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Knapen: Private Sector Programme meant for local development
Knapen: Private Sector Programme meant for local development
A broadcast yesterday by the TV consumer programme Radar has prompted development minister Ben Knapen to launch an investigation into possible irregularities in a Dutch project in Bosnia in 2007. ‘Of course it’s important to me that money meant to promote local economic development is well spent,’ said the minister. ‘We will see if that was the case here.’
However, Mr Knapen rejects the suggestion that development cooperation funds are widely used to subsidise livestock factory farming abroad. The grants mentioned in the broadcast consisted mainly of funds from a former programme of the Ministry of Economic Affairs, called the Emerging Markets Cooperation Programme (PSOM), which gave a few per cent of its grant funds to animal husbandry projects. Only one such grant was awarded from the development cooperation budget to the Dutch company Van Genugten’s operations in Bosnia. Since 2009 this project has fallen under a new development cooperation programme, the Private Sector Investment Programme (PSI), which is aimed at stimulating economic development in the Netherlands’ development cooperation partner countries.
PSI draws on the knowledge and expertise of Dutch companies in support of joint ventures, in which a Dutch company provides at least 50% of the investment and the government provides additional funds on a one-off basis. Practical experience in Africa (with cultivating sustainable coffee in partnership with Simon Lévelt in Uganda and cashews in Mozambique, for example) has shown that this approach is effective. PSI’s objective is to foster local economic development, not simply to increase Dutch companies’ profits. An evaluation in 2010 concluded that the PSI programme is a success. The evaluation showed that PSI projects are directly responsible on average for creating 81 local jobs, in addition to an average of 1,300 jobs created indirectly for employees of local producers and suppliers. Suggestions for improvement made in the evaluation were reflected in supplementary grant criteria for 2012.
Applications for PSI grants are always checked. Visits are paid to every Dutch company that applies, as well as to the proposed partner firm in the developing country. Checks are made to ensure that the companies’ management and finances are properly conducted and that they comply with international standards for, for example, workers’ rights. Van Genugten’s project was checked in March 2007, and both the Dutch firm and its local partner made a good impression.
The Ministry of Foreign Affairs uses the following criteria in assessing PSI projects: all projects should foster economic development and entrepreneurship in the developing country; they must comply with all ILO, OECD and other guidelines for trade union rights and corporate social responsibility, including working conditions and environmental standards; they must be financially viable after the grant money runs out; they must be innovative; they may only receive a limited, one-off donation from PSI of no more than 50% of the total investment; and the project must not be able to obtain the funds in any other way, such as through a bank loan. All PSI projects are inspected annually by NL Agency.
As for PSOM projects that were financed by the Ministry of Economic Affairs from non-development cooperation funds, these projects were aimed at helping Dutch companies expand into emerging markets. PSOM projects involving investment in animal husbandry were assessed for compliance with European legislation. All nine PSOM projects mentioned by the Dutch animal welfare organisation Wakker Dier complied with the legislation then in force.