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8 Impact

Impact in OECD/DAC terminology considers the longer-term result of a development activity, both intended and not intended, both positive and negative. This chapter assesses the impact on the local partner companies’ commercial performance, on employment, both direct and indirect, on local firms’ competiveness, but also possible market distortions. It also discusses the impact on the Danish partner companies.

The assessment includes both Pilot only and Project phases.

8.1 Impact on local partner companies’ commercial performance

The underlying theory of the B2B Programme is that the support will ‘ensure a transfer of knowhow and technology from the Danish partner to the local partners thereby strengthening the competitiveness of the local partner.’ In order to test this theory, the Evaluation has rated the local partner companies’ current commercial performance as compared to the situation when the company joined the B2B Programme. The rating is based on information provided by the local companies primarily, substantiated by the Danish firms when possible and the embassies judgement in PCRs and in interviews carried out.

In Uganda, 38% of the interviewed local companies considered the performance better or much better today than the baseline, but 25% considered it worse. In Bangladesh, the situation was the reverse: a third claimed the performance was worse today, while only a quarter said it had improved. In the random sample, the following distribution was found on how the local companies currently performed as compared to when they joined the B2B:

Figure 17: Performance of local companies after engagement in B2B (random sample)

Figure 17

Commercial performance of the local company can to a larger or smaller extent be attributed to the programme. For example, a company which had performed ‘much better’ as compared to the baseline were the cotton ginnery project in Uganda earlier discussed, which had increased its turnover by DKK 50 million and its employment by 100 persons as compared to the ‘before’ situation in 2009. According to the management, the B2B project has played a role in facilitating this. See Annex J. Two more projects in Uganda in the category much better performance belonged to an Indian owned conglomerate, one steel mill, the other a vegetable oil processing plant. Both companies are large, and had improved performance each by DKK 40-60 million per annum, and increased employment jointly by 300 persons since the beginning of the B2B engagement. In both cases, the B2B partnership provided technical assistance on environmental issues in the companies. While successful in upgrading the environmental standard in both companies, there was limited attribution of B2B projects to the companies’ overall commercial performance. It is noteworthy that in none of these three cases there was an active partnership with the Danish partner after the end of B2B, and the commercial performance of the companies was largely explained by the fact that the three companies had strong professional management, in all three cases lead by expatriates.

The impact by B2B on company performance may also be negative: A partnership between a Danish machinery manufacturer and a local sawmill in Zambia had negative consequences for the local firm. The local company has had to come up with financing for expensive equipment supplied through the programme through loans in local banks. Even though Danida refunded 25% of the cost, the reimbursement took place long after the loan was obtained. Hence even though the company is now able to sell higher value products, today, four years after the Project phase was initiated, they still struggle financially with the aftermath of this investment. The Danish partner has sold the machinery and carried out technical training but has not invested in the partnership which also ended, as planned, after the equipment was installed and training carried out.

Below, the correlation between the company contextual factors and local company performance in the random sample is analysed.

Table 10: Relationship between various company-related contextual factors and local company performance
Contextual factor Correlation with local company performance
Size of the Danish company. Partnerships with larger or medium-sized Danish companies have some correlation with local company performance.
Size of the local company. Large firms perform better, followed by micro firms.
International experience of theDanish company. Weak. However, Danish companies with considerable international experience are better correlated with local company performance.
Age of the Danish company. Older companies related to better performance of the local company.
Age of the local company. A clear correlation with age of the companies. Older better performing.
International experience of the local company. Local companies with considerable international experience perform better.
Financial robustness of the Danish company. Financially robust Danish companies seem to spill over to local through knowhow transfers.
Financial robustness of the local company. Weak correlation although initially financially robust companies perform better over time.
Business motive of the Danish company in B2B (market extension, outsourcing, in-sourcing of material, technical assistance). Technical assistance associated with the highest share of commercial performance of the local company.
Type of partnerships (agent; buy/sell; joint venture; technical assistance). Buy/sell has the highest share of commercially performing local companies.
Business sector (agro & food, ICT, environment technology and other). ICT performing worse than other sectors.

The relationship with local company performance largely is in line with the initial hypotheses of the Evaluation with better local company performance in projects with initial larger companies, older companies, internationally experienced companies and financially robust companies. However, the correlation is generally quite weak, and should only with caution be used in policy context. For details, see Annex E.

8.2 Employment creation

All together, the Evaluation estimated that the B2B Programme in Uganda could be attributed to perhaps the creation of about 500 permanent jobs, of which about 150 are for women. Some of these jobs have a strong attribution factor. For example, a Danish company initiated a work under B2B with a government vocational training institute to develop skilled welders, and in this process also established a new company. The latter, today employing 30 persons, has been bought by a French multinational consultancy company and is now actively engaged in providing services to the emerging oil industry in Uganda and Rwanda. The collaboration between a major Danish food industry and a Ugandan food company triggered the creation of a new 100% locally owned company for the purpose of developing a cold food chain. This company, which currently is supported by DBP with a different Danish partner, has a workforce of 20 persons and 30 on temporary employment. In other cases, it is difficult to separate out the impact of B2B in the activities of the on-going companies. For example, a Ugandan cleaning company in which the Danish partner bought a minority share today has 50 more persons employed than before B2B, but the labour force has varied between 150 and 400 due to changes in demand and market conditions.

The employment factor depends to a large extent on the type of enterprises the programme support (besides whether the support is a success or not). Thus, some partnerships which are doing financially well have meagre employment effects. For example, a partnership between a large Danish company with global presence in medical equipment in partnership with a distributor of medical supplies in Uganda is doing well financially, but the project has created one local job. Employment might also suffer due to the B2B Programme even if the partnership is functioning well. The collaboration between two manufacturers of signs in Uganda had an indirect impact on the latter by reducing its labour force from about 80 prior to the collaboration to currently 40, mainly due to productivity increase and reduction of unnecessary labour, on the advice by the Danish partner.

In Bangladesh, the Evaluation’s estimate is that there are about 250 employees in the surviving pilot and project partnerships that might be attributed to the B2B Programme. Of these no more than 25 women, or 10%, are employed. In most collaborations there are between 10 and 20 employees, and the one with the highest number, an ITC partnership, there are 50 additional jobs. The attribution of the B2B to this employment increase is reasonably strong, particularly for the JVs. As most of the ongoing collaborations would not have been started without the B2B, the Danish programme can take substantial credit for the results.

In the random sample, there are examples of collaborations, which have been quite successful as generators of jobs. In the security service project in Bhutan involving a large Danish company, some 500 jobs are estimated to have been created in the local partner, while in an aquaculture project in Mozambique, some 100 additional jobs are claimed to be at least partly the result of the collaboration with a Danish firm. In the before-mentioned successful cherry tomato project in Egypt, the additional number of jobs created in the project period is around 500, 340 of which are female employees, where it is estimated that the attribution factor from B2B is medium (other factors have also had a positive influence on the performance). This local partner has in this case focused specifically on hiring young people and has in that way focused on one of the key structural problems in many development economies, namely youth unemployment. An ICT collaboration in Vietnam earlier referred to has created some 300 new jobs so far.

Of six projects in the random sample which were estimated to have created over 100 new jobs per project, three were in the agro-food sector; one in the ICT sector, one in aquaculture and one in security services.

While exceedingly difficult to provide an employment creation factor for the total programme, the Evaluation’s best estimate, based on the random sample and the case studies, is in the order of 9,000-10,000 new jobs of which an estimated 25% are for women can be associated with the programme[50] Given an investment by Danida of DKK 1,050 million, the average cost per job would in such case be in the order of DKK 110,000-120,000. As a comparison, an evaluation in 2012 of Finland’s Finnpartnership found that the participating companies reported an employment effect of about 2,500 jobs over the period 2006 to 2009 at a total cost of the programme of EUR 10 million,[51] i.e. about DKK 30,000 per job. An assessment of the Norwegian MMP in Sri Lanka and South Africa in 2010 calculated the cost per 2,000 jobs created at NOK 30,000 per job. Adding additional subsidies, such projects could avail from the Norad support system, the cost per job would be NOK 60,000.[52]

While comparisons are difficult to make as the programmes have differences and the methodologies to assess jobs also differ, the cost per job in B2B appears high. Given an average GNP per capita for the majority of the B2B countries of less than USD 500 per annum, B2B is not a particular cost-effective job-creating programme if each job has a subsidy cost of more than USD 20,000. The major reason for the difference in cost per job in B2B with the Nordic business alliance programmes is the considerable subsidy element in B2B. However, that said, one reason for the higher cost per job in B2B is that the programme included mandatory investments in CSR and other similar activities, which at least not in the short run is job-creating.

8.3 Creation of indirect employment

Successful new business partnerships do not only create direct jobs, but often also indirect jobs down-stream (through supplies of raw material, components, services etc.) and up-stream (retail, distribution etc.). In addition to such indirect employment, temporary jobs can also be a significant source of income for example in agro-businesses with varying demands for labour over the year.

Examples of B2B projects reviewed which have significant potential impacts in terms of indirect jobs are:

  • A cotton processing company in Northern Uganda, which claim an outreach to about 35,000 farmers in the Gulu district, providing these farmers with an outlet for farm products such as cotton, in addition to temporary employment of several hundred persons in the cotton processing firm.
     
  • Several B2B collaborations in agriculture that export different products to Denmark (dried fruits, vegetables, coffee, tea, etc.) and get the produce from contracted out-growers. These may vary from a handful to several hundred in each case.
     
  • A cold chain project in Uganda providing a missing link in the value chain with impact on farmers and food distributors in Uganda as well as in neighbouring countries, in addition to temporary employment in the local firm.
     
  • A B2B project in Bolivia involved in creating new export markets for llama wool. The company might potentially have significant spin-off effects in terms of jobs and better earnings for llama keepers in the country.
     
  • The B2B has supported several joint ventures in Bangladesh that deliver improved trawls, and also whole trawlers, to domestic fishing companies. While employment aboard these trawlers cannot be directly attributed to the B2B, the programme has at least contributed to significant indirect employment, possibly in the range of 1,000-2,000 jobs.
     
  • In South Africa a Danish innovative company have invested heavily in setting up a JV with a local company for the production of insulation material for houses made of waste newspapers. Besides the skilled jobs that will be established in the factories approximately 200 people will be needed to collect newspaper for the production.

It is clear that if temporary jobs and indirectly created jobs would be added to the estimate of total jobs created, the cost per job would be substantially reduced. It might in this context be mentioned that some of the most effective job-creating developmental programmes with a focus to a large extent on self-employment and informal sector jobs calculate with a cost per job in the order of USD 200.[53]

One of the most critical questions in development assistance is increasingly seen as how to create hundreds of millions of jobs for the poor with limited purchasing power and limited capital for investment. In the foreseeable future the informal sector, including small-scale agriculture, will be the creator of mass employment. Currently there are nearly one billion self-employed and unpaid family workers in the world, most of them self-employed farmers in developing countries. The self-employed represent nearly half of the workforce in low-income economies. For any strategy to be successful, it must give central importance to self-employment and entrepreneurship, with emphasis on agriculture, agro-industry and small firms in the informal sector. The B2B portfolio’s dominance on agro-businesses is fortunate in this respect. What is required in addition is to maximise the potential spin-offs of such projects. The reporting system in B2B did not consider the indirect job-creation effect, nor attempted to monitor this in the progress reporting. An effective business alliance program should both make attempt to estimate such effects ex ante and ex post. Indirect job-creation can often be of greater significance as development outcome than direct due to numbers and externality factors.

8.4 Competitiveness and market distortions

Increased competiveness is a focal theme in the B2B Programme, also reflected as an evaluation criterion in the ToR. In the discussion of knowhow transfers and local company performance above, enhanced competitiveness was assumed to be an essential parameter. Hence, the B2B Programme has had a significant contribution to increased competitiveness on local firms or in newly created joint ventures. However, as discussed in the chapter on relevance, competitiveness is not a good indicator of the B2B as a developmental programme with the objective of poverty alleviation. As discussed earlier, subsidizing one enterprise risks causing market distortions by favouring one company over others in a competitive market.

The potential market distortions in the B2B Programme are apparent. For instance, the B2B support to one particular supplier of vanilla in Uganda has been criticized in international market reports. “Further aggravating the market in Uganda was an attempt by a major flavour manufacturer to stimulate the vanilla trade in Uganda by way of a well-intentioned (but ill-advised subsidy in our opinion) given by a Danish governmental organisation similar to USAID called Danida. Traditional curing practices were abandoned in favour of a more industrialized approach which negatively impacted both the quality and quantity of the Ugandan vanilla crop.”[54] Also local suppliers other than the company partnering with the Danish firm complained to the Danish embassy over unfair competition.

It can be assumed that market distortions of a lesser or greater extent might have taken place in other partnership projects which have gone to the Project phase, hence more significant subsidies have been delivered. Market distortions may well also have occurred in the Danish market, for example in the ICT sector where often smaller companies in highly competitive sub-markets could benefit from subsidies for the purpose of outsourcing and off shoring, reducing production cost.

As mentioned earlier, the B2B seems not to have been concerned with the market distortion aspects. The other Nordic business alliance programmes referred to earlier, all seem to adhere to EU’s de minimis rules established to reduce distortion effects on the EU market. Independent of whether the EU rules should apply to B2B or not, grant subsidies to individual partnerships of DKK 5 million (and if the Danish firm is seen as the main beneficiary, it could in theory be up to DKK 10-15 million as the same company may receive support for several B2B projects is contradictory to best practices in private sector development, especially as the companies are selected rather arbitrarily as compared to, for example, in challenge funds, where hundreds of companies compete for a few grants often smaller than the B2B grants.

8.5 Gender

In line with Danida policies, gender was placed high on the agenda in B2B. Overall, at top managerial and ownership positions, there are few women in the B2B portfolio both in the local enterprises and in the Danish firms. The Uganda study found women to be the formal owners of companies, but they were de facto fronts for their husbands who had official positions as a head of the central bank or as an ambassador, preventing them from formal ownership of businesses. The Bangladesh B2B portfolio has few – if any – female company owners, directors or entrepreneurs engaged on either side, which is an indication of prevailing discrimination of women, rather than a fault of the programme.

In the random sample, the Evaluation calculated that the female direct employment was about 25% of the total. The low share of women in the jobs created in the B2B companies has to a large extent to do with the type of businesses the collaborations concern, but it is also a reflection of the labour markets in most of the B2B countries. At the farm-level, and the indirect employment, women often play a more important role, hence the gender balance is better.

As noted earlier, the B2B projects have had limited influence over the gender distribution, but at least in some cases, both the Danish firms and the local have actively tried to engage women more strongly. Thus, the current gender balance is not due to lack of efforts by the partner companies. Rather, interviews with companies show a keen understanding of the importance of recruiting more women. Possibly, the embassies might also have down-played ‘industries’ with a high share of female labour such as crafts and garments. Thus, gender could play a greater role as discussed in the final chapter of the report.

8.6 Impact on Danish partner firms

The B2B Programme has an added objective in the sense that it was expected to provide benefits to Danish companies in terms of opening new markets and reducing cost through outsourcing, hence strengthen the Danish firms’ competitiveness in internationalisation. Whatever the motive, the overall conclusion as was discussed earlier is that the B2B has been an ineffective programme in providing substantial financial benefits to the Danish business sector at least in the short and medium term. There are a limited number of Danish companies in the B2B portfolio that can point to clear commercial returns on their engagement in B2B, but for a majority this is not the case. In fact, many Danish companies have lost financially on their involvement.

The case study in Uganda found no Danish firms, which had made a considerable gain from the programme in terms of developing a new commercially successful business. Rather, the majority of the Danish companies have ended up in a status quo situation comparing before and after in financial terms, and a few claimed the participation has caused losses to them. Some of the Danish firms have or are in the process of developing an emerging business, albeit at a small scale given the companies’ turnover. A major Danish medical equipment manufacturer, for example, with a global turnover of DKK 3.6 billion, exports worth about DKK 1 million per annum through its partner in Uganda, corresponding to 0.003% of its turnover.

Also the Bangladeshi case study found limited impact on the Danish companies. However, there were a couple in the fishing sector of which the engagement in Bangladesh (or more generally in Asia) was a part of a rescue strategy as the North Sea business had declined significantly. For most other Danish companies, the Bangladeshi experience did not meet expectations. Many ended up in tough partner disputes, and while the staff involved certainly learned from that, many JVs turned out to be more sources of frustrations than profits.

There are other benefits than financial returns for the Danish partners. Most companies, which lost money or are likely to lose, still described the collaboration as worthwhile in the sense of learning, personal development for the company owner, and similar ‘soft’ outcome. The B2B has opened up the interest among many Danish entrepreneurs, sometimes less as a commercial opportunity and more as a cultural experience, as a means of broadening ones outlook on the world, as a ‘life changing’ experience. From a development perspective, several entrepreneurs in micro or small Danish enterprises have to a certain extent become ‘emissaries for technology transfers and business skills’ which goes beyond their own commercial interests and has more to do with altruism and a desire to help less privileged countries. This is particularly the case with some of the Danish farmers engaged in B2B.

An important distinction can thus be made concerning the key motivation for the Danish companies to engage in B2B between what we call conventional business motives (such as opening up new markets, assure sources of supplies) versus altruistic, adventure-seeking, life changing motives. The latter category appears by no means small. For example, in the Uganda portfolio these motives accounted for at least a third of the collaborations. To judge from the case study, there is no evidence from the analysis to indicate that these entrepreneurs are achieving less result in terms of development impact, than Danish firms triggered by business motives. In fact, the altruistic/adventure/life changing partners tend to create valuable informal relationships with their partners, independent of B2B grants or commercial rewards.[55]

It is difficult to make up a ‘balance sheet’ for the B2B portfolio in financial losses versus returns for the Danish businesses. However, adding the soft values of experience, learning, cultural understanding and personal satisfaction, the Danish business community has gained more than it lost by engaging. In the longer term, the learning from B2B, might also lead to commercial benefits due to the Danish enterprises’ acquired knowhow and, overall, a broader global outlook also involving emerging markets.

In the random sample, the Evaluation tested the contextual factors also on the commercial performance of the Danish companies. It found that size mattered. The larger companies performed better, also when engaging with larger local firms. Surprisingly, international experience by the Danish company seems not be a determinant factor, albeit international experience by the local matters. Initial financial robustness of the Danish company is essential for the commercial outcome, but the financial robustness of the local company seems to be unimportant. Companies engaged in environmental technology perform better according to the sample, than in other sectors. For further details, see Annex E, Figures 34-44.

8.7 Direct investments

A common assumed result of a programme such as B2B is a leverage of donor funds in the sense of stimulating private investments by either the local company or the foreign. Investment is also one of the six Programme Indicators in B2B. The overall conclusion is that the leverage of Danish foreign direct investments in the B2B portfolio has been limited. First, the mandatory cost-sharing by the firms is low, with a higher grant share than in all other similar partnership programmes. (A common share tends to be 50%, also the share applied in the new DBP.) In most partnerships, the Danish company has not invested more than required (except, perhaps unpaid time inputs). Some projects have in their applications indicated substantial investments, such as for a new factory, but the financing of this is almost exclusively expected to be mobilised from other sources than own capital such as IFU loans or equity, or Danida’s mixed credit. In the great majority of such cases, no additional financing took place, either as IFU turned down the applications, or that the partners did not go through with the process.

In the Uganda case study this was the pattern. In a few projects based on JVs or ‘buy-ins’[56], the Danish companies have invested in equities in the JVs or in the local companies. In none of the cases, has the investment exceeded DKK 1 million. The estimate in the Uganda study is that the leverage in B2B is not more than 1:0.15, i.e. that DKK 100 million in grants have not mobilised more than DKK 15 million, excluding the mandatory investment estimated to a similar amount. Such a ratio can be compared to challenge funds and Public Private Partnerships which would find a leverage ratio of less than 1:1 unacceptable.

Also in Bangladesh, there have been limited direct investments in the B2B collaborations. The marine companies have set up production and service facilities, and there are additional investments in these. In South Africa a JV between a Danish flower producer and distributor and a South African protea flower producer has resulted in additional investments from each of the JV companies of approx. DKK 10 million besides a loan from IFU of EUR 1 million. This is, however, an atypical case: the B2Bs attribution to this project and its success is low as the partners knew each other on beforehand and would have set up the JV also without B2B support.

Several partnerships did not want to disclose how much they had paid in cash, and in some cases “in kind” contributions seems to dominate the share capital. Investments in ICT companies were generally limited, as these companies have less need of up-front investments. Indeed, funds for computers, room rent, and for a few months of working capital can get a company started. The capitalisation level of some of the failed JVs seems to have been in that range.

In short, the conclusion is that the B2B Programme has been ineffective as a leveraging mechanism in triggering FDI. The key reasons for this are:

  • The B2B attract many companies, which had not planned to invest or do business with the countries chosen. There is a certain opportunistic behaviour of the partners in the exploration of business. Their initial motivation to invest is therefore limited, at least until the business idea and partnership is well proven. The ‘risk’ of entering an unknown market with an unknown partner is covered by Danida, and many partnerships try to survive on that injected capital.
     
  • As mentioned earlier, a fall out of three out of four partnerships reduces the overall level of Danish investments. A large share of the portfolio comprises service industries such as ICT and consultancies, which inherently are low capital intensive.

8.8 Developmental impact

The Evaluation has used as a performance criteria ‘developmental impact’ to illustrate outcomes of partnerships that go beyond the companies through spread effects in society or in the market what might be defined as positive externalities. Such effects might be the introduction of new technologies, which spread throughout an industry, projects that solves market-wide bottlenecks in a sector, projects that have particular spread effects through indirect employment or creation of significant market outlets not existing before. Development impact did not require a lasting partnership. The Evaluation rated the developmental impact in a scale from 0 to 2.[57] The figure below shows the distribution in the random sample and the case countries.

Figure 18: Level of development impact in Uganda, Bangladesh and random sample

Figure 18

As noted above Uganda had a considerably better outcome than Bangladesh mainly due to the fact of good performance in the agro-food sector in Uganda. In the random sample, the Evaluation rated 10% of the projects having a considerable developmental impact. Of the eight projects with such a rating, six were in the agro-food sector, one each in environment and health. Assessing the company contextual parameters against developmental impact provides the following results:

Table 11: Relationship between various contextual factors and development impact of projects
Contextual factor Correlation with Developmental impact
Size of the Danish company. Large companies providing higher development impact, followed by micro enterprises.
Size of the local company. Some correlation with larger companies performing better.
Age of the Danish company. Older Danish companies associated with greater development impact.
Age of the local company. Good correlation with age of company (older better impact).
International experience of the Danish company. More experience, better results.
International experience of the local company. Companies with considerable experience provide better development impact.
Financial robustness of the Danish company. No clear correlation.
Financial robustness of the local company. No clear correlation.
Business motive of the Danish company in B2B (market extension, outsourcing, in-sourcing of material). In-sourcing of raw material best correlation.
Type of partnerships (agent; buy/sell; joint venture; technical assistance Buy/sell best correlation with development impact
Business sector (agro & food, ICT, environment technology and other) Agro-food and environment technology best correlation with development impact

The correlation concerning developmental impact differs somewhat from the other parameters (sustained partnerships, transfer of knowhow, etc.) in the sense that the financial robustness appears not to play a role. Also noteworthy is the fact that the Danish micro enterprises have played a significant role in creating developmental value. It appears that conventional trade relation between the partners has a stronger chance for good development impact than other forms. For details, see Annex E Figures 45-55. In terms of relationship with the country contextual factors, no significant correlation was found with any of the parameters.

8.9 Poverty reduction and economic growth

The theory behind the B2B Programme is that creation of employment and increased competitiveness of local firms will contribute to economic growth and hence to reduce poverty in Danida’s partner countries. Growth, in its turn, is a major determinant of poverty reduction. Does the causality chain hold in reality? While a possible 9,000-10,000 new jobs is important, it obviously has little bearing in the B2B countries with an annual growth of the joint labour market of about 10 million (excluding China).[58]

Even if indirect employment is considered, the B2B is a drop in the ocean in terms of required job creation, and furthermore, it is an expensive drop limiting scaling up opportunities by the companies or by Danida. Given the limited FDI triggered by B2B and the smallness of the companies, their contribution to economic growth is at best marginal, especially in countries receiving considerable amounts of FDI such as China, Indonesia, Vietnam, Egypt and South Africa. In macro terms, B2B is not a programme reducing poverty in any noticeable way.

While not an effective poverty reduction programme in macro terms, on the other hand certain poverty impact has taken place locally. Throughout the report examples are given of such partnerships, which in most cases concern market changes in agro-businesses. The reasons for this are several: agro-businesses tend to have stronger links to the rest of the ‘economy of the poor’ than in many other sectors, especially in the African LDCs where 70-80% of the population is engaged in agriculture. Agro-businesses often depend on supply of raw materials, which potentially can engage a large number of persons, as cotton farmers, coffee producers or growers of fruits and vegetables. According to the World Bank 75% of the poor are living in rural areas, and thus are dependent on primary production or occupations linked to agriculture. If the B2B Programme contributes to better functioning of agricultural markets, the spin-off effects on employment, productivity and poverty can be substantial.

One of the strengths in Danish business alliance programmes is that Denmark has a strong and diversified agriculture and food sector with relevant knowledge and market links for developing countries with labour markets still dominated by agriculture. Denmark is in the donor community unique in this sense, hence has a strong comparative advantage to most other donors. It should, however, be noted that the commercial performance of the Danish partners in agro & food according to the random sample compares negatively to, for example, environmental technologies. The reason for this has not been investigated by the Evaluation.


[50] In the random sample, an estimated job creation which can be associated with the B2B Programme was calculated to about 1,800-1,900. Assuming a similar rate for the whole portfolio, the incremental number of jobs would be 9,000-10,000. Clearly such extrapolations must be used with considerable caution.

[51] KPMG (2012) Evaluation of Finnpartnership.

[52] The Evaluation estimated that some 70 successful projects that participated in MMP in Sri Lanka and South Africa jointly had created about 2,000 jobs at the programme cost of about NOK 60 million. It can be assumed that most of these projects also had utilised Norad’s application based support at an average of NOK 0.3 million. This would imply a cost per job of NOK 40,000. See further Lindahl et al (2010) Evaluation of Norwegian Business-related Assistance, Main report. Norad Evaluation series 3/2010.

[53] Quote by Percy Barnevik, creator of the philanthropic programme Hand-in-Hand which supposedly has created about 1 million jobs mainly in India and for women.

[54] http://www.austhachcanada.com/vanilla-market-report-no-41-december-2012/

[55] In Bangladesh, there appears not to have been any such motive for engagement, possibly due to sector focus. No analysis of this was carried out in the random sample.

[56] Buy-in refers to a partnership in which the Danish partner buys a share of the local, hence create a joint venture.

[57] The case country studies used a d scale of 0-5 due to the fact that projects could be studied more in detail and also impact assessed in a country and sector context. For the Uganda and Bangladesh projects included in the random sample, the following transformation was used: 0 (none) – same; 1-2 in random sample defined as 1 (some), and 3-5 in random sample defined as 2 (considerable).

[58] Calculated as follows: total population 900 million, a labour force of 45%, and a growth rate of 2.5%.

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