Danida Market Development Partnerships Guidelines Ministry of Foreign Affairs of Denmark May 2016
1 Introduction and background 1 Danida Market Development Partnerships is a new business instrument which falls within the government s priorities for the Danish Development Cooperation in 2016 2. Promotion of marketdriven sustainable growth and employment in the developing countries is emphasised among the key priorities for Danish development cooperation. The Partnership Programme thus complements other Danida business instruments as well as bilateral and multilateral engagements that aim at promoting inclusive economic growth and employment opportunities, among others through increased trade, investments and business development. Moreover, outcomes of the individual partnership projects will contribute towards fulfilling the Global Goals for Sustainable Development. Traditional public sector development cooperation through ODA will not be sufficient to fulfil the 17 Global Goals by 2030. Mobilizing additional resources, including private investments at scale, is required as emphasised at the Conference on Financing for Development in Addis Ababa 2015. Partnering with a broader range of stakeholders including civil society, private business, government institutions, academia and other institutions at national and international level (as emphasised in Goal 17) is a way to pool complementary resources, capabilities and knowledge that can foster new business models which align commercial and social interests. Such strategic partnerships where partners utilise their core competencies with focus on joint value creation have the potential to bring transformational change, that reach beyond philanthropic partnerships or partnerships built on more limited exchange of services. Development assistance can play a catalytic role by supporting activities through such partnerships that address some of the challenges related to market development in partner countries and thereby reduce the risk for private businesses in engaging in less developed markets. Using donor funds for supporting partnerships involving private business need to demonstrate that the intervention would not have happened, or would not have been as successful, without their contribution. In other words, that the additional effect of the support provided has made a difference. On this background the Market Development Partnerships programme has been designed to support commercially oriented partnerships for sustainable market development that contribute to the achievement of the SDG s with participation from civil society organisations, private business, academia, government institutions etc. SDG 17 Multi-stakeholder partnerships 17.16 Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the sustainable development goals in all countries, in particular developing countries 17.17 Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships 1 Reference is made to the Programme Document for full background and rationale of the programme [link to be inserted]. 2 The Government s priorities for the Danish Development Cooperation 2016. Overview of the development cooperation budget 2016 2019. 1
The overall objective of the programme is: To contribute to sustainable and inclusive economic growth in developing countries within the framework of the Sustainable Development Goals. The programme is not particularly focusing on specific goals among the 17 SDGs but some will be more directly applicable than others depending on the nature of the individual partnerships. At the same time, supporting one or more SDGs should be seen in the context of contributing to fostering sustainable and inclusive economic growth as the end goal. At outcome level the individual partnership projects will be required to specify to which targets under the 17 SDGs their project will contribute. Further inspiration and concrete tools such as the SDG compass can be found on the Global Compact website [link to be inserted]. Regardless of which SDGs the proposed projects are aimed at supporting, they must reach beyond mere service delivery or delivery of e.g. base of the pyramid products, unless these directly catalyse local economic activity. Partnerships may in this regard also include local public institutions and authorities that play a role in market development in terms of developing regulations and standards that are crucial for the business venture, or other public functions that require capacity building etc. Such activities may strengthen the sustainability of the interventions and contribute to wider systemic effects of the partnership projects. Box 1 Examples of areas that might be part of a partnership project: - Insertion into global value chains - Introduction of new technology, services or innovative processes that drive local business development - Production of new products for local or regional markets - Etc. Specific activities could include: - Training and capacity building - Development of new norms and standards - Organisation of local producers/stakeholders - Promotion of responsible business conduct - Adaptation of innovative technologies and approaches - Provision of minor investments for enhancing productivity - Introduction of environmental technologies (energy and water saving, resource efficiency etc.) - Etc. 2
In 2016 the total allocation for the programme is DKK 40 million. Within this budget frame it is anticipated that support will be provided to 5-6 projects which may run for 2-5 years. As the Partnership Programme is a new venture for Danida this first programme period is considered a pilot phase where preliminary experiences will feed into possible future phases of a continued Partnership Programme. This guideline describes the requirements to partners seeking Danida support for developing a multistakeholder partnership project under the programme and provides information on application procedures, deadlines etc. For further information visit the Ministry of Foreign Affairs web site or contact the Department for Growth and Employment vbe@um.dk 2 Who can apply for support and what activities can be supported The programme will work as a competitive Challenge Fund through a cost-sharing mechanism that invites consortia of partners to apply for support. Applications from consortia of partners must present a solid business plan that addresses key development issues and with the aim of becoming commercially sustainable. The application process will be divided into two phases as explained below: a concept stage, and a full project proposal stage. This will allow partners to present their project idea without investing substantial resources and time in developing a full project proposal at the initial stage. Working in partnerships Working together through partnerships is a requirement for qualifying for support and an opportunity for business and other partners to combine comparative advantages and various strengths. It is recognised that working through partnerships can be a complex process in terms of building a joint understanding and vision. Danida will therefore attach particular attention to assessing the partnership consortia in terms of their robustness and joint commitment. In order to create a learning environment across the partnership consortia that are granted project support, these will be invited to form a platform for sharing experiences during project proposal development and implementation. Participation in the platform will be voluntary and based on mutual interest and engagement from the partnership consortia. After the concept note stage, Danida will be available for providing other support during full project proposal development and project implementation, where relevant. Such support may include advice on development related issues, country level issues etc. Responsible Business Conduct It will be a key requirement that the businesses are committed to responsible business conduct by integrating human rights, labour rights, environment and anti-corruption concerns into their operations and core strategies within the framework of the UN Guidelines on Business and Human Rights and the UN Global Compact. The purpose is to 1) enhance positive impact of a partnership on sustainable and inclusive economic growth in local society and 2) to identify, prevent and mitigate potential negative impacts. 3
All partnerships are required to conduct a risk assessment and include this in the concept note. The assessment should focus on potential negative impacts focusing on human rights, labour rights, environment and anti-corruption and result in identification of priority areas to address. In conducting the risk assessment partners may use the UN Global Compact Self Assessment tool 3. The full Project Application should include a risk-based due diligence analysis of the business operations and activities of the partnership project and account for how potential negative impacts will be addressed. An action plan and timeframe for implementation must be presented in the full project proposal and the indicators for responsible business conduct should be included in the results framework. Who can apply for support partnership principles At the concept stage the partnership must as a minimum include a private business (or a group of businesses) on one side and a non-commercial partner (or group of partners) such as a civil society organisation, business member organisation, government institution, trade union, university college/business school, research institution, international organisation etc., on the other side. The model is accordingly open to consortia including partners with different profiles and business sizes. The application for support must be submitted by the lead non-commercial partner, who will be overall responsible on behalf of the partner consortium for managing and administrating the project. Multilateral organisations may be included in the partnership, but they are not eligible as lead partners. The Partnership project must build on the core business of the private business partner and also be part of the core activities of other participating partners. It is not a requirement at concept note stage that the partnership has a formal agreement with a local partner. However, addressing development challenges in the partner country through a sustainable business venture without associating local partners during project development would not seem feasible. The vision of the partnership project in terms of engaging with local partners such as CSOs, private businesses, government institutions, knowledge institutions etc. will therefore be part of the project assessment criteria. All partners in the partnership must have legal personality. Danish partner organisations with a framework financing agreement with Danida may be partners in a project. However, the financial support they already receive from Danida cannot be counted as own contribution to the project. Danish businesses that wish to receive assistance from the Danish Trade Council as part of the project may procure such services in accordance with the Executive Order on Payment for Services Provided by the Danish Foreign Service. The costs for these services cannot be funded by the Danida grant to the partnership project, but expenses may be included in the budget as in-kind contribution from the private partner. Goods and services produced with direct support from Danida through partnership projects must be available to the general public (such as analyses conducted through Danida support or 3 Link for UN Global Compact Self Assessment Tool: http://www.globalcompactselfassessment.org/ 4
other specific products resulting from the direct support). Also, producers included e.g. in value chains cannot be obliged to deliver exclusively to businesses under the partnerships. Where can projects take place? The programme is available in Denmark s priority countries and in countries with a GNI per capita below the WB limit of lower middle income countries (at present USD 4,100) with a Danish representation. One Partnership Project can only cover one country. Danida priority countries Other countries w. GNI below USD 4100 per capita w. a Danish representation Afghanistan Bangladesh Burkina Faso Ethiopia Ghana Kenya Mali Myanmar Niger Palestine Somalia South Sudan Tanzania Uganda Egypt India Morocco Nigeria Pakistan Vietnam The Philippines Ukraine Indonesia Which costs can be included in the project? Within the activity areas indicated in box 1 eligible costs are indicated below. Danida s support to the partnership project may cover up to 75 % of total project costs. The remaining 25 % to be covered by the project partners may be provided as in-kind contribution (staff time, travel expenses etc.) or cash contributions. Resources mobilised by the partners from other donors than Danida, including e.g. philanthropic funds, may be included as part of the partners own contribution to the project. Such funds may also be used for increasing the overall project budget thereby reducing the proportion of Danida s contribution. The private business partner(s), including possible subsidiaries in the partner country will be required to finance the costs related to own participation in the project including time spent, travel costs, project related administrative costs etc. These cots may be included in the project budget as in-kind contribution. More specifically, following costs are eligible as projects costs: Activities of the non-commercial partner(s) including local partners related to staff salary, travel costs and other expenditures related to their engagement in the project. External consultants may be recruited where justified for achieving project objectives, but the major part of the staff input is expected to be provided by the project partners. Services from local service providers may be included (e.g. related to training, organisation, technical support etc.) Danida Development Partnerships does not support (non-exclusive list) Activities or product areas listed on the European Development Finance Exclusion List (Annex 1) Preparation of concept notes Activities aimed at capacity building of own staff from the partnership consortia Product development/innovation in Denmark General infrastructure investments Costs for purchasing, renting or leasing land or buildings 5
Activity related expenses, including local transport, communication, IT, etc. Minor equipment for demonstration purposes may be included, but the Danida grant does not support large scale investments in e.g. productive infrastructure. An overhead of maximum 7% may be included in the budget to cover expenditures of the lead partner related to general office expenses, administrative costs including budgeting, accounting and reporting etc. The overhead is calculated on the basis of the grant from Danida to the project. Further details are provided in the administrative guideline. Project activities must primarily take place in the partner country; still a few project activities may take place outside the partner country, e.g. study visits or workshops for local partners, administrative support covered through the overhead costs etc. Example of composition of project budget A partnership consortium consisting at the concept stage of one civil society organisation (lead partner) and one business partner apply for support to a partnership project in a partner country. They plan to include further partners at national level, local service providers and international consultants. The project budget overall amounts to DKK 9 million. They apply for a grant of 6.75 million from Danida (corresponding to the maximum of 75%). Within this grant they apply for a project preparation grant of DKK 300,000. Partner consortium contribution (min 25%) DKK Danida contribution (max 75%) DKK Total project cost Project preparation Non-commercial partner 265,000 - Staff time - Travel and related costs Business partner 100,000 - Staff time - Travel and related costs - Administration Local experts for studies 35,000 Total project preparation budget 100,000 300,000 400,000 Project proposal Non-commercial partner(s) 1,077,500 - Staff time - Travel and related costs - max. 7% administration 472,500 Business partner 1,400,000 - Staff time - Travel and related costs - Cash contribution Local experts and service providers 1,000,000 International consultants (max. 10%) 400,000 Minor equipment incl. for demonstrations 500,000 Other activity related costs 2,662,500 Grant from philanthropic fund 750,000 Total Project phase budget 2,150,000 6,112,500 8,262,500 DKK 6
Budget margin max. 5% of grant 337,500 337,500 Total costs 2,250,000 6,750,000 9,000,000 Amount that can be applied for The total frame for Danida Market Development Partnerships is DKK 40 million in 2016 which will support 5-6 projects. Applicants may apply for a total grant of minimum DKK 5 million and maximum DKK 8 million for the partnership project (including possible grant for project development mentioned below) with a grant element of maximum 75 %. The remaining 25% may be provided as in-kind or cash contribution. Applicants successful at the concept stage will be invited to submit a full project application. Approval of the concept note provides the applicants with the opportunity to apply for a maximum of DKK 300,000 for covering project development costs including studies, partner visits etc. during the project development period. The project preparation grant will be provided on a reimbursement basis upon completion of the full Project Proposal application. The grant for supporting project preparation costs will be provided based on fixed hourly rates and standard travel costs included in the hourly rates as further explained in the Concept Note form. During project implementation the rates claimed by project partners must reflect real costs within a maximum ceiling. Travel and other costs will be according to actual costs in relation to location and activities within the individual project. Further details are provided in the Administrative Guideline [link to be inserted]. The Concept Note must include an estimate of the total budget, subject to revision and a more detailed budget in the full project application. See the application forms for preparation of budgets. 4 Application process To ensure development of quality projects with a strong local anchorage and to allow partners to present their project idea without investing substantial resources and time in developing a full project proposal at the initial stage the application process will include two steps: Stage 1: Submission of a brief Concept Note outlining expected scope, purpose, partners etc. as well as possible needs for further investigations needed to prepare a full project proposal. The Concept Note may include an application for support to development of the full project proposal including studies, partner visits etc. Based on an assessment of the Concept Notes, the MFA will select the 5-6 project concepts that best meet the programme criteria. The Ministry of Foreign Affairs will enter into preliminary grant agreement with the successful applicants at the Concept Note stage. Final funding agreement will be subject to approval of the full project proposal. 7
Stage 2: Applicants successful at the Concept Note stage will be invited to submit a full project proposal. During the project development phase, the partner consortium will be invited to consult the Ministry of Foreign Affairs for receiving feed-back and recommendations on how to further develop the project proposal. This may include country specific remarks received from relevant Danish embassies. 5 How the application will be assessed Applications for support will be granted or rejected based on an overall assessment of the proposed project Concept Note in relation to its ability to contribute to the objectives of the programme, i.e. how well the project addresses specific development challenges of priority to the country in question, its potential for scale and sustainability, and financial capacity, technical capability, human resources, and prior international experience of the consortia of partners etc. The private business partner (or group of businesses) will be required to document adequate capacity to promote the business venture in terms of previous experiences as well as sufficient resources (financial and human) to engage in the project. Similarly, the lead non-commercial partner must be able to document adequate experiences relevant to the nature of the partnership project as well as to the country in question and documented experience with managing and administrating similar project. Other participating partners would be evaluated against their capacities and relevance to the partnership project in terms of their added value to achieving the results and outcome of the project. Assessment criteria All Concept Notes received within the deadline indicated under section 6 will be assessed according to the following process and criteria for evaluation: Concept Notes will be checked to confirm that the partners comply with the general requirements indicated under previous sections and in the format for Concept Notes and that all required documents are included and have been duly completed. Concept Notes that do not comply with the basic requirements will not be considered further. Concept Notes that meet the requirements will be evaluated according to the criteria described below. Partner consortia that have submitted Concept Notes that in the opinion of the Ministry best meet the criteria for support (and that reaches an overall score of minimum 70 points) will be invited to submit a full project proposal. Assessment of Concept Notes will be based on the following weighted criteria: 1. Potential effect for inclusive economic development (30%) 2. Coherence with national policies and priorities (10%) 3. Capacities and previous experiences among main partners; in-country cooperation (20%) 4. Business case and strategic approach (20%) 5. Potential for scaling-up business case and catalytic effect on improved market conditions (20%) See annex 1 for further details on assessment criteria. 8
The proposed projects must explain the additionality of the Danida support (i.e. that the project would not have taken place without the support from Danida). The Concept Note form includes further directions on aspects to be covered at this stage which will form part of the assessment. Concept Notes will be assessed in a light version, with acceptance of lack of information regarding some of the more specific assessment criteria listed in the application form. The full project proposal will follow the same overall format for project presentation as the concept note but with further details under the individual headings as indicated in the Project Proposal form. In addition to the above 5 criteria, the full Project Proposal will be subject to an assessment of its costefficiency, i.e. how proposed activities and outputs are related to the budget in a cost efficient manner. 6 How to apply for support At the Ministry of Foreign affairs website following application forms and guidance on how to fill them in is found: A. Concept Note form including Application Form for project development support B. Reimbursement form C. Full Project application form D. Results Framework E. Risk Management Framework F. Administrative guidelines G. Status report forms Please note that there is a maximum number of pages for the Concept Note and for the full Project application. Deadline for Concept Notes and full Project applications Concept Notes must be submitted by the latest on 1 October 2016. Please submit by email to Department for Growth and Employment, Ministry of Foreign Affairs, vbe@um.dk. Only applicants who receive written approval of a Concept Note will qualify for submission of a more comprehensive project proposal. Full project proposals must be submitted no later than 1 May 2017. All application documents shall be included in one document in PDF format. Assessment process and reply Concept Notes will be appraised during the period 1October - 1 November 2016 and qualifying applicants will be invited to a meeting November 2016 in the Ministry of Foreign Affairs for receiving feedback and for clarification of Concept Note details as needed. A full project proposal should only be submitted following the go-ahead from Danida based on an approved Concept Note. 9
Applicants not qualifying for submission of a detailed project application will be informed and provided a short explanation in writing of why the application was not selected by the latest on 1 December 2016. Full Project applications may be submitted by qualifying applicants for assessment as soon as the preliminary grant agreement has been signed between Danida and the lead partner, i.e. at the earliest by the end of 2016, subject to approval by Danida of the full project proposal. Applicants are owners and drivers of the projects. The Ministry of Foreign Affairs incl. relevant embassies will, however, be available to partnership consortia for guidance during the period of project preparation. Full project applications will be appraised within approximately one moth from receipt. Applicants may be contacted during the appraisal if supplementary information is needed. It is for instance likely that suggested results frameworks and indicators will be subject to discussion before final approval of applications. The Ministry of Foreign Affairs will contact applicants directly by email. Applicants can expect to initiate implementation of projects from early 2017 and all projects should start at latest by August 2017. If the funding requests of applications complying with the requirements exceed the amount available, Danida will prioritise between the applications recommended for approval. If needed Danida may require budget adjustments among approved projects. Approved applications including budget will be published at www.um.dk. Download application forms Concept Note form, full Project application form and administrative guidelines can be downloaded from: [link to be inserted] 7 Management of grant support The letter of approval for grant support and the administrative guidelines describe how and when to submit audited budgets, regular reporting and a final report on the project s results according to the performance indicators. The lead partner must commit to comply with several conditions and requirements regarding management of the grant as outlined in the Administrative Guidelines. This also implies that grant funds will disbursed to the lead partner, who will be responsible for channelling funds to other partners according to approved budgets and reporting. 10
Annex 1 Assessment criteria at concept note stage 1 Potential effect for inclusive economic development (30%) a. Does the project present a clear vision on how it will contribute to sustainable economic development in the partner country? Is there a clear ToC and (preliminary) results framework? b. Does the project contribute towards one or more SDG s, and which SDG targets? c. Is it clear how the project will ensure inclusiveness and how it addresses human rights, gender equality etc. in relation to project activities? d. Will project activities contribute to solving any challenges pertaining to enabling the business environment? 2 Coherence with national policies and priorities (10%) a. Is the project coherent with national policies and strategies? b. Is the project relevant within the national context and analysis of challenges? c. How will information on the project be made available locally? 3 Capacities and previous experiences among main partners; in-country cooperation (20%) a. Do the partners demonstrate adequate and relevant expertise and experience within the area of the business case and the partner country? b. Do the partners present a clear vision for the partnership incl. division of roles and responsibilities? c. Does the proposed lead partner possess adequate capacities for management and administration of the project? d. Are partners in the partner country identified and/or is there a clear strategy for how the project will engage with partners at country level? 4 Business venture and strategic approach (20%) a. Is the business venture convincingly argued; are ways of addressing possible outstanding issues for engaging in the partner country described? b. Does the project build on a sound and realistic strategy for achieving the project outcomes? c. Are risks related to the business venture in the proposed context analysed and addressed? 5 Potential for scaling-up business venture and catalytic effect on improved market conditions (20%) a. What are potentials for the business venture to become commercially viable? b. What is the likelihood of the project/business venture to spread to other target groups or partners beyond the Danida supported phase? The full Project Proposal will furthermore be assessed in relation to its cost-efficiency including following criteria: a. Do costs of administration, travel, and salaries correspond to the needs and characteristics of the intervention? b. Is the relation between the outputs of the intervention, the scale of activities, the number of participants or members of the target group, and the total budget justified? c. Is the cost level balanced in view of the context of the intervention? d. Are expenses allocated to salary to partner staff justified in view of the intervention s contents and objectives? 11