4 Strengthening Norway’s efforts to promote private sector development
Important aspects of Norway’s efforts to promote private sector development, both multilaterally and bilaterally, will be maintained. This includes investments made through Norfund (the Norwegian Investment Fund for Developing Countries) and funding for leading multilateral actors such as the World Bank and the UN, as well as bilateral initiatives to improve the business environment, such as Oil for Development, Fish for Development, and cooperation on clean energy and tax systems.
Figure 4.1 Tanzania. This lady was able to buy the poles and the ropes she uses to grow seaweed in the sea with the help of a microfinance loan. The seaweed is sold to a factory that exports it to Japan.
Photo: Wim Opmeer
The Government will also make changes in existing policy instruments and implement new measures. Some of these are outlined below.
More support for private sector development
The Government will increase Norway’s support for private sector development in developing countries and facilitate strategic cooperation with the Norwegian private sector and knowledge institutions, with a view to achieving better performance.
Greater emphasis on aid as a catalyst
The Government will emphasise the strategic use of development assistance funds to promote private sector development. Development cooperation will increasingly be used to mobilise capital or other input factors from the private sector. In this context, the Government will increase the use of innovative financing mechanisms.
A more systematic geographical approach
The Government will intensify its efforts to promote private sector development through long-term programmes in the six focus countries Ethiopia, Malawi, Mozambique, Myanmar, Nepal and Tanzania. The Government will also support private sector development projects in other developing countries that are eligible for Norwegian aid, including selected countries in West Africa.
Greater emphasis on the links between development cooperation and other economic engagement
The Government will strengthen collaboration between public bodies and other Norwegian actors that are engaged in business-oriented efforts in developing countries. This will include cooperation with key private sector actors, in part to ensure that major business investments have a local economic spill-over effect.
Greater emphasis on information and advice for the Norwegian private sector
The Government will establish a business information and advisory service for Norwegian companies operating in challenging markets. This service will also cover business and financing opportunities available through the multilateral system. Private sector expertise will be strengthened at relevant diplomatic and consular missions, and close cooperation between the missions and Innovation Norway is envisioned.
More capital allocated to Norfund
The Government will continue to strengthen Norfund as a key channel for support to private sector development and investments in renewable energy. No significant changes to Norfund’s activities are envisaged.
More targeted and results-oriented private sector development schemes
The Government will replace Norad’s current application-based scheme, including the Business MatchmakingProgramme , with a new, competitive scheme. The new funding scheme will be a far more important instrument for Norway’s private sector development efforts than the current scheme is.
Adapted export finance schemes
If today’s exposure limit is reached, the Government will assess the exposure limit for the guarantee scheme for export to and investment in developing countries (u-landsordningen) administered by the Norwegian Export Credit Guarantee Agency (GIEK), with a view to promoting the Norwegian private sector’s activities in poor countries. In addition, the Government will harmonise the regulations used by Export Credit Norway concerning the definition of projects that are considered to be in Norway’s interests with those of GIEK. In order to promote trade with developing countries, adjustments will also be made to how Export Credit Norway secures its loans. All these measures are in line with the provisions set out in international agreements.
The Government will, on an ongoing basis, monitor the development of relevant financing schemes for the private sector in other countries.
More strategic efforts in selected sectors
The Government will focus its bilateral efforts on sectors that are of great importance for many developing countries and in which Norway has particular expertise. Priority will be given to efforts in the energy, ICT, agriculture, fisheries/marine resources, and maritime sectors.
More business-related R&D cooperation
Within the existing R&D framework, the Government will establish knowledge bridges between Norwegian knowledge institutions and developing countries where conditions are conducive to cooperation on business-oriented research and higher education. These programmes will focus on the priority sectors, and will be open for projects at all stages of the knowledge chain. Partnerships with knowledge-intensive Norwegian businesses, including clusters, will be encouraged. The purpose is to build local expertise in order to develop a more knowledge-based private sector.
Greater emphasis on good governance
The Government will emphasise good governance as crucial to private sector development, and will support efforts in the areas that are most important to the private sector in the countries concerned.
Greater emphasis on infrastructure
The Government will promote increased international support for investments in infrastructure through public – private partnerships. The need for a transition to environmentally sound, sustainable infrastructure will be emphasised.
Greater emphasis on marginalised groups
The Government will work to promote increased access to financial services for business actors in developing countries, with particular emphasis on marginalised groups. Support for formalising the economy is important, although Norwegian support will also be provided to the informal sector.
Greater emphasis on climate change and the environment
The Government will ensure that Norway’s efforts to promote private sector development are sustainable, emphasising measures that promote responsible use of resources and a green shift. This means strengthening partnerships with actors that can help developing countries to grasp the economic opportunities this shift provides.
Figure 4.2 Bangladesh. Thousands of poor men and women in -Bangladesh collect and recycle plastic to earn their living. The plastic pieces are then dried and sold to manufacturers.
Photo: Probal Rashid
Greater emphasis on the significance of trade
The Government wishes to use trade as an instrument of development policy to a greater degree than before. Trade is crucial for development, economic growth and employment. At the same time, the least developed countries are only able to exploit the potential inherent in increased trade and market integration to a limited extent. Trade-related measures involve both helping national authorities, so that the country can participate in international trade and sell its export products, and working to maintain and strengthen the multilateral trading system, in which developing countries have a real opportunity to win acceptance for their demands. This white paper must be seen in close connection with the white paper on globalisation and trade (Meld. St. 29 (2014 – 2015).
Greater emphasis on responsible private sector development
The Government will promote conducive conditions for safeguarding human rights and workers’ rights, efforts to protect the environment and anti-corruption work, and will base its work to advance private sector development on international CSR standards and best practices. This will be stressed in the Government’s dialogue and cooperation with all actors. The Foreign Service will intensify its efforts to provide guidance to the private sector on these issues.
Greater emphasis on women’s rights and gender equality
The Government will ensure that women’s rights and the gender perspective are integrated into its work to advance private sector development. Norway will also support targeted efforts to reduce political, economic, legal and other structural obstacles to women’s participation in the private sector.
Greater emphasis on creating an enabling environment through multilateral cooperation
The Government will work through multilateral organisations to promote better conditions for private sector development in developing countries, and will focus its efforts on fewer – and more large-scale – projects. Private sector development and job creation will be emphasised in Norway’s dialogue with the multilateral development banks and the UN system, and through participation in their governing bodies. Norway will also support concrete initiatives through these institutions.
The Government will conduct a comprehensive assessment of the relative strengths of the various UN organisations in promoting private sector development, and will use this as the basis for increasing Norway’s cooperation with selected organisations on targeted efforts.