“Everyone should benefit from economic growth.”

Heinrich M. Lanz, President of the Board of Trustees, and Samuel Bon, CEO and Executive Director, look back on 2016 – a year when Swisscontact reviewed its strategy and political debates on international development cooperation took place in Switzerland.

In 2016, the Swiss parliament conducted intense debate on the budget for international development cooperation. How did you experience these discussions?
Heinrich M. Lanz: Various commissions submitted requests for massive budget cuts, although the Federal Council’s budget proposal had already been cut by one billion Swiss francs. Thus, international development cooperation shoulders one fourth of the stabilisation programme burden, despite only constituting four percent of the total federal budget. Bilateral technical cooperation, which is also Swisscontact’s core activity, is most strongly affected by these cuts. This development is cause for concern. Fortunately, Swiss parliament finally complied with the Federal Council's proposal, but we cannot rule out further painful budget cuts in the future.

Migration is currently an important issue in Switzerland. Do you see international development cooperation as a way to deal with the refugee crisis?
Lanz: Long-term investment in professional education that is essentially grounded in prac- tice and the market, can help relieve some of the pressures to migrate. However, it is illusory to believe that this can be achieved in a three-year vocational education project. There would also have to be a stable economic, social, and legal environment for the investments in professional training to be effective. Such processes cannot be implemented overnight. We must be clear: we’re talking about a time horizon of one to two generations.

Swisscontact supports the private sector in developing countries in order to help alleviate poverty. Where have these efforts been particularly successful in 2016?
Samuel Bon: I’d like to highlight a skills development project in Uganda and Tanzania that we have been implementing for the last five years. In Uganda, it is difficult to get a full-time job with a vocational education, because the economy is growing only sluggishly and too few new jobs are being created. Swisscontact therefore provides start-up kits to young adults after their training and guides them along their path to independence. Some 3,800 youths have benefited from this over the last five years. This model has convinced The MasterCard Foundation enough to extend the project for a further five years. In Bangladesh we have been implementing Katalyst, our largest market development project for more than 10 years, and are set to close it out in 2017. It has already reached 4.8 million businesses. Two-thirds of its beneficiaries live on less than USD $2.50/day. Participating farmers and SMEs have increased their incomes by USD $800 million. The ratio of project investments to resultant increases in net incomes of all beneficiary SMEs is 1:7. That is a very respectable figure. It has been possible to achieve this extraordinary result because Swisscontact has identified business opportunities for poor people and implemented them together with private businesses. We call this the “inclusive markets” approach, which specifies that local markets must also include the poor.

Swisscontact Management completed a Strategy 2020 interim review. Which objectives were achieved and on which areas will Swisscontact be focusing in the next few years?
Bon: We have reached our main objectives: we have grown and were able to stabilise Swisscontact’s finances. Our donors place enormous trust in us. In Switzerland, we were able to shore up our core concerns and sharpen our public profile, as well as bolster our systematic impact assessment tools. We enjoy a stable network with good local and international partners. Now we must strengthen these partnerships even further. In our projects, South-South cooperation will become increasingly important. With microleasing, Swisscontact has shown how this successful business model from Kenya can be transferred to Central America. This also includes building the capacities of local businesses and institutions. Content-wise, we are standing at the crossroads of differing interests. We are therefore concerned with the question of what our role as an international NGO should be, moving forward.

How does the Board of Trustees judge the results of this evaluation?
Lanz: The process was very valuable. It was prepared with great care and the Executive Committee was involved. Our environment is changing, therefore the strategy review was both interesting and necessary from the point of view of the Board of Trustees. One trend, in addition to the South-South cooperation mentioned, is the economisation of international development: donor organisations also intend to work more with the private sector. As an organisation with close ties to the business world, Swisscontact is well positioned to uncover ways such a collaboration could be structured to achieve the necessary results.

Do you think the private sector is ready to cooperate?
Lanz: In principle, yes. However, we must be aware that the objectives of the private sector differ fundamentally from those of international development. International development aims to be inclusive of as many people as possible and support the poorest segments of society. Its objectives are not financial but content-related. At the end of the day, a company is focused on profits. When both interests meet, we should use the opportunity. We see particular willingness from companies to collaborate if it affects their value chains.

Swisscontact has been active in Peru for 50 years. In no other country has our foundation worked for so long without interruption. A reason to celebrate or to ask ourselves why our engagement is still needed?
Bon: Much has changed over the last 50 years. Swisscontact has seen Peru change from a developing country to an emerging economy. We have reinvented ourselves again and again and adapted to new situations. A large percentage of the population is not getting anything out of the economic boom in the cities; we will to continue working on their behalf. In rapidly growing countries, there is the considerable danger that the income gap will widen significantly. The UN development goals refer to “inclusive growth”, i.e. that all people should benefit from economic growth. But how can we include the entire population in this growth over the long term? We want to help solve this problem.

Over a year ago, the UN adopted its 2030 agenda for sustainable development. Has the message already reached the Swiss public?
Lanz: The agenda is receiving more attention from policymakers and international business consortia than I had expected. This is a good thing and is rooted in the fact that for the first time all countries are being asked to define their own development goals. I also hope that over the course of this debate the broad public will update its perception of international development. Awareness of the classic aid worker is still quite widespread but the image has not reflected reality for a long time now. Development aid is meanwhile a highly complex affair at the crossroads of many economic, foreign policy, and socio-political interests.

In 2016, Swisscontact concentrated predominantly on the change in microfinance instruments over the last 10 years. Why this change?
Bon: There are three key points: insolvency is a risk in microcredit. Therefore, it is important that microcredit instruments are applied with a mind to improving productivity and therefore increasing incomes. Second: saving is almost more important than microcredit. We show SMEs how to improve their liquidity by saving. Third, SMEs lack financial skill, without which they don’t have a chance to become interesting clients for larger financial institutions as well. Therefore, we provide a lot of training and counselling.

The Board of Trustees was enhanced with the addition of new staff. What further support from its highest governing body can Swisscontact expect to receive in the future?
Lanz: At our annual conference this year we said goodbye to two long-time Board members: Professor Fritz Fahrni and Dr Thomas Bechtler. At year’s end, Raphaël Odoni stepped down. I wish to thank sincerely all three for their service. In 2016, we elected three new members to the Board of Trustees: Dr Berangère Magarinos-Ruchat, Claudia Coninx-Kaczynski, and Dr Thomas Sauber. We are excited about the new additions to our Board and collaborating with them and all other members of the Board of Trustees.
Interview: Katrin Schnellmann