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6 Efficiency

Efficiency concerns the relationship between outputs and inputs, hence is an economic term. The ToR pose a series of questions under the label of efficiency, which are related to the ratio between outcome and input, than output and input, hence probably should be labelled cost-effectiveness. This chapter deals with the ratio of outcome to inputs.

As a point of departure for assessing efficiency (or cost-effectiveness) in B2B, the inputs to the B2B Programme in terms of Danida financial resources will be discussed below.

6.1 Inputs: the cost structure of B2B

B2B has the following cost-elements:

  • Grants for the Contact phase.
  • Grants for the Pilot and Project phases.
  • Marketing costs.
  • The administrative costs for Danida and the embassies to manage the programme.

The first three items have specific budgets and are followed up in terms of actual costs. The fourth is not shown separately for B2B, and the Evaluation has made an estimate based on staff and salary data provided by Danida. The analysis below must be seen as an approximation of costs as B2B was a programme in a series of similar programmes. Thus, some projects were started and funded in the PSD phase, while others have continued with DBP funding.

Grants for the Contact phase

Grants provided to Danish and local firms to undertake visits have been difficult to trace in B2B as they were provided as block allocations to the embassies. Based on data provided by Danida for some of the 19 countries, the Evaluation’s estimate is that the total disbursement under the Contact phase for the period from 2006 to 2011 has been in the order of DKK 40 million. Some countries, such as Vietnam and Mozambique, had disbursements of over DKK 5 million, while other countries such as the West African countries had hardly any cost for the Contact phase.

Grants for Pilot and Project phases

The division on grants and disbursements for the Pilot and Project phases are not transparent in the B2B Programme as some embassies in their reporting have included Pilot grants under the Project grants, while others report these separately in the database. In the estimate of the Evaluation, the disbursements under the Pilot phase grants account for about DKK 300 million,[38] while the disbursements under the Project phase, exclusive of the Pilot phase, would be in the order of DKK 580 million.[39]

Marketing costs

B2B had a budget for marketing costs both at the embassy level and for the central B2B administration. The tracing of the disbursements under this heading has not been complete, but the Evaluation’s estimate is that the total marketing cost had been about DKK 40 million, very unevenly distributed between the countries. For example, Mozambique alone had a marketing cost of DKK 11 million, while the French-speaking West African countries had none.

Administration and management

B2B has costs for administration and management by Danida in Copenhagen and by the Danish embassies in the 19 eligible countries. This cost was not included in the B2B Programme budget. Based on figures of staff engagement in the programme at the Ministry and at the embassies, and with salary levels and estimated overheads, the Evaluation has calculated the total administration cost for B2B from 2006 to 2011 to DKK 90 million. This corresponds to about 8% of the total disbursed funds.

The estimates above result in the following coststructure for the B2B Programme:[40]

Table 6: Summary of costs for the B2B Programme
Cost and budget item Estimated cost
(disbursed) DKK million
Per cent
of total cost
Contact phase grants 40 3.8
Pilot phase grants 300 28.6
Project phase grants 580 55.2
Marketing 40 3.8
Administration and management 90 8.6
Total 1,050 100

Dividing the costs on the different phases of the B2B the following cost structure emerges, assuming an equal share of the administrative cost for the three phases and that the marketing costs can be allocated in full to the initial matchmaking phase:

Table 7: Summary of costs for the B2B divided into phases

Programme phases Estimated cost
(disbursed) DKK million
Per cent
of total cost
Matchmaking phase (Contact phase) 110 10.5
Initial collaboration (Pilot phase) 330 31.4
Deepened collaboration (Project phase) 610 58.1
Total 1,050 100

6.2 Efficiency in matchmaking

Considerable efforts by DGG in Denmark and the embassies have been put into the initial matchmaking and promotion when there neither was a clear interest from Danish companies of engaging in businesses in any of the countries, nor any identified partners. The programme was proactive in the matchmaking in different ways besides providing grants for the Contact phase: The embassies, DGG, HVR and DI arranged various matchmaking events such as fairs and delegations, often tailored to specific sectors with the dual purposes of marketing the programme and stimulating initial contacts; many embassies and HVR engaged actively in specific matchmaking efforts by talking to individual enterprises about the opportunities and the potential partnerships; the embassies produced business profiles for the countries, identifying sector opportunities as a means of guiding companies. While there were standard elements of the match-making in the programme design, the embassies could to a large extent design their own approaches and be more or less proactive in the matching phase, partly due to demand, partly due to the human resources allocated to the programme at the embassy level (in many countries, the B2B Programme coordinator was not a full-time position).

How efficient was the matchmaking at the Contact phase? A first answer to the question is that almost all collaborations which applied for a Pilot or Project phase grant had been engaged in the Contact phase or other matchmaking events of the B2B Programme or its predecessor. In the e-survey conducted in the Evaluation, over 80% of the respondents said that the Contact phase was either extremely important or important for the formulation of the Pilot phase. One of the findings of the Evaluation is that only few of the Danish firms and their partners know of one another before engaging in the B2B. Partners met as a result of B2B. The additionality of the B2B was consequently very high for the Danish companies to seek the B2B partnerships.

A second test of efficiency is the cost to Danida in stimulating such matches. The overall cost for the matchmaking and Contact phase is estimated to DKK 110 million as mentioned above, implying a cost per Contact phase of DKK 85,000.[41] The cost per partnership in the matchmaking phase leading to engagement in the Pilot phase is about DKK 260,000, including the management, marketing and administration costs.[42] Compared to similar donor programmes the support level in B2B was generous. The Norwegian Matchmaking Programme provides grants of up to NOK 60,000 per company to cover 80% of the travel costs for participation in matchmaking events in the selected countries. Furthermore, the Norwegian companies have to pay a fee of NOK 10,000 for participation in the MMP. Finnpartnership does not provide any grants for matchmaking, but has a virtual meeting place where Finnish and local companies can advertise, and also services by consultants arranging matchmaking Swedpartnership lacks a specific grant for matchmaking, and it is assumed that the partners have established a contact beforehand which in fact is a condition for participating in the programme.

The Norwegian MMP has been effective in mobilising the Norwegian SME sector over an extended period of time in some of the countries. For example, from the early 1997 to 2009 it mobilised on the average 15 Norwegian companies per annum in South Africa to participate, and in Sri Lanka almost the double. Of that number, about 40% entered into a partnership manifested in a MoU.[43] In the Norwegian MMP, the estimated cost for an established MoU in South Africa was about NOK 350,000. Using Norway’s MMP as a reference, the Evaluation concludes that B2B was an efficient programme to stimulate visits and establish partnerships, especially as B2B include countries for which there was very little interaction between Danish and local companies prior to the programme.

6.3 Efficiency in promoting initial partnerships

Most, but not all collaborations, have followed the assumed logic in the B2B in the sense that they first go through a Contact phase to find a partner, then a Pilot testing the business idea, and thereafter applying for a Project phase grant for deepening the collaboration. Of the Pilots initiated, slightly more than half continued to the Project phase. This appears to be a measure of considerable effectiveness for a business alliance programme, especially taken into account that the great majority of partners had no previous experience of one another. The cost to Danida for each partnership, which entered the programme and continued after the Pilot to the Project phase can be estimated at DKK 1.7 million.[44]

Overall, the B2B has had in an international comparison a generous grant system of up to DKK 1 million (+ support in the Contact phase) for undertaking the initial feasibility phase’ of collaboration as compared to similar other programmes. As a reference, in the Norwegian Application-based Support for training and feasibility studies, Norad funds maximum 50% of the cost and the approved amounts tended in reviewed period to be NOK 0.2-0.3 million (exclusive of administrative cost for Norad). The estimated share of continued collaboration in the Norad scheme was 30-40%, which did not involve any further Norad support, but was based on the partners own funding on commercial terms. Calculating the cost in the Norwegian MMP and the Application-based Support gives a cost per sustained collaboration beyond the feasibility stage of about NOK 1 million in the mid-late 2000s (equivalent in DKK).[45]

The Evaluation’s conclusion is that while the B2B has been effective in stimulating initial collaborations to move into deepened business relationships, this has been accomplished at a relatively high cost to Danida per such partnership. B2B is only partly an efficient programme to promote longer terms collaborations. The key reasons, derived from interviews with stakeholders, are:

  • The B2B has had a generous grant mechanism under the Pilot scheme, which basically can be seen as a feasibility test. Some companies saw it as an incentive to continue and benefit from further grants. Over 80% of the grant cost has been for training, technical assistance and feasibility studies, most of which has been provided by staff of the Danish partner firms (fees for staff and travel costs). As the B2B has funded 90% of the costs, the Pilot phase of the programme implied a low-risk venture.
  • There was a mixed objective in the B2B Programme in the sense of, on the one hand, testing the commercial viability of partnerships, and, on the other, using the Danish partners to deliver technical assistance and knowhow transfer to companies in the partner countries, especially in fields such as environment, OHS and CSR.

Taking the last point into account, the efficiency cannot only be judged on pursued partnerships (see further below).

6.4 Efficiency in promoting longer-term partnerships

As further discussed in the next chapter, the estimate from the random sample is that about 27% of partnerships which were initiated in the B2B Programme (Pilot or Project phases) is likely to be sustained as formal businesses after the B2B ends. (This figure corresponds to the case study in Uganda, but it is above the results in Bangladesh.) The random sample indicates that about 40% of the partnerships which entered the Pilot phase did not move into the Project phase, while of those 48 projects that entered the Project phase, 62% either have ended or are unlikely to be sustained after the end of the programme. While a dropout rate at the Pilot phase which is a test of business ideas and newly formed partnership must and should be expected, a survival rate of less than 40% of those partnerships which enter the Project phase is according to the judgement of the Evaluation more worrisome. However, the results must be qualified in two respects. First, about 12% of the Pilot only projects continue as a partnership outside the B2B. Second, in partnerships that have collapsed in a formal sense, there sometimes is an informal relationship based on friendship, which might have a not inconsequential element of prolonged knowhow transfer.

The main reasons that three out of four partnerships that enter the B2B (at Pilot phase) will not survive in a formal sense beyond the programme are according to the views of the Evaluation:

  • Start-ups and newly formed businesses tend to have a high rate of failure in most contexts due to market conditions and other factors.
  • The B2B took place in the midst of the global financial crisis, which impacted on many Danish firms resulting in bankruptcies and withdrawal to the core home market.
  • Overall, the appraisal process in the B2B has been liberal. Few applications submitted have been rejected, hence there was limited due diligence in the programme assuring a high chance for sustained partnerships. An evidence of this is that almost all projects which intended to seek support from IFU for co-financing, in the form of loans or as equity, were either rejected by IFU or the partners did not pursue such financing as they realized that the financial basis of the partnership was not strong enough.
  • As mentioned earlier, the 90% support element in the Project phase leaves very little risk at the hand of the Danish partner to continue from Pilot to Project, especially as the firm can capture this support by providing training and technical assistance through its own staff. Some partnerships might therefore have moved into the Project phase even if the business case was weak and the partnership not strong. Once the grants were over, the incentive to continue evaporated.
  • A not insignificant number of projects were formulated as short-term technical assistance projects where the partners never had the intention of establishing a long-term partnership or only had ‘hypothetical intentions’. These were accepted in the programme on equal terms of all others.

In view of the fact that the full cost of the programme is likely to be DKK 1,050 million and the number of partnerships, which are likely to survive after the programme is about 120, Danida’s cost per surviving partnership is about DKK 9 million. As many of the partnerships are small, and some weak, the subsidy element is considerable. As compared to the other Nordic programmes, the B2B was costly as a means to create surviving partnerships.

The Evaluation’s overall conclusion is that the efficiency (or cost-effectiveness) in the B2B declines along the Contact-Pilot-Project phase stages as indicated in the figure below:

Figure 13: Efficiency levels in the different phases of the B2B Programme

Figure 13

It should be noted that the declining degree of efficiency/cost-effectiveness in the programme has less to do with the effectiveness of Danish companies moving from Contact to Pilot to Project and to Sustained partnerships, and more with the costs in the different stages, largely dependent in the increasing support element to the companies especially in the Project phase.

6.5 Efficiency beyond promoting collaborations

Efficiencies should not only be judged based on continuing partnerships. Value was created by the matchmaking and especially so in the pilot processes. Value might also be created in local companies in projects in which partnerships are broken up. In fact, one of the most successful such projects identified in the portfolio, a cotton processing company in Northern Uganda, belongs in the latter category. This project, which initially had a small Danish firm as a partner, succeeded in building a successful local company and provide a market outlet for some 35,000 cotton and sesame farmers in the war-torn Gulu district in Northern Uganda where limited economic opportunities existed. The collaboration with the Danish firm, however, did not last. See further Annex J for a case study. It is therefore essential to avoid seeing the B2B as a programme which is judged to what extent and how successful it is creating commercially viable partnerships with Danish enterprises. As a programme financed out of the Danish development cooperation budget the key efficiency measure, or more general the value for money, should not be based on the partnership factor, but the developmental results it creates in the partner countries versus the cost of the programme to the aid budget. Unfortunately, no quantifiable measure can be established for this as the benefits to the partner countries are not fully known yet and are of a nature that they cannot be aggregated.

In this context it is important to take into consideration that the programme is not only delivering benefits, but also costs in terms of companies that are losing money due to poor investments and more general, there are market distortion effects due to the subsidies of specific companies in a competitive market. The Evaluation’s qualitative assessment, nevertheless, is that substantial knowhow transfers have taken place, and local companies have gained from the B2B. Whether such net gains justify the cost of B2B of near DKK 1.1 billion is a different matter. The Evaluation’s judgement is that B2B is less than desired efficient/cost-effective due to two key factors:

  • As a means of creating sustained partnerships, B2B efficiency is low due to the high subsidy rate which both act as an ‘incentive’ to prolong weak business models and partnerships and add to the high costs;
  • As a means of a creating development effects for poverty alleviation, the B2B Programme has not sufficiently been oriented in that respect in its marketing and due diligence of projects, for example in ex ante assessment of potential development impact for the poor, creating systemic effects beyond supported companies, and avoiding distortion effects on markets.

It could be argued that the efficiency/cost-effectiveness problem at least to some extent is due to the incoherence between the overriding objectives. This is further discussed in the final chapter.

6.6 Factors determining success in partnerships

The ToR request an assessment whether any specific factors (for instance company type, motivation, financial incentives, power relationship between partners, type of partnership project, or other) systematically come into play in promoting Pilots to Project partnership, and how the rate of companies establishing successful partnerships can be increased. The Evaluation has in the random sample tested the contextual factors in terms of the difference between Pilot only collaborations and Project grants.

Even though the collaborations in the random sample in the general analysis have been treated as a coherent group, it is no surprise that there are differences between the results of Pilot phase collaborations and those reaching Project stage. The Evaluation has looked into which contextual factors have had the strongest influence on results also in Pilot only collaborations. The general picture is that Project phase partnerships have had better impact along the five results areas than pilot collaboration. This is not surprising. While the Pilot collaborations in general show fewer positive results than the Project collaboration, most of the contextual factors do not play as significant a role in the Pilots as in the Projects. In some cases, the Pilots follow the same line (though less significant) as the Projects and in other cases the picture is very blurred. Three of the contextual factors do, however, seem to also play a role in the Pilot collaborations which are all related to the Danish company, namely: size, financial robustness and previous international experience. Hence, these three contextual factors could be some of the most influential on results of the collaborations in general.

The Evaluation has also tested what appear to be key factors leading to sustained partnerships ex post B2B. The response to this question is through two means: 1) relating pre-determined contextual factors to the sustained partnerships post B2B; and 2) analysing key factors determining success expressed in interviews with partner companies.

The Uganda case study found that size of the participating companies matters for the chance of sustained collaborations. The larger the company, especially the Danish partner, the greater was the chance for a sustained collaboration. In Uganda where different forms of partnerships were applied (such as joint ventures, agencies and trade collaboration), the case study also found that joint ventures had a lower success rate than other forms of partnerships.

In the Bangladesh case study, financial robustness of the Danish partner was a determining factor for successful partnership. Especially the ICT sector in Bangladesh had a high ratio of failed partnerships of financially weak companies at the time they entered the programme, which could not survive the onset of the financial crisis in 2008-2009. For details, see the case country study in Annex J.

In the random sample, the Evaluation has tested the relationship between the rate in terms of likely sustained partnerships beyond the B2B with a series of company and collaboration contextual factors in line with the proposed methodology (for details of definitions and categories see Annex B). The results are indicated in the table below.

Table 8: Relationship between contextual factors and sustained relationships (random sample)
Contextual factor Correlation with sustained partnerships post B2B
Size of the Danish company. Large companies higher degree of sustained partnerships, followed by micro enterprises.
Size of the local company. Medium-sized enterprises higher degree followed by micro enterprises.
Age of the Danish company. Older companies higher degree than younger.
Age of the local company. Older companies higher degree than younger.
International experience of the Danish company. Considerable experience slightly better chance for sustained partnership.
International experience of the local company. Considerable experience by local partner much higher degree of sustained partnership.
Financial robustness of the Danish company. Financial robust companies have higher degree of likely sustained partnerships.
Financial robustness of the local company. Financial robustness impact positively to a certain extent.
Business motive of the Danish company in B2B (market extension, outsourcing, in-sourcing of material, technical assistance). Market extension the highest share of sustained partnerships.
Type of partnerships (agent; buy/sell; joint venture; technical assistance (TA.). Buy/sell has the highest share of sustained partnerships, and TA the lowest.
Business sector (agro & food, ICT, environment technology and other). Environmental technologies and agro-food a higher share, while ICT low.

While these findings confirm the initial hypotheses of the Evaluation, it is essential to note that none of the factors have a sufficiently profound determining effect reflected in a clear correlation. For details see Annex E Figure 1-11.

The Evaluation, using the random sample, also tested to what extent the rate of sustained partnerships was correlated with the country contextual factors discussed in Chapter 4. The Evaluation found no strong correlations with any of the country contextual parameters. Thus, for example, there was not a higher rate of sustained partnerships in projects taking place in countries considered having a good business environment according to the World Bank’s Doing Business Index (such as South Africa) than in countries with a poor environment (such as Bolivia).

The interviews carried out with the partner companies shed a different light on what determines if a partnership in B2B leads to a sustained partnership post B2B. Important factors are:

  • Trust between partners and the right ‘chemistry’. Developing trust is not an easy process in business partnerships involving partners that generally don’t know one another beforehand. However, in several interviews, partners have pointed to the importance of frequent visits by the partners, that it is the same key persons from Denmark that visit every time, and also the importance of the local partners making study visits to Denmark. Besides this, it is very difficult to identify factors that create trust, except refer to general personal traits. Similarly, chemistry cannot be imposed on partners but it has been clear that the successful partnerships has mentioned this factor as key and that a number of the failed partnerships has pointed to lack of good personal chemistry.
  • Time that is strongly related to trust. It is essential that a programme such as B2B allows sufficient time for building trust and do not rush partners to form business alliances faster than they prefer. Many partners have pointed to the flexibility of the embassies in terms of extensions of both Pilot and Project phases as important for letting their partnership and business develop at its own pace.
  • Coordination and alignment of expectations to the partnership and the business idea in terms of input, products, time horizon etc. This is closely interlinked with trust, chemistry and allowing sufficient time for the partnership to develop. An issue brought up by many local companies is a perceived feeling of imbalance that the decision-making on how the funds used are almost exclusively determined by the Danish partner.
  • A flexible arrangement of what type of business formation partners want. The joint venture model, when enforced strictly as was the case in Vietnam was not always productive as it is the most complex business alliance and in many cases was contradictory to company policies and wishes.
  • Early successes in business. There is generally a limited staying power if business is not emerging in terms of market access and financially rewarding arrangements.
  • The vision of the partners that the business alliance will create something of value, often seemingly involving more than just commercial return for the Danish partner, but also elements of altruistic motives or corporate social responsibility. The interest by some Danish partners to continue to pursue the partnership even under adverse conditions was striking, while others took the participation light-heartedly.
  • Generally, an important, albeit qualitative, factor is what can be termed management skills and mindset of the business partners. Managers, who are realistic, with an easy readiness to deal with unexpected events and delays, and with the ability to react flexibly and creatively to challenges, have a better chance.

As mentioned above, not all the B2B collaborations intended a long-term business relationship. In some countries, projects were initiated by Danish firms and entrepreneurs, who only planned to deliver services in the form of technical assistance as long as the programme paid for this. For example, in Uganda, a third of all partnerships were of such nature. In fact, some of the best development projects in the Uganda portfolio, which had positive sectorial effects, were delivered by Danish organisations specialising in technical assistance without plans to continue in a joint business. There were farmers that engaged in the programme more of altruistic motives and for personal reasons, than with a common long-term business model as a vision. This fact once again emphasize that the B2B Programme should not primarily be judged from the point of view of sustained partnerships. For details, see the Uganda case study in Annex J.

The discussion above illustrates the problems associated with efforts to increase effectiveness in a business alliance programme by trying to select partner companies based on administrative criteria such as company size, financial robustness or international experience, especially if issues such as additionality and developmental effects are taken into account. There are some weak correlations, i.e. that large and financially robust companies and companies with considerable international experience perform better, but there are also micro enterprises, financially weak and with no or limited international experience that succeed.

6.7 Efficiency in Adapting to Internal and External Factors

The efficiency of (the B2B Programme) “adapting to external and internal factors” in the design phase, and indeed in the implementation phase of Pilots and Projects is difficult to judge. An example of seemingly low adaptability in Bangladesh took placed in the ICT sector. At the same time as the Bangladeshi industry expanded by increasing exports by almost 50% a year (2011-2013), the B2B ventures started collapsing. In Uganda, the B2B Programme – or rather its follow-up programme DBP – was rigid in its interpretation of the new rules (of at least five employees in the companies) which closed the opportunities to continue for quite a number of well-functioning Pilots in agribusiness involving Danish micro enterprises in terms of employment (basically a single farmer). This meant not only lost opportunities, but also a degree of bad-will in the Ugandan business sector. In Vietnam, the embassy applied a rigid approach to eligible partnerships where only 50-50% JVs were accepted. Such a formula was not conducive for effective partnership and it meant that some seemingly viable partnerships were rejected of no other reason than formality. In Egypt, the revolution in 2011 meant that a decision to close down the programme in 2012 was reverted and the programme was extended for a few years but when the new closure date was approaching it was again extended now without an expiry date. This has left the embassy with a difficult job in terms of managing the portfolio of potential projects and partners. In other countries decisions were made while B2B was ongoing to shift away from certain sectors, such as garments.

On the other hand, embassies have often been resourceful in helping Danish companies identify new potential partners if the current partnership had gone sour. Some of the most successful B2B projects are results of this, for example in the cotton sector in Uganda and in the coffee sector in Bolivia. While the B2B Programme overall was not administered by staff with a background in business or with experience from institutions having assessment of business cases as its profession, both local and Danish partner firms testify that the embassy personnel overall were service oriented, ready to be flexible and participate in problem solving and adjusting to changed circumstances. All the instruments used in the Evaluation confirm this view. However, some partners would have like more assistance from the embassies, especially as regards the legal aspects of setting up partnership agreements.

It is a common experience in most business development that initial plans have to be modified as a result of market changes and other factors. Hence flexibility in support is critical and a too rigid structure of what can be financed or not and what form a partnership should take can be counterproductive.

6.8 Efficiency in embassy implementation

The B2B management system builds on a dual management function: at the centre in Danida and at the embassies. According to information provided by Danida, in total some 18 persons (full time equivalent) have been involved in the administration and management of the programme, the vast majority at embassy level.[46] Some of the embassies have recruited one or two local staff to administer the programme, while in others, administration was a one-person part-time job. The delegation of the B2B management to local staff seems overall to be a useful approach. Not only do local employees cost less, but they tend also to have a better understanding of the local environment and economy, stay longer with the programme, and so on. During the fieldwork and interviews with staff at the embassies, the Evaluation has come across a number of very well qualified, motivated and professional programme managers.

In the Uganda as well as the Bangladesh country studies, the Danish companies were generally positive towards the work done by the embassies, and the interviews carried out with Danish and local companies in the random sample also support this conclusion. The result of the E-survey in this respect is that 78% of the respondents were either very satisfied or satisfied with the “level of advisory support received from the Danish embassy”.

A particular issue is the balance of responsibilities between local staff and Danish expatriates at the embassies, and especially to what extent other embassy staff engaged in B2B. A number of very short Project Completion Reports with no analysis, but signed off by the Ambassador, is an indication of a possible low priority at some embassies. The issue is understandable: expatriate staff positions at the embassy are few; persons stay a limited time; and generally deal with Danida programmes with considerably more financial resources and with less staff resources.

The B2B Programme is considerably more staff intensive than the Nordic sister programmes in business alliances, which all also have applied a more central administration than B2B. For example, the Finnpartnership, implemented by Finnfund, uses two to three persons all located in Helsinki. Swedpartnership, since 2009 outsourced by the Swedish Government for implementation to Swedfund, has a staff of two persons working full time on the programme, both placed in Stockholm. The Norwegian ABS support is managed by Norad from Oslo with about two full time staff-years, while MMP is outsourced to Innovation Norway, using between 5-10 persons (not all full time) both in Oslo and in selected country offices on the MMP.

The model of B2B anchored in DGG in Copenhagen but using embassies in country administration has its merit of a stronger local presence, allowing both active marketing at country level and fire fighting in partnerships with problems. The drawback is administrative costs, and perhaps more important, the risk of a programme which promote quantity before quality where embassy staff, in order to justify their work, might promote and accept projects which should not have been provided with public funds. The delegation of business alliance programmes to a DFI as in Finland and Sweden is an option. It has the merit on anchoring the programme in an institutional business environment with peer professionals.

6.9 Accounting for results: Documentation and monitoring

As mentioned before, B2B established an ambitious reporting system both ex ante and ex post. The number of reports produced by the participating companies and by the programme management bears witness of this. Especially the ex ante reporting in terms of company applications for Pilot grants and Project grants are very detailed and extensive. The B2B is a rigidly designed programme in terms of how an application for Pilot and Project phase support should be written. It is more attuned to a public sector bureaucracy than to business and especially to small companies with no ‘project’-related experience. The template is such that the applications become extremely lengthy, covering some essential aspects, but far from all. Much of the information is not of value to the programme management, nor to the partners. In the E-survey, 66% of the respondents found the preparation and reporting requirements too demanding or demanding. Only 2% found them easy to cope with.

The massive documentation at the ex ante stage is such that programme managers became bogged down in too many details, and risked losing sight of what the partnership was all about. Furthermore, the documents were supposed to be joint contractual agreements, but local enterprises often complain that it was all dominated by the Danish firm, that their say was limited and sometimes just a question of signing a paper. The progress and ex post reporting, on the other hand, suffered from the opposite problem: too vague and with too low ambition.

Specific points derived from the Evaluation’s review of nearly 1,000 documents for 140 assessed B2B Pilot and Project phase projects are:

  • The application documents were complex, time-consuming for the partner companies to fill in, and contained more information than could be used by the embassies in their appraisals. There has been a strong critique from the participating companies of a much too bureaucratic application process. The Evaluation agrees with this critique.
  • The appraisal documents by the embassies were largely based on checking certain pre-established criteria against the applications. The Project phase appraisal was not a due diligence process, critically reviewing the business case neither in terms of potential development impact, nor of the viability of the underlying business models.[47] Only a minority of applications were turned down, mostly due to reasons of formality. Underlying the appraisal process seems to have been that the applying partners had the ‘right’ to the grants. Furthermore, the same embassy staff that carried out the appraisal had often also been involved in the matchmaking and partnership set-up prompting the question of whether there was a conflict of interest in this process.
  • Progress reports reviewed tended to lack a common structure, were activity based and often reporting on details from the last quarter, produced in order to request disbursements. Possibly the reporting has been of use for the embassies to follow-up on progress, but for programme management or this Evaluation, they have not been useful. Generally, the reports have not left the embassies and are maintained mainly in hard copies in project files, which can be quite voluminous. The Evaluation has not come across a single status report submitted after the end of the B2B support as is otherwise required.
  • The Annual Indicator reports are subject of major methodological problems and are thereby providing a misleading picture of the B2B performance. For example, data on employment year by year were in some cases aggregated in such a way that a collaboration, which has 10 employees after five years was reported as 50. Furthermore, the Indicator reports did often not take the baselines into account; thus, if a project had an initial 10 employees, no jobs were added, it could, nevertheless be reported as 50 after five years. For example, the Uganda Report indicated the creation of 4,300 jobs in total by 2012, while the Evaluation’s case study estimated the job creation to at most 500.
  • The embassies have shown varying diligence in carrying out PCRs. Thus projects that have ended several years ago often still lack a PCR. Furthermore, the PCRs varied considerably in length and detail. Many were just a few lines, in sharp contrast to the elaborated applications. The opportunities to follow up on baselines and targets for monitoring purposes were largely missed. Some embassies, such as Vietnam, have been more ambitious, but the overall picture is one of missed opportunities in accounting for results and genuine learning.

In short, the results-based management system of the B2B had significant deficiencies both for the purpose of accountability and for learning. A key problem was that it took place in an institutional framework not set up for this type of business projects. The projects were, as aid projects, very small, while at the same time requiring a considerable amount of reporting. The system became bureaucratic rather than management oriented, geared to disburse funds rather than assure results.

[38] Calculated based on 80% disbursement of approved grants (DKK 158 million) for the Pilot only collaborations, and 90% of all Project collaborations going through an initial Pilot (240 projects) of an average disbursement of DKK 0.8 million.

[39] The figure is based on an assumed disbursement of DKK 880 million for the Pilot and Project phases once all disbursement are over.

[40] Support to DI and HVR from Danida is counted under the Contact phase.

[41] Calculated as follows: DKK 110 million divided on 1,300 projects; of this DKK 40 million was subsidies to the companies.

[42] Calculated as follows: DKK 110 million divided on 420 Pilot phase projects.

[43] On the other hand, in Bangladesh, which was introduced in MMP in 2010, the number of Norwegian companies involved has only been about four per annum of which two entered a MoU for collaboration.

[44] Calculated as follows: Cost for the Contact phase DKK 110 million and for the Pilot phase DKK 330 million. Number of partnerships, which have entered the Project phase with or without prior Pilot phase 240 and an estimated 20 partnerships, which continue without the Project phase support.

[45] The calculation is based on information in an assessment of MMP and ABS in South Africa 2000-2007, see Lindahl et al. (2010) Evaluation of Norwegian Business-related Assistance. South Africa case study report.

[46] Some stakeholders interviewed with insight of the B2B consider this a considerable underestimate.

[47] This was a topic discussed at the focus group discussion among the ‘success stories’, that even these would have welcomed a critical review of their business plans and partnership idea which some of them received from HVR/DI but not from the embassies.


This page forms part of the publication "Evaluation of Danida Business-to-Business Programme 2006-2011 – Evaluation 2014.05" as chapter 6 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