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3 The B2B Programme Portfolio

3.1 The B2B Portfolio

The B2B Portfolio includes 445 partnerships involving about 420 Danish enterprises

(Contact phase excluded).[12] The portfolio comprises 205 collaborations, which only went through a Pilot phase, and 240 collaborations, which have included Project phase support (with or without earlier Pilot). The distribution of collaborations in the 19 eligible B2B countries is shown below:

Figure 1: Number of collaborations in the B2B portfolio 2006-2011

Figure 1

As evident from the figure, the distribution of Danish companies’ engagement among the countries has varied from no collaborations in Mali and Benin to over 60 in Vietnam (As noted earlier, in China and Indonesia the B2B Programme was only open for environmental projects, which partly explains their low figures). The B2B was standar dised, hence the same criteria and conditions applied whether in Vietnam or Mali.[13] In line with the methodology outlined for the Evaluation of testing different contextual factors for determining results, the evaluation has pursued the issue of the extent to which the Danish interest in the selected countries could be related to different contextual country factors such as the quality of the business environment, the size and growth of the local market and the political risk. The result of this analysis is further discussed below.

3.2 The Contact phase

The first phase of the B2B Programme, the Contact phase through which matchmaking was promoted, is not part of the B2B database as the embassies received block allocations for this. The Evaluation has from reviews of selected embassies estimated the number of Contact phase cases collaborations to about 1,300 in total for the 19 countries for the period from 2006 to 2011. From research in Uganda, Bangladesh and in the random Sample, the Evaluation has found that the majority or an estimated 90% of the Pilot/ Project collaborations were preceded by a Contact phase grant (or a similar activity under the previous PSD Programme).

The Evaluation estimates that about half of the companies engaging in the Contact phase also applied for a Pilot phase (or in a few cases directly for a Project phase grant), while the other half did not pursue any further partnership. The reasons for companies not pursing further engagement in the B2B Programme after the Contact phase varies, but is mainly explained by the fact that the companies did not find sufficiently attractive partners or that the business opportunities were not interesting enough to warrant a continuation. In some cases the partners submitted an application for Pilot support, but this was turned down by the embassy. According to embassy representatives interviewed, the number of turned down applications was overall low, possibly in the range of 10-20% of the submitted applications. Reasons for declined applications were generally that the projects did not fulfil the formal criteria of the B2B Programme and/or those criteria established by the embassies (such as sector focus).

3.3 The Pilot and Project phases

The Danida database is not fully transparent in terms of which Project phase collaborations were preceded by a Pilot phase. Studies in Uganda, Bangladesh and in the random sample indicate that about 90% of the Project phase partnerships in fact were preceded by a B2B Pilot phase. This indicates that the B2B Programme has financed about 420 Pilot projects, of which 215 continued to the Project phase and 205 ended.

A Pilot which was not followed by a Project phase grant neither means that the Pilot necessarily was a failure in terms of the B2B Programme objectives of knowhow transfer, nor an end to the collaboration between the Danish and the local firm. The Evaluation estimates, based on interviews with partners in the Pilot only phase, that 10% of all Pilot phase projects which were not followed by a Project grant phase still continued the partnership, for example as a trading arrangement.

3.4 The financial allocations

The total approved Danida financial allocation for the B2B Programme from 2006 to 2011 for the 19 countries was DKK 1,088 million (Pilot and Project phases). The allocations vary greatly between the countries as shown below:

Figure 2: Allocations for Pilots only and Project phase under B2B 2006-2011 (DKK million)

Figure 2

The distribution of B2B allocations largely follows the number of collaborations in the countries. However, there are differences. For example, Kenya has the second largest grant sum after Vietnam, while Egypt with second most collaborations declines in relative importance in total grants. Partly, the average grant size is related to the share of Pilots and Projects, but this is not the only reason. Some of the countries have smaller Projects grants on the average than in other countries.

3.5 Approvals versus disbursement

The disbursement under B2B has so far (April 2014) been DKK 855 million or 79% of the grants approved. The lower disbursement is explained by three factors. First, a number of collaborations are still under implementation, hence full disbursement has not yet taken place. Second, in many partnerships – both Pilots and Projects – disbursement was discontinued after the partners realized that there was no scope for further collaboration, or due to the fact that the Danish or the local company went bankrupt. In some cases the embassies interrupted the disbursement for different reasons such as the companies did not fulfil obligations under the B2B in forming a formal joint venture. Third, Project grants were based on budget estimates, while disbursements were based on actual costs.

The Evaluation estimates that the still outstanding amount of approved grants is limited; hence the final cost of the B2B is not likely to exceed DKK 880 million. The latter figure is used as an estimate of the final grant cost of the B2B.

3.6 Project phases of the total portfolio

There is a considerable difference between the B2B countries in the distribution of Project phase versus Pilots only. This ratio could be seen as a form of at least temporary ‘success’ of the programme on the assumption that ended Pilots indicate that the partnership did not work out.[14] The figure below shows the distribution in the portfolio between the countries:

Figure 3: Number of Project phase collaborations of the total number (%)

Figure 3

As indicated in the figure, in Bolivia four out of five collaborations were Project phase, as compared to less than a third in Ghana, Nepal and Indonesia. In the contextual analysis below, the different rates to what extent partnerships continue from Pilot to Project phases is analysed whether the country contextual parameters have any explanatory value.

3.7 Sector distribution

The B2B portfolio comprises a very wide distribution of business sectors. However, some sectors dominate. Below is an attempt to define the most common business sectors in the full portfolio and the distribution in terms of number of collaborations.[15]

Figure 4: Sector distribution in the B2B portfolio (number of projects)

Figure 4

Agro-industries and food is by far the most common business sector in the B2B portfolio as indicated in the figure above. This category includes collaborations in primary production, processing and trading of commodities such as coffee, tea, cocoa, rice, cotton, fruits and vegetables, oilseeds, honey, animal feeds, flowers as well as projects in diary, piggery, poultry and other meat production. The category also includes food manufacturing, logistical support such as cold chain development in agriculture and food. The dominance of agro-businesses in the portfolio can be explained by three key factors: 1) Danish world-leading competence and strong export performance in many agro- and food-industries; 2) for many of the B2B countries primary production dominates the economy and the sector constitutes, at least in the short- and medium-term, these countries’ competitive advantage in the global economy; and 3) agriculture had a Danish political aid priority related to food security.

Information and Communication Technologies (ICT) is the second largest business sector in the B2B portfolio. This includes a variety of different business models such as software production, mobile applications, animation and web-design. The strong prevalence of ICT in the B2B portfolio reflects the fact that ICT is a business which easily lends itself to partnerships with (certain) developing countries due to low investment costs and the utilization of the rapidly emerging IT skills amongst well-educated youth in many developing countries. There is a worldwide trend of outsourcing from industrialised countries to developing nations, starting with India, which over time has diversified to a number of countries mainly in Asia. ICT has also been prioritized by the B2B Programme through marketing efforts such as ICT delegations to Vietnam, Bangladesh, Nicaragua, Bolivia and Egypt. ICT in the B2B portfolio is almost exclusively driven by Danish enterprises seeking lower production costs through out-sourcing and off-shoring, and local ICT companies looking for new market outlets.

Environmental technologies, in the Evaluation’s terminology, including renewable energy and energy efficiency services, water & sanitation, and waste management, constitute the third largest ‘sector’ (with China and Indonesia, jointly with 20 projects, somewhat distorting the relative importance of this sector). The environmental focus in the B2B has in general been strong. It has increasingly also become a thematic focus of Danida and the embassies, linked recent years to concepts such as ‘green growth’.

Besides agro-industries, ICT and environment technologies, which account jointly for 60% of all the collaborations, there is a wide distribution of sectors as reflected in the figure above. For some sectors the embassies have been restrictive in grant support, for example in garments, which otherwise probably would have a stronger prevalence in countries such as Vietnam and Bangladesh. Overall, the sector distribution reflects on the one hand the interest by the Danish enterprises in exploring new markets, secure supply of raw materials and means to cut production costs through outsourcing and off-shoring, and on the other hand the embassies’ active promotion of certain sectors based on local demands and needs. For example, in Bangladesh the embassy promoted the ICT industry on the basis that the embassy saw particular advantages in this industry for Bangladesh, while in Uganda the embassy especially promoted agro-businesses in line with its sector priorities.

3.8 Size distribution

The B2B database does not provide size of the participating companies. Based on the random sample, the size structure depicted in the figure below was derived. As the new programme Danida Business Partnership is using a cut-off point of five employees the definition applied in the evaluation for small enterprises was set at five employees rather the more common 10.

Figure 5: Company size in the random sample

Figure 5

As illustrated above, the B2B portfolio is dominated by smaller firms with less than 50 employees both in Denmark and in the partner countries. It is noteworthy that every fifth Danish company in B2B was a micro enterprise with less than five employees, i.e. companies that would not be eligible to participate in the DBP.

[12] This is due to the fact that some Danish companies apply and are provided grants for several Pilots or Projects with different partners in the same country or in different countries. The reason for this might be that the first partner in a Pilot or a Project did not work out, but the Danish company found a different partner. The embassies have accepted and often encouraged such multiple applications.

[13] As mentioned above and discussed later, embassies could add certain restrictions, for example that the partners had to form a joint venture, or that certain sectors were not accepted. The embassies could also select sectors they wanted prioritize.

[14] As discussed elsewhere Pilots only do not always mean a failure as in about 10% of these collaboration continue.

[15] The B2B database does not provide the sector orientation, and the figure above is established using an attempt by the B2B management to classify the projects for some countries, in combination with this evaluation. The typology is partly based on B2B’s own typology. Not all sectors are shown in the figure – only those with more than a token number of projects.


This page forms part of the publication "Evaluation of Danida Business-to-Business Programme 2006-2011 – Evaluation 2014.05" as chapter 3 of 11.
Version no. 1.0, 2014-11-14
Publication may be found at the address http://www.netpublikationer.dk/um/14_danida_btb_programme_2006_2011/index.html