agriculture: An Energy Grand Challenge for Development

Together with USAID, the Government of Sweden and partners, supports the Powering Agriculture: An Energy Grand Challenge for Development, with the objective of encouraging private sector innovation and investment to enhance access to the clean energy for the agricultural value chain in poor countries with no, or limited access to energy, thus improving agriculture productivity and added-value while fostering innovative clean energy technologies and business models. Ultimately, the program will expand farmers’ and farm–related businesses’ access to clean energy solutions for improving irrigation, value-added processing, cold storage, or other on-farm applications. This will enhance the incomes and economic opportunities of the networks farmers and associated businesses along agricultural supply chains, and help build profitable clean energy companies. Awards range between $300,000 and $1,500,000 and specific themes are announced for each competition cycle.

http://www.poweringag.org/ 

Making All Voices Count

Making All Voices Count: A Grand Challenge for Development (MAVC) brings together Sweden, the Department for International Development (DFID), U.S. Agency for International Development (USAID), and Omidyar Network (ON) to create a $45 million fund to enable citizen engagement and government responsiveness through support  to innovation, scaling-up, and research that will deepen existing innovations and help harness new technologies.

The partnership will seek inclusive ways to empower all citizens to voice their concerns and demands, and to improve governments’ responsiveness and accountability to those citizens.

http://makingallvoicescount.org/

 

 Innovative Financing

Guarantees:

The Swedish Governments guarantees are flexible financial instruments, promoting economic growth to help reduce poverty. Guarantees allows for mobilization of capital, including partner countries’ domestic capital. In this way, many countries will be able to reduce their aid dependency and instead be able to domestically finance economically viable investments. Guarantees function like a insurance for a financial institution wanting to lend to investors and companies. A guarantee can help lenders deal with these risks by insuring eligible projects against losses relating to the different market risks. Guarantees will usually be given to a partner financial institution to promote extension of credit to important sectors or segments perceived as risky by the financial sector and thus underserved, but can also be issued for a specific large private investment with strong public utility and perceived benefits for economic growth and poverty reduction.

For more information contact the Loan and Guarantees unit L&G@sida.se  

  

Drivers of Change 

Drivers of Change are civil society organizations or other change agents transforming current ways of doing business so that they become more sustainable and inclusive of people living in poverty. Drivers of Change are contributing to transforming markets, better business practices, long-term systemic change and a sustainable development. To receive support from the Embassy of Sweden as a Driver of Change, the organization or change agent must work to influence the private sector and/ or the market for the benefit of people living in poverty and for a sustainable development. The Driver of Change is expected to cover at least 30 % of the total cost of the project. The 30 % should be a mix of project-owners’ contribution and other funding, preferably from the private sector.

 

Principles for collaboration

Every project is different and has its own characteristics. Partnerships are developed in close dialogue between the Embassy and the partner/s.

  • Investments must have a clear objective to support sustainable development and create better conditions for people living in poverty in developing countries.
  • The Embassy is open to collaboration with companies from all countries, provided that there are clear development results to be achieved.
  • Partnerships are conducted in line with the collaborating country’s priorities.
  • Embassy funding is catalytic and the idea is to enable development or projects that otherwise would not have become reality.
  • By engaging the resources of the private sector (for example knowledge, innovation, long-term investments and local presence) the Embassy wants to multiply the development impact resulting from its contribution.
  • Investments are always based on risk- and cost-sharing between the Embassy and the partnering companies. Innovative solutions are particularly encouraged.
  • The Embassies support should contribute to well-functioning markets, but must not distort markets or competition. In the interest of transparency and learning, partners should be willing to share information and results from the projects.
  • Collaboration is always based on close dialogue with companies, governments and civil society in order to stimulate continuous communication, local ownership and cooperation.
  • All partners must take social and environmental responsibility and strive towards compliance with key Corporate Social Responsibility and sustainability principles, such as those of the United Nations Global Compact.

 

Contacts

 For further information please contact:

Nito Matavel, Programme Officer Private Sector Development and Rural Development

nito.matavel@gov.se