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10 Answering the Evaluation Questions and Lessons Learned

10.1 Answering the evaluation questions

Below, the findings and answers relative to the nine Evaluation Questions are summarised:

  1. To what extent has the B2B Programme been consistent with private sector development requirements in the partner countries and with Danida’s private sector policies?

The B2B has been partly consistent with the private sector development requirements in the partner countries and with Danida’s private sector policies. B2B is relevant as a mechanism for transfer of knowhow in broad terms and in creating partnerships with Danish enterprises in selected countries. The B2B is of less relevance as a mechanism for stimulating economic growth and addressing poverty except in selected cases, which overall are few. As a means of addressing broader constraints in the business environment in the partner countries such as access to finance, infrastructure bottlenecks and corruption, the B2B is generally not a relevant instrument. B2B was its design not relevant for countries in French-speaking West Africa due to its inability to attract Danish firms to engage, which may also be the case for DBP.

  1. How efficiently were the B2B Programme instruments used in creating partnerships and how did external factors influence the results?

B2B was an efficient programme in stimulating Danish companies to seek partnerships in some of the eligible countries and for the creation of partnerships, but less so in creating sustained and commercially viable partnerships beyond the B2B support period. The reason for good efficiency in the earlier stages was a combination of liberal subsidies and a proactive promotion of the programme by DGG, the embassies, HVR and DI, as well as consultants in most of the countries. The lower efficiency in creating sustained partnerships can mainly be ascribed to the high grant element in the Project phase in combination with a weak due diligence of proposals by the embassies. Determinants for how and where Danish companies engaged were factors such as the quality of the business environment, the overall flows of FDI and where Danish firms already are engaged in business. Contextual factors such as company size, international experience and financial robustness had certain relevance for the results, although results were also related to dimensions such as trust between the partners and the motivation for joining the programme.

The partnerships have dealt with Corporate Social Responsibility (CSR) quite differently. Some partners defined internal CSR as improving the working environment for the employees, which is an obligation according to most countries’ labour laws. Other partnerships have provided socio-economic benefits to their employees that are in addition to improved working environment. As regards the external CSR, some partnerships did not considered external CSR; other partnerships mainly focussed their CSR activities on the external environment resulting in better protection of natural resource; and some have conceived interventions that constitute a strategic element of their business vision and concept. For some Danish partners the main aim was the business perspective, whereas others also appreciated and accepted the development perspective of the B2B Programme and took great care to comply with this through CSR interventions.

Additionality has mainly been created in the following ways: 1) creation of partnerships, most of which would not have been established without the B2B support; 2) engagement in countries which generally were characterised by weak business environment and low competitiveness; 3) transfer of appropriate technology which generally increased the local companies performance; and 4) emphasis on CSR, which in a number of cases provided socio-economic benefits, which would not have been attained if the focus had been strictly on the business perspective.

  1. To what extent did the management of the B2B Programme provide an efficient framework for: delivery of services to companies, utilisation of resources, and accounting for results?

The B2B was efficient in delivering matchmaking and stimulating initial partnerships and transfer of knowhow due to active work by the embassies, Danida, HVR and DI, combined with the liberal subsidies. Embassies were in most cases service oriented and flexible. The overall resource utilisation has not been efficient in the view of the Evaluation primarily due to ‘over-financing’ of business alliances. The accounting for results was largely a failure due to an overly ambitious results-management system in design where the application and appraisal absorbed most of the resources by the companies and embassies, while the monitoring of projects had considerable weaknesses, especially in reporting on overall programme performance and results.

  1. How has the B2B Programme led to knowledge and technology transfer in the local partner company and what were the resulting short-term outcomes?

Knowhow transfer in a broad sense is one of the strengths of the B2B due to the engagement of over 400 Danish enterprises delivering hands-on and practical business knowhow. This transfer has led to some significant results in upgrading of skills in the local companies and hence their performance. There are some outstanding cases of market and technology development with spin-off effects beyond the companies. Technology transfer was mainly apparent in the Project phase, but not lacking in the Pilot only phase. For large Danish companies, companies with international experience and financial robust companies there was a higher share of successful technology transfer.

  1. How has the B2B Programme led to improved conditions for employees and the wider population and what were the resulting short-term outcomes?

The B2B has, in the Evaluation’s best estimate, created some 9,000-10,000 jobs and a substantial number of indirect jobs up-stream and downstream and as temporary employment. Overall, there has been an upgrading of the quality of occupational health and safety and working conditions in many local companies, including JVs. The impact on the wider population has been limited, except for some successful projects with significant spread effects of new sources of income, especially in the agriculture sector.

  1. What long-term effects have the B2B Programme had on the local partner companies and specific business sectors, and how have these influenced local communities, and the national enabling environment?

There is no impact of B2B on the national enabling environment, but in some countries and in some sectors, B2B has had a positive impact in the sense of systemic effects on addressing market constraints especially in agro-businesses. Overall, there is a good impact in strengthening some of the local partner companies in technology, management practices and international market knowhow.

  1. What long-term effects have the B2B Programme had on the Danish partner companies?

As an aggregate, the commercial impact on the Danish partner firms in terms of increased turnover and/or profit is limited, and there are even cases of negative commercial outfall of the B2B engagements. There are some exceptions of very positive development, for example in the ICT sector. Overall, a major benefit of the B2B Programme is broad learning in Danish SMEs in terms of operating on new markets and in new cultures. Danish companies generally report satisfaction of having participated in the B2B, even when the financial return was negative.

  1. To what extent and how has the B2B Programme contributed to poverty reduction by creating growth and employment in Danida partner countries?

In macro terms the contribution to economic growth, employment and poverty reduction is negligible given the sheer size of the issues and the overall limited results of the programme. Through knowhow transfers and through a selected number of very successful projects there are pockets of impact on regional economies, rural communities and in selected sectors. These projects are not necessarily due to sustained partnerships, but successful local company development. The success stories identified by the Evaluation in terms of poverty impact are mainly in agro-businesses due to the fact that the majority of poor people in rural areas to a large extent derive their livelihood from such ventures.

  1. To what extent have the benefits derived from the B2B Programme continued after project completion?

The Evaluation estimates that one of 12 Danish companies that engaged in the programme at the Contact phase, one of four in the Pilot phase, and about four out of 10 in the Project phase will continue in a sustained partnership beyond the B2B. The commercial viability of the latter varies, but there a good number of successful partnerships based on joint ventures or other forms of business relationships. The knowhow transfer which has taken place with or without lasting partnerships is likely to have a high degree of sustainability due to the nature of this transfer in direct training by and exposure to Danish partner firms in the same industry.

10.2 Lessons learned from past evaluations and reviews

In the table below, the Evaluation summarises its findings in relation to some of the key critical issues that have been brought up in other evaluations of Danida’s business alliance programmes that the team has considered most relevant in the context of the Evaluation of the B2B Programme. Reference is made to Table 2 in Chapter 2, which also provides the sources. These findings are both an indication of the learning in Danida and identification of problems still existing.

Table 12: Learning from past evaluations?
Critical points in previous evaluations Findings in the 2014 Evaluation of B2B

The link between the business partnership programmes and poverty reduction is unclear and Danida’s cross-cutting issues do not have a central role in the programmes (maybe except environment).

This critique is still valid even if the linkage now is explicit in formulation of the objective. The problem is rather the causality between B2B interventions and the overriding objective and the mixing of two incoherent objectives.

In terms of cross-cutting issue, especiallyenvironment is well handled in B2B.

There is little synergy between Danida’s business partnership programmes and other sector programmes, even in countries that are implementing sector-wide business programmes. This limits the possible long-term impact of the partnerships.

The critique is still valid, although in some countries there has been an effort to create linkages as in Uganda and Kenya.

The one-size-fits-all approach of the partnership programmes (non-country specific set of guidelines) makes the programme less relevant in the local context.

This critique is still valid though the embassies have exercised some kind of flexibility in their management of the programme.

There is limited sharing of experiences between companies both in partner countries and in Denmark, which hampers internal learning.

There are efforts to address this for example in Kenya, but they are not systematic.

There is a narrow focus on individual business cases (matchmaking) and a lack of focus on the enabling environment in which the local businesses operate. This influences the prospects for sustainability of results and hence also broader impact of the programme.

This critique is still valid. It is appreciated that a limited number of business cases cannot by themselves influence the business environment.

Longer preparation period and more assistance in the first phase could yield better results.

The suggestion is partly valid, although the B2B has an extensive preparation period and provides support.

Technology transfer has been well perceived, but the tying of the aid to Danish companies might not have been the most appropriate way to offer this type of support as there are often cheaper options regionally and in competitive situations.

The point is valid. However, tying is an integral element of the Danida business alliance programme. The tying only concerns the Danish partner and is not related to equipment and personnel. The Evaluation assumes that questioning the tying would not be politically acceptable. In addition, all Nordic business alliance programmes practice such tying in spite of political statements of untied aid.

Additionality is very difficult to assess and measure. Analysis and documentation of additionality needs more attention.

The B2B has made considerable efforts to address additionality in applications and appraisals.

Stronger result-orientation in the programmes and more relevant indicators in the monitoring system (follow-up after the official partnership has ended). Results should be both quantifiable and qualitative.

There have been significant efforts to establish this in B2B even to the extent that the system has become unmanageable and hence does not provide reliable data.

Administration of the programmes should be simplified and less bureaucratic at the project level as well as the programme level.

The B2B continues to be bureaucratic programme both at project and programme levels. Unfortunately, the new DBP has added to the bureaucracy.

10.3 Main features of the Danida Business Partnerships facility

In 2011, the Danida Business Partnerships (DBP) replaced both the Innovative Partnerships for Development (IDP) and the B2B Programme in an effort to simplify and streamline Danida’s support to business development with the aim of contributing to s ustainable development and inclusive green growth in developing countries.

The main features of the DBP are presented below.[61] The DBP continues to focus on transfer of knowhow and technology from Danish partners to local partners in order to strengthen competitiveness and CSR in developing countries.

The overall objective of DBP is to: fight poverty; facilitate green growth; and promote better living and working conditions. The immediate objective is to: create jobs; increase competitiveness; and promote CSR for the benefit of employees, their families, the local community and the society at large. Promotion of CSR means that partnerships are required to integrate human rights, labour rights, environment, and anti corruption concerns into the business strategy and operations. Various business cases qualify for support, e.g. increase of productivity, improvement of supply chain, promotion of energy efficiency, upgrading of the workforce qualifications, innovative solutions to social and environmental challenges, etc.

DBP offers support to the identification of a suitable partner, development of a business case into a business plan, and implementation of the business plan. The DBP comprises three phases covering a total of four to five years – see Table 9. The DBP Facility can be applied in Danida priority countries where the economic and political context allows for commercial operations. The DBP is managed by the embassies in a similar fashion as B2B.

Table 9: DBP phases
  Identification phase Preparation phase Implementation phase

Purpose.

Identification of a partner and elaboration of the business idea.

Development of a business plan – including integration of CSR.

Implementation of business plan and achievement of expected development objectives on job creation and CSR.

Support level.

75% support up to a max. of DKK 100,000

75% support up to a max. of DKK 750,000*

50% support up to a max. of DKK 5 million*

Examples of activities.

Country visits.

Background analysis and studies.

Testing of products/procedures.

Training/ technical assistance.

CSR improvements.

Establishment costs.

Procurement ofequipment.

Timeframe.

Six months.

Six months.

Three to four years.

*Including support received in the previous phase

Partnerships can be structured in various ways depending on the business case. One type of partnership is the traditional business-to-business cooperation between two companies, but may also involve multiple partners. Creation of joint ventures is also in DBP considered a positive factor that contributes to fostering long-term commitments. Partnerships are encouraged to apply for joint support or coordinate with, e.g. Danida Business Finance, The Investment Fund for Developing Countries (IFU), or other financial facilities.

Two categories of main partners are supported – the Danish main partner and the local main partner. The main Danish partner must be a commercially registered company – and should in principle have a minimum of five fulltime employees. The local main partner can be a company/business, a farmer, a cooperative, a civil society, a university/ research institute, or a parastatal/public authority. Main partner may choose to subcontract additional partners if this is seen as an advantage for the implementation of the business case. Prior to the application for DBP support, all companies and organisations must pass an initial screening. The screening is undertaken by the embassy with assistance from the auditor appointed to the programme by Danida, who also audits the partnership accounts.

10.4 Lessons learned from the B2B Evaluation and perspectives

This section contains the Evaluation’s lessons learned and perspectives on how partnerships could become a more relevant, efficient and effective, and with a stronger impact than today. Few of the weaknesses in B2B have been dealt with in the new DBP facility in 2011, and unfortunately others have been added, for example the degree of bureaucracy in the administration of the programme.

Balancing the objectives

There is a risk that the partnership objective overshadows the overriding poverty reduction objective of B2B. A better balance is required where partnership is seen as a means, not an end in itself. Thus, the potential poverty impact should be in focus, governing the design, the implementation and the promotion of a new programme. This would impact on the due diligence process as elaborated below. Business partnership programmes often deal with strong political constituencies in terms of donor countries’ business sector and their interest organisations; hence the risk that their interests dominate is high, while the interest groups representing the poor in developing countries are weak and often voiceless. It takes a special effort by a donor agency to balance these interests. In the judgement of the Evaluation, the DBP is not addressing this weakness in B2B.

Development impact

Another lesson from the Evaluation is that the B2B Programme paid too little attention to the potential systemic impact of projects supported, both positive and the negative factors commonly associated with micro level business support. It is possible ex ante to make a judgment what potential systemic impact (both positive and negative) a project might have and screen out those that have a potential negative impact and also those that are unlikely to have any positive impact in order to increase the potential value for donor money. This is primarily a task for the programme management as elaborated below. In the judgement of the Evaluation, the DBP is not addressing this weakness in B2B.

Making positive systemic impact explicit

Positive systemic impact has to do with projects that are addressing market constraints of different nature, for example embedded in problems of value chains, logistic systems, technology deficiencies, ineffective competition, and so on. It might be reflected in projects introducing services and products previously not available, or projects addressing specific issues in environment. It might be projects located in poor and economically neglected regions. For example, if a future business alliance programme should be relevant for addressing key business constraints as identified by WEF or the World Bank, such as finance or infrastructure, the programme must be tailored to Danish financial institutions or larger infrastructure players, e.g. energy, transport, etc. The systemic impact approach might be reflected in the promotion of the programme, as well as in the application and appraisal process, and in the monitoring of results. In the judgement of the Evaluation, the DBP is not addressing this weakness in B2B.

Making potential negative impact explicit

Best practices in private sector development pay considerable attention to the potential distortion effects that might occur in grant support to individual firms operating in competitive markets. Some analysts argue that donors should all together refrain from such micro support and instead focus on business environments and making markets work for the poor. A minimum rule in business alliance must, nevertheless, be that the potential distortion effects should be made explicit ex ante both by asking relevant questions in the application template and in the due diligence by the programme management. When they are likely to occur, mitigation should take place or donors should refrain from providing support. A lesson from the B2B Programme is that the programme has been negligent in addressing such potential effects both in the design (e.g. application template and appraisal template) and in implementation. In the judgement of the Evaluation, the DBP is not addressing this weakness in B2B.

Other negative impact might occur besides market distortions. The obvious case is environmental effects, which already are well integrated in the programme. But negative impact on limited natural resources tend not to be considered in B2B, nor the impact a project might have on displacement of poor people engaged in traditional activities in sectors in which modern techniques are introduced.

Utilisation of Denmark’s unique competence

A lesson in the B2B is that agro-businesses attract Danish companies and that agro-business projects dominate amongst those that have significant development impact beyond the local company. Given that poor people in Danida’s priority countries predominately are dependent on agriculture, Denmark is in a favourable position from a development cooperation point of view, by having a dynamic and diversified agro-business sector. Also Denmark’s competence in environmental technologies is strong, and increasingly relevant for poor countries and people. The focus on these unique competences can be strengthened in a business alliance programme, for example in the promotion of the programme to different categories of business in Denmark. The targeting can be broadened in terms of who can participate, also including institutions within priority sectors. The business profiles can more strongly have a focus on these sectors, be more concerned with market failures and constraints.

Synergies with country programmes

A link with sector programmes, which addresses market failures from a business environment point of view, can create dynamic synergies. There is a mixed experience in the B2B to what extent projects have been linked to on-going Danida sector programmes in the targeted countries. Some embassies have tried to create linkages or at least create clusters of B2B projects in certain sectors. The conclusion from previous evaluations is that the linkages overall are weak and synergies not apparent, seems also to hold true for B2B. There are merits to foster stronger linkages in a new business alliance programme, especially in thematic areas where a sufficient number of partnerships can be mobilized to support Danida’s development engagements under a country programme. In the judgement of the Evaluation, the DBP is not addressing this weakness in B2B.

Forms of partnership

The B2B Programme was rigid in what type of partnerships that were accepted in some countries and had an overall bias for joint ventures. A lesson in the Evaluation is that this rigidness was counterproductive to promote partnerships and common business. JVs are the most complex form of business partnerships with high risk of failure. In a globalised world, business alliances can take many forms and it is not given than one form is better from a development perspective than the other. It is essential that the business alliance programme has a considerable flexibility to allow businesses to form whatever relationship they find useful, formal or informal. The DBP has to some extent taken that lesson into account with less focus on JV creation.

New forms of engagement

In economic theory there is nothing to prove that formal partnerships built on joint ownership in businesses are more effective in stimulating economic growth, private sector development and poverty alleviation than other forms of engagement, such as the establishment of fully owned subsidiaries. The transfer of knowhow and technology, and overall economic modernisation, can equally well be facilitated by fully owned subsidiaries of Danish companies. The concept of partnership might therefore be replaced by commercial engagement in whatever form the investor thinks is useful. Around successful FDIs, clusters of local companies can emerge as sub-contractors, suppliers or competitors. The other Nordic business alliance programmes have a more liberal approach in this sense. The DBP is similar to B2B, albeit seemingly more flexible in what types of local partners that can be involved.

Exclusion of micro enterprises

Although large Danish partner companies generally show better correlation with the outcome parameters used in the Evaluation, a lesson is that also the micro enterprises often have been quite effective in providing development impact and knowhow transfers in B2B. A future business alliance programme should not exclude the very smallest companies. Of the number of Danish enterprises, about 70% have less than five employees[62]. A lesson is that a future business alliance programme should be broad-based and not excluding enterprises due to size, and also actively promote the engagement of different types of enterprises keeping in mind which type best can address poverty issues in the targeted countries. The DBP has introduced a weakness in this respect according to the Evaluation by a restriction in terms of size.

A two window model?

A key conclusion of the Evaluation of B2B is that there is a declining return on Danida’s funds from the initial matchmaking to the prolonged support in the Project phase. Best practices and economic theory would argue that public subsidies should be applied when there are high transaction costs to enterprises due to uncertainty which make them refrain to explore business which has positive effect on society. Danida might consider a two window approach rather the B2B’s three phases: a matchmaking mechanism similar to B2B’s Contact phase, and a second window similar to the Pilot, but stretched over a longer period of two to three years and with a slightly higher grant, hence eliminating the third Project phase. If partners have not found a common basis after two to three years for a commercial venture, they are unlikely to find that after more elaborate support. The knowhow transfer and mutual learning is also likely to have a rapidly diminishing return after a period of two to three years. The DBP follows the same approach as B2B in terms of three windows.

The grant levels

The Evaluation has concluded that a subsidy level of 90% risks having effects of unwarranted incentives, i.e. that some businesses may base their decisions to continue partnerships less on the underlying commercial feasibility of a business, and more on a desire to access further subsidies. Danida has already changed the support level in DBP to 50% in the Implementation phase (75% in the earlier phases). It is clear that some highly relevant partnerships in the B2B would not have taken place if the subsidy level had been 50%, for example in the agriculture sector where Danish farmers engaged in B2B sometimes more of altruistic motives than commercial. Also some other more ‘technical assistance’ forms of collaborations which never intended a long-term partnership, but which provided valuable services, would not have been taken place at the 50% level. An alternative to a blanket subsidy level might be having a varying scale of subsidy, for example, from 30-80%, and dependent on countries (higher rate for ‘difficult’ countries). This could considerably improve the adaptability of the programme to country contexts and this would also eliminate the one-size-fits-all model.

Adhering to EU’s de minimis rules?

The B2B Programme has not adhered to EU’s de minimis rules of maximum subsidies of EUR 200,000 over three years to commercial entities in the common market, nor is that level introduced in DBP. [63] As a Danish company can be engaged in several projects in parallel, the total subsidy level can exceed the maximum in de minimis by several factors. In line with the argument above that there was declining returns on the Danida funds in the Project phase Danida might consider the level of support granted to each partnership. The benefits would also be that the risk of market distortions is reduced.

Take country relevance into account

A lesson from the Evaluation is that engagement of the Danish firms varied considerably between the different countries. In order to make a business alliance programme more relevant and effective, it should target countries where the programme can make a difference, i.e. countries, which in relative terms get smaller levels of foreign direct investments in general and Danish FDI specifically. In this way, the additionality of the programme is strengthened especially as the Evaluation indicates that the performance of projects in ‘difficult business environments’ is not worse than in better environments. B2B might have been successful in creating a large number of partnerships in for example Vietnam, but in the context of the massive inflow of Danish and other FDI to the country, the relative impact of B2B becomes negligible. Targeting might be done by stratified subsidy levels tailored to the country conditions with considerably higher grant rates for ‘’needed’ countries than those already attracting major inflow of investments as suggested above. Countries like Vietnam might be open for matchmaking support, while the support for companies willing to engage in West Africa might be provided with a much more elaborate form of support reducing risks for Danish companies, small as well as large, to initiate business in these nations. This can also be achieved by targeted promotional and marketing efforts. In the B2B Programme, the marketing efforts were focussed on the countries that could be assumed attracted interest, rather than the reverse.

Diffusion of knowhow and good models in the countries

Learning from the Evaluation is that the B2B in its design and implementation was highly micro-oriented, i.e. focussing on what happened to specific commercial entities. There were no mechanisms to diffuse knowhow and learning from projects to a sector or the business community at large in the targeted countries. Such spin-offs when they happened were largely the results of the work of enthusiastic entrepreneurs and companies. A new business alliance programme might more systematically ensure diffusion of learning and good models. This could be done in arranging sector wide events or broader business events, using successful models as cases. This can be facilitated by linking to local business associations such as chambers of commerce or industrial associations, as well as the local institutions corresponding to the Danish business federations. Diffusion of good models might be a part of the grant conditions. In the judgement of the Evaluation, the DBP is not addressing this weakness in B2B.

Learning between companies and training

While B2B had establish some mechanisms at embassy level for increased interaction between companies engaged in the programme for mutual learning, this can be strengthened, e.g. by establishing networks based on sector. A demand from many companies interviewed in the Evaluation, both Danish and locals, was also that there should be some form of introduction or mentor programme for newcomers to learn from experienced companies. The Danish business associations could become more engaged in learning and experience sharing in Denmark. It has been suggested to establish an information-sharing network in each country to assist the business partnerships to relate to the prevailing business environment. Such networks have been attempted established in a few countries. The proposed interactive learning element is relevant for both local and Danish companies. The business alliance programme might also arrange formal training for both Danish and local entrepreneurs prior to start of collaboration such as issues in cultural differences. Such training could, for example, be arranged by the embassies.

The gender perspective

The gender profile of a new business alliance programme could be strengthened through the marketing of the programme to sectors with a higher profile of women, and also with the option to specifically aim at female entrepreneurs both in Denmark and locally. Addressing specific constraints in employment for women in the programme is an option, possibly also having a special window of financing for measures to address such constraints. Promoting success cases in employment of women in non-traditional sectors and highlighting successful female entrepreneurs or business leaders in the programme is another means of lifting the gender issue.

The results-based management system

The deficiencies in the results-based management system applied in the B2B Programme have been discussed at length in this report. The concrete suggestions for a more effective and simpler system are as follows:

  • Simplify the application forms and focus on the essentials both to appraise them and to use them as a baseline for monitoring. An application should not be more than 8-10 pages, be of a nature which does not necessarily require the assistance of a consultant to fill in, and be manageable both for Danida and the companies. The focus should be on the viability of the business, idea and its potential development impact.
     
  • Deepen the appraisal and focus on the essentials, not least the potential development impact of the project and potential distortion effects and other negative impacts. Danida might consider separating the due diligence from the management in order to have an objective assessment of the strengths and weaknesses of a project. This might be done by delegating the appraisal process to an external expert in the business sector in questions, or by setting up a simple investment committee.
     
  • Simplify the progress reporting and separate this from request for reimbursement. Reporting every half year, or even once yearly, should be sufficient for monitoring purposes. Use a template for process reporting and assure it is handled electronically.
     
  • Introduce an embassy progress reporting on the portfolio, which in a simple and understandable way for outsiders and embassy management shows progress, especially on emerging outcome, rather than outputs of all kinds of activities.
     
  • Create a simple overall programme reporting using a few key results indicators and assure it is accurate.
     
  • Make the completion reporting meaningful, both for accountability purposes and learning. Build this report in a follow-up of the baselines and targets, and an analysis of reasons for failure or success.

Reduce bureaucracy

The suggested reformulation of the results-based management system above would be a means of reducing bureaucracy and make the system more business friendly. The DBP has not addressed this weakness of B2B, but rather gone the opposite way according to interviews with companies, HVR and DI.

Outsourcing the business alliance?

A lesson on the Evaluation is that B2B at embassy level tends to be seen as demanding on staff resources for, in relative terms to other development programmes, limited grant funds, and also highly demanding on reporting. A means of addressing this might be outsourcing of the programme as the other Nordic programmes have done. This would make Danida’s supervision easier and clearer, and allow a stronger focus on results rather than day-to-day administration.

Closer links to IFU

Engaging IFU at an earlier stage of the business alliance programme could help in bridging the gap between the subsidy programme and regular commercial financing. One objective in the design of B2B was to achieve a stronger link between the business alliance programme and the Danish DFI than past programmes had shown. Another option is outsourcing the new programme to IFU for implementation in a similar way has taken place in both Sweden and Finland.[64] A number of functions have already been delegated to IFU and further delegation may need overall policy and strategic considerations.[65]

Create a missing middle facility

In order to bridge the gap between Danida’s business alliance programme and commercial funding with a developmental perspective provided for example by IFU, Danida might consider initiating a ‘missing middle’ programme providing partly subsidised credits (for example, covering the administrative costs). Such a programme would scale up successful ventures more rapidly. Preferably it should be open also to local companies.

10.5 The Theory of Change

The Theory of Change was reconstructed based on the B2B Programme’s objectives, and presented the intended/warranted results of the B2B development interventions at the conceptual stage. Being a development programme, such impact is intended to be positive. However, given the level of investments in each of the B2B Programme countries, the macro-level impact on poverty reduction and in promoting economic growth and social development has been minimal and was thus left out of the analysis. The thrust of the Theory of Change as regards long-term outcomes and impacts is therefore on the local level. The results of the B2B Programme partnerships would not be either all positive or all negative for the programme as a whole, as there is a great variation in performance of the partnerships. The overall result will be between the two extremes – as some collaborations would have positive impact, some mixed, and some negative. For further details see Annex D.

The B2B partnerships succeeded in transferring new technology and knowledge due to the substantial interaction between partners during the Pilot and Project phases. In many cases this led to increased performance of the local company in terms of turnover and productivity, but only to a limited increase in employment. Generally, the performance forecasts were optimistic and were seldom achieved fully. Significant improvements in the internal as well as the external environment were achieved, as Danish companies generally have this high on the agenda in their domestic manufacturing and service delivery.

The partnerships have dealt with CSR quite differently. Some partners have defined internal CSR as improving the working environment for the employees, which is an obligation according to most countries’ labour laws. Other partnerships have provided socio-economic benefits to their employees that are in addition to improved working environment. As regards the external CSR, some partnerships did not consider external CSR; other partnerships mainly focussed their CSR activities on the external environment resulting in better protection of natural resource; and some have conceived interventions that constitute a strategic element of their business vision and concept. CSR is a relatively new concept for most local partners, which was also the case for some of the Danish partners. For some Danish partners the main aim was the business perspective, whereas others also appreciated and accepted the development perspective of the B2B Programme and took great care to comply with this through CSR interventions.

A number of pilot collaborations were ‘de facto’ projects having the potential to generate long-term outcomes. The positive outcomes of pilot and project collaborations enhanced the performance of the local companies in terms of work conditions, quality of services and products, and improved resource efficiency – all of which strengthened their competitive position. However, only in a few cases – mostly agro-based companies – were there substantial employment spill over effects that benefitted the local community.

The B2B supported local companies did not adequately generate employment and income that enabled the interventions to raise the level of welfare significantly in the local communities in which they were located, except in a few cases. Correspondingly, the contribution to poverty reduction in the local communities has not been as significant as warranted. Despite the significant amount of transfer of knowhow and technology to the local companies, it appears that the diffusion of technological achievement has only taken place to a limited extent. A higher rate of diffusion of technology, management systems, CSR interventions, etc. would have added to the programme’s overall impact.

In monetary terms, the benefits have generally not been substantial for the Danish companies. A number of the Danish companies also had an altruistic perspective in supporting the local company. But the experience and lessons learned have been valued, as these provided insights on how best to expand their markets in developing countries.


[61] Source: Danida. 2013. Guidelines and Conditions for Support to Danida Business Partnerships.

[62] Source: HVR 2014.

[63] The EC has adopted revised Regulation on small aids amounts that falls outside the scope of EU state aid control because they are deemed to have no impact on competition and trade in the internal market – Commission Regulation (EU) No 1407/2013 of December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid.

[64] The legal aspect of this has not been analysed in the Evaluation, for example if Danish procurement law will require a tendering process in a potential outsourcing of B2B.

[65] The Danish Trade and Development Minister announced in June 2014 the launch of an Agriculture Investment Fund dedicated to commercial investment in the farming sector in developing countries, especially in Africa. The fund will initially consist of DKK 40 million. The goal is for the Danish pension funds and private funds to contribute to the agriculture fund so that the total investment involving Danish companies will reach up to DKK 800-900 million. The fund will be included in the Government’s new export strategy and will be administered by IFU. In early 2014 the Government launched a Climate Investment Fund with an injection of DKK 275 million, also managed by IFU. Finally, a SME Facility has been approved having an annual budget allocation of DKK 60 million – also to be managed by IFU.

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This page forms part of the publication "Evaluation of Danida Business-to-Business Programme 2006-2011 – Evaluation 2014.05" as chapter 10 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