Collaboration with the Private Sector: A New Framework, thanks to SDGs

Swisscontact’s country portfolio includes both very poor and fragile countries, as well as middle-income countries. In both contexts, Swisscontact was able to offer specific solutions and broaden its project portfolio in 2016, thanks to many years of experience. Swisscontact also has broad knowledge of collaboration with private sector companies – an objective of the UN’s Sustainable Development Goals (SDGs).

Reducing Poverty for People in Fragile Contexts

Swisscontact works in various countries where the state stands on shaky ground.
Political or humanitarian crises render the creation of functional state institutions difficult. In North and West Africa, there is also the threat of violent extremists and terrorist outfits. Such fragile contexts present challenges to Swisscontact; the risks to project management, safety, and achieving our goals are more than in well-functioning states. Wherever state structures are weak, it is a particularly challenging to induce sustainable systemic change.

Of course, these challenges are not new. Over the last few decades, Swisscontact has learned how to make its mark fighting poverty even in fragile contexts. Key is the ability to react quickly and have well-established control mechanisms in place within projects. However, along with more stringent safety requirements, these involve higher operational costs and careful use of financial resources to cover these costs – with ever-tighter project budgets expected in the future.

In fragile contexts, Swisscontact is almost exclusively implementing technical projects financed by bilateral donor organisations such as the Swiss Agency for Development and Cooperation (SDC) or private sector partners. The main focus of these types of projects is in Africa. 

Job Creation for Middle-Income Countries

In poor countries, Swisscontact’s work focuses mostly on the bottom of the pyramid of society. In middle-income countries, the focus is on involving those who otherwise do not benefit from general economic growth. Even though there is a growing middle class in these countries, income distribution is very uneven; poverty and hopelessness are still endemic.
 
The fact that Swisscontact’s private sector development know-how in middle-income countries is recognised, is supported by the increased collaboration with the State Secretariat for Economic Affairs (SECO). Swisscontact is implementing several large-scale projects that sometimes span multiple continents, including the Swiss Entrepreneurship Programme in six countries, and the Swiss Import Promotion Programme (SIPPO) in eleven countries (as of 2017). There is also a project helping to improve the competitiveness of Colombian SMEs.

Middle-income countries often boast relatively stable governments and economies. This makes it easier to collaborate with private sector companies as outlined in the UN’s Sustainable Development Goals (SDGs): the private sector should play a key role in achieving sustainable development goals.

Defining the Distribution of Roles More Sharply

For Swisscontact, involving the private sector in development projects is a regular practice. For years now, we have been collaborating closely with private sector partners within our market development projects; these partners also contribute to project costs. Thus, for the Katalyst Project in Bangladesh, where public donors have invested over $100 million over 10 years, the private sector has provided $50 million in investment. One model that has already become established is the public-private partnership, based on matching funds. This means that the public sector supports the efforts of private companies to contribute to the SDGs by taking on a portion of the investments and thereby buying down some of the risk.

As a foundation with close ties to the business world, Swisscontact welcomes closer collaboration with the private sector. Swisscontact however sees a challenge in complementing private investments, not stifling them. The distribution of roles needs to be defined even more sharply: what are the roles of the private sector, the multilateral and institutional donors, and what can development NGOs like Swisscontact do? An example of how these roles could be allocated is provided by a Swisscontact project in the Indonesian cocoa sector financed by SECO: the public sector finances classic development policy objectives such as basic training or initiatives to improve gender equality. For its part, the private sector covers the costs of sustainability certification, traceability and monitoring. Swisscontact coordinates these efforts as a neutral arbiter.

Development Programme: Focus on Entrepreneurship

For its development programme, Swisscontact implements its own projects supported by SDC and private sector partners. In the latest 2017 – 2020 phase, existing projects will be further developed so that they can achieve long-lasting impact. The programme will be expanded to Cambodia, by extending the project to promote tourism in southern Laos and by introducing new agricultural technologies. The thematic focus in the new phase is also on vocational education. The subject of entrepreneurship is being given more importance in that new approaches are being tested and innovative young adults are supported in their efforts to launch their own business concepts.

In terms of subject matter, Swisscontact has worked intensively with financial services during the reporting year. Access to financial services provides a basis for participating in economic life, and an economy can only become formalised and strengthened if local businesses are integrated into the financial sector. Based on various internal studies and discussions, a new strategy regarding this issue has come about. It stipulates that there should be access to financial services in all new Swisscontact projects: if Swisscontact is to introduce a new teaching curriculum in skills development projects, then this should include teaching basic financial skills. In value chain development programmes, it is also essential for smallholder farmers to be able to open savings accounts or access credit. Only this way will they be able to invest in their enterprise.

Partnerships with Leading Educational Institutions

Swiss expertise is highly valued in Swisscontact’s projects. Access is provided through our close collaboration with Swiss research institutes. In 2016, for example, experts from the University of Applied Sciences St. Gallen (FHS) and the Swiss Hotel Management Academy in Lucerne (SHL) shared their expertise with tourism firms in Macedonia. Based on solid collaboration with various institutes at the Lucerne University of Applied Sciences and Arts, a global and comprehensive agreement has been signed. Furthermore, during the reporting year, Swisscontact has worked closely with the Zurich University of the Arts as well as the Zurich University of Applied Sciences in Wädenswil.

Swisscontact is now working in 34 countries. In 2016, we opened an office in the Democratic Republic of Congo. Map