Strategic Partnership Agreement. The Ministry of Foreign Affairs. The International Finance Corporation (IFC)

Transcription

1 Strategic Partnership Agreement between the The Ministry of Foreign Affairs and The International Finance Corporation (IFC)

2 File no.: Date: 31 January 2017 Contents Abbreviations 1. Summary of the Strategic Partnership Agreement Context: The private sector is critical in the 2030 Agenda era About IFC IFC 3.0 mobilization and market creation Background: Building on existing collaboration and achievements Presentation of Strategic Partnership Agreement Theory of Change Strategic considerations Policy Framework Justification of the support MFA s analysis of challenges and opportunities for the partnership Legal, Institutional and Financial Partnership Agreement Budget Risks Results Framework and monitoring of the partnership with IFC... 9 Annex 1 Innovation in select sectors Annex 2 Process Action Plan Annex 3 Examples of results achieved through the 2010-MoU

3 Abbreviations DFI IDA IDH IFC IFU FCS GHG MFA MIGA MoU ODA PPP SDGs SDIP SMEs UN USD Development Finance Institution International Development Associations The Sustainable Trading Initiative International Finance Corporation Investment Fund for Developing Countries Fragile and Conflict Situations Green House Gasses Ministry of Foreign Affairs of Denmark Multilateral Investment Guarantee Agency Memorandum of Understanding Official Development Assistance Public-Private Partnership Sustainable Development Goals Sustainable Development Investment Partnership Small and medium-sized enterprises United Nations United States Dollars 2

4 1. Summary of the Strategic Partnership Agreement The overall objective of the Strategic Partnership Agreement between the Ministry of Foreign Affairs (MFA) and the International Finance Corporation (IFC) is to strengthen the two organizations collaboration on how best to leverage the private sector s contribution to sustainable development with a focus on business innovation that can catalyse transformation and foster sustainable economic growth. On a broader notion, the partnership seeks to provide input to discussions on how best and most effectively to engage and leverage the private sector as the global community works towards the United Nations Sustainable Development Goals (SDGs). The MFA envisages supporting IFC s Advisory Services with a yearly contribution of DKK 20 million in with a focus on business innovation in key sectors such as energy, agribusiness, manufacturing, and financial services 1 (subject to annual approval of Finance Act). The MFA-IFC partnership will: Be centered upon business innovation that can catalyse transformation and play a critical market making role, through a number of stages: o Identifying, promoting and documenting game changing technologies and/or business models, including by investing in small and medium-sized enterprises (SMEs), women and youth; o Mobilizing knowledge and investment, and removing barriers that inhibit more rapid technology adoption, such as perceived financial risk; o Accelerating and scaling-up adoption and increasing the impact of clean technologies and business models over business-as-usual adoption rates; and Contribute to strengthening IFC s focus on development impact and additionality of investments, and seek to build knowledge and best practices to be disseminated in relevant fora; Enhance synergies between development finance institutions and the United Nations (UN) by bringing into the UN learnings from IFC and vice versa (policy-engagement/thought leadership); Promote public-private partnerships (PPP), inter alia build knowledge on effective engagement modalities, continue strategic PPP collaboration through the initiative to replace 3GF; and explore how common partnerships with initiatives such as the Sustainable Development Investment Partnership (SDIP) and the Sustainable Trading Initiative (IDH) can be leveraged; Scale-up strategic communications to disseminate best practices and results; Strengthen cooperation between the Danish private sector and IFC; including by making concerted outreach efforts in Denmark targeted companies, institutional investors, pension funds, IFU and other Danish parties; and Identify opportunities for secondments and facilitate the exchange of human resource knowledge. The partnership agreement replaces the 2010 MoU between Denmark and the IFC. 1 Through the Green Growth Platform, the SME Ventures Programme and the Africa Development Programme 3

5 2. Context: The private sector is critical in the 2030 Agenda era To implement the SDGs will require massive investments, innovation and collaboration across sectors. PPPs will play a key role, with business and investors helping to identify and scale-up more sustainable business models as well as helping to bridge the funding gap to implement the SDGs. The potentials to leverage official development assistance (ODA) and to bring in private investment is great. Expanding public-private cooperation in the form of blended finance is one of the most important ways the international community can support developing countries as they seek to generate the investment required to meet the SDGs. Working with the private sector in the pursuit of the SDGs is at the core of the Danish strategy for Development Cooperation and Humanitarian Assistance (2017). Noting the paradigm shift of the SDGs, Denmark will mobilise and catalyse private capital and bring into play business, investors and pension funds to help identify more sustainable solutions to global challenges, and to set the world on a sustainable path. The Danish Investment Fund for Developing Countries (IFU) is critical in this endeavour. International Finance Institutions, such as the International Finance Corporation, can also play a critical role. It is against this backdrop Denmark and IFC engage in a strategic partnership covering About IFC IFC, a member of the World Bank Group, helps developing countries achieve sustainable growth by financing private sector investment, mobilizing capital in international financial markets, and providing advisory services to business and governments. IFC s mission is to reduce poverty, improve living conditions, and promote sustainable and comprehensible development in the developing world. IFC has leveraged about $2.6 billion in capital from member governments to deliver more than $245 billion in financing for development. Each dollar of IFC capital thus leads to about $20 of total project financing, including co-financing from other investors. IFC Advisory Services: IFC s advisory services works on the firm and market level to unlock investment opportunities and strengthen clients performance and development impact. IFC s advisory portfolio includes more than 700 advisory projects in about 100 countries, valued at $1.3 billion. 2.2 IFC 3.0 mobilization and market creation IFC has built extensive experience, developed core competences, and established a global footprint through the implementation of its successive business models: IFC 1.0 and 2.0. Building on this experience and in the pursuit of a new architecture for development finance, IFC 3.0 proposes to tackle more difficult development challenges by creating markets and mobilizing the billions to trillions 4

6 needed to implement the SDGs. IFC 3.0 intends to apply a cascade approach; moving countries and sectors along a continuum from public to private finance a function of sector economics, policies, institutions and investments. The IFC-MIGA private sector window was recently approved with the conclusions of the IDA18 negotiation, thus securing a critical underpinning of IFC Background: Building on existing collaboration and achievements The strategic partnership agreement replaces a 2010 MoU between the MFA and IFC focused on priority thematic areas Environment and Climate and Gender equality and with a regional focus in Sub-Saharan Africa and Fragile States. Total amount allocated to IFC under the 2010 MoU amounts to approx. $22 million 2. The partnership delivered convincing results in several areas. The results achieved through the Green Growth Platform were among the most notable and Denmark s funds played an instrumental role. This approx. $11 million partnership supported close to 50 advisory projects, which enabled over 7 million people to obtain improved access to energy and water (mainly clean, safe, affordable off-grid solar services). It also reduced GHG emissions by more than 9 million Metric Tons/Year, and helped to catalyse over $6 billion in private sector investment. Strategic objectives of the 2010 MoU ranged from human resource questions to strengthened collaboration with the Danish private sector. The results were generally very positive. For examples, please refer to annex Presentation of Strategic Partnership Agreement The overall objective of the partnership with the IFC is to strengthen the two organizations collaboration on how best to leverage the private sector s contribution to sustainable development with a focus on business innovation that can catalyse transformation and foster sustainable economic growth. As well, the partnership sets out to contribute to global discussions on how best and most effectively to engage and leverage the private sector in the achievement of the SDGs. Business innovation, as defined in this partnership, may occur through a number of stages: 2 In this period, IFC also received grants from Embassies/Missions amounting to USD 4,3 million 5

7 1) Identifying, promoting, documenting and scaling-up game changing technologies and/or business models; 2) Mobilizing knowledge and investment, and removing barriers that inhibit more rapid technology adoption, such as perceived financial risk; and 3) Accelerating adoption and increasing the impact of clean technologies and business models over business-as-usual adoption rates. Under these headlines, and in light of the challenges and opportunities identified in section 3.4, the strategic partnership includes the following funded/non-funded components: $$ Programmatic Support Non-financial collaboration Strengthen IFC s work in the areas of business innovation in key sectors such as energy, agribusiness, manufacturing, and financial services. These sectors are essential for achieving goals around climate change and adaptation, jobs and competitiveness, and promoting prosperity that is truly shared, including opening up economic opportunities for SMEs and women. Support activities will be at both the firm level and sector level. It will provide direct support to first-of-a kind projects in specific markets, including support to firstmovers that establish new models of investment, as well as sector-wide collaboration to mobilise investment and transform markets. These interventions are underpinned by knowledge management activities to support replication across target markets. Geographically, it is expected that over 60 percent of the activities will be carried out in IDA/FCS, which are especially predominant in Africa. Development impact - IFC 3.0: Contribute to strengthening IFC s focus on development impact and additionality of investments, and build knowledge and best practices to be disseminated in relevant fora, including among staff. Public-Private Partnership: Build knowledge on effective engagement modalities (when are partnerships the most efficient means to the end). MFA-IFC will also continue to engage in strategic discussions relating to the new initiative to replace 3GF, including continued engagement of IFC in specific partnerships of the new initiative, and explore synergies where both partners have a strategic interest, e.g. the Sustainable Trading Initiative, where IFC is a partner and MFA a donor as well as SDIP. Trough leadership and policy-engagement: Enhance synergies between development finance institutions and the UN by bringing into the UN learnings from IFC and vice versa, with focus on, inter alia, mobilisation, development impact/modalities and FCS. Outreach to private sector actors in Denmark: Make concerted efforts to include more Danish companies and investors in the IFC portfolio, and explore synergies with Danida Business Instruments and IFU. Human resources: Identify opportunities for secondments and facilitate the exchange of human resource knowledge. Strategic communications: Scale-up strategic communications around joint achievements and activities. 3.2 Theory of Change IFC s advisory services focus on upstream and midstream activities, or business model development and proof of concept. When these activities are successful, this can: - identify and promote game changing technology and/or business models, and bring new products to market that can have positive impacts on quality of life and society at large (e.g. provide access to off-grid solar devices, reduce GHG emissions); - have demonstration effects which lead to upscaling and an increase in private investments; - play and innovative, market-building role whereby investments lead to the growth of SMEs, job creation, economic growth and sustainability. 6

8 IFC s development impact and additionality in these areas is greatest where private sector solutions are not possible; where IFC can make a significant different to reaching tipping point for products/services/models, and where access to risk capital is limited. Ultimately, when IFC s interventions lead to crowding-in funding from other sources, public and private, they have a catalytic impact that further adds to the development impact. Finally, IFC brings sustainability and responsibility into the mindset of the private sector. Inputs Outputs Outcomes Impacts Finance Advisory Services Investment and ESG expertise Project development Management and monitoring A number of innovative business models where sustainability is at the core SME finance Scalable projects Access to better products and services Decent jobs Contribution to the SDGs Improved quality of life Sustainable economic growth 3.3 Strategic considerations The Danish Government seeks to strengthen collaboration with development banks, hereunder development finance institutions. The renewal of a partnership agreement with IFC thus comes at an opportune time where IFC is in the midst of developing its new strategy, and where further capital has been injected through the IDA18 private sector window. Denmark can be an important source of funding 3 and a partner who can support the advancement of IFC s 3.0 visions. Through the programmatic support offered through the partnerships, MFA gets additional entry-points to lend support and direction to IFC at a critical juncture. Likewise, MFA has recently developed a strategy for its collaboration with IFU, including the launch of an SDG Investment Fund, which perfectly complements the IFC-MFA partnership. To fully leverage the potential of the partnership, the agreement goes beyond programmatic support by identifying areas of common interest in the pursuit of a robust two-way partnership that can help both IFC and MFA succeed in other objectives. As well, sectors such as energy and agriculture, targeted with the programmatic support, are areas where Danish companies have competencies that are relevant. 3.4 Policy Framework The proposed partnership with IFC is fully in line with the Danish strategy for development cooperation, which underlines the importance of market-driven growth and partnerships that can help catalyse and mobilise private funding, knowledge, innovation and new technology for the developing countries, including at the level of entrepreneurs that can grow local businesses and maintain and/or create jobs. The strategic partnership agreement between the MFA and IFC complements MFA s overall organizational strategy with the World Bank Group ( ). 3.5 Justification of the support IFC, as the largest global development institution focused exclusively on private sector development, acts as vector for broader replication in private sector markets, which underlines the effectiveness of partnering with IFC. Furthermore, IFC has a track record of mobilising private finance, which is crucial 3 Denmark is a long-time shareholder in the IFC 7

9 for scaling and enhancing development impact. Finally, IFC is perfectly positioned to forge more sustainable markets through its focus on responsibility and sustainability. The relevance of the funding is evident as IFC depends on donor funding to support interventions that are commercially marginal such as identifying and providing support to first-of-kind projects; to develop successful business models and to translating pilots into mainstream, and ultimately transform markets and improve the lives of people. These are costly and risky activities, and donor funding for such activities is essential for crowding in private investment at scale and bringing about transformational development impact. In this regard, IFC has an important role to play to help create a new mind-set; one that recognises the trade-offs between public and private solutions, and one that prioritises private, or blended finance, before turning to ODA. 3.6 MFA s analysis of challenges and opportunities for the partnership This section entails a brief analysis of some of the key challenges and opportunities related to the strategic partnership. Challenges IFC investments mark a win-win-win effort where IFC mobilises significant capital from the private sector; contribute to sustainable development in the developing countries and reasonable return on investment. Blended finance provides clear opportunities for all parties involved. However, it has to be ensured that the public sector s participation in a PPP is additional. When public money is being used as a catalyst for private investment, the underlying assumption must be that the private sector investment would not have taken place without the additional public funding. Considering the scope of the partnership agreement, the risks that additionality will be compromised are considered relatively minor, and will be sought mitigated through the project selection criteria. The potential for cooperation between IFC and IFU, Danish pension funds, institutional investors and businesses is not fully exploited. Strengthened collaboration among IFC and Danish stakeholders was a priority under the 2010 MoU but with limited success. There are ample opportunities for strengthening the collaboration, where IFC s Paris could play a role. For its part, the MFA can share with IFC experiences on existing collaboration with Danish pension funds, which may provide useful insights to IFC on how to mobilise this sector, which in turn can open possibilities for increased collaboration among Danish pension funds and IFC. Opportunities IFC s renewed focus on development impact as laid out in the visions of IFC 3.0 is a great opportunity for strengthened focus on activities and investments where the needs are biggest. For businesses, the SDGs offer a compelling growth strategy to drive innovation, growth and development at unprecedented scale. Companies that align with the Goals are expected to be rewarded with great market opportunities. Pursuing sustainable growth models, such as new circular and more agile business models or digital platforms, can have transformative impact. IFC plays an important role by spearheading such innovations and business models, and demonstrating how sustainability and development go hand in hand, which in turn can have triple effects and bring more companies to embrace the SDGs. The set-up of the agreement gives opportunity to finance advisory services to firstof-its-kind projects 8

10 4. Legal, Institutional and Financial 4.1 Partnership Agreement The Strategic Partnership Agreement will be outlined in an Annex to the trust fund agreement. 4.2 Budget The contribution to IFC is secured via the Finance Act and subject to annual approval. The indicative DKK 60 million budget for the commitment to the IFC will be allocated between the described focus areas (cf. section 3) on a competitive basis. Criteria for fund allocation will be developed jointly by IFC and MFA. Criteria could include: SDG impact; potential for scaling; The competitive basis will mitigate the risks of funds sitting unspent in a trust fund. 4.3 Risks Investments in developing countries are generally associated with a relatively high perceived and real risk, which is also a reality faced by IFC. As well, focusing on upstream and midstream activities, such as business innovation, there s a risk the business model/products may not break through and deliver the intended development impacts. The following are some of the key program risks relating to the MFA-IFC agreement, and an indication of how these risks can be mitigated. Risk assessments on specific projects will be undertaking prior to initiation. Political and Enabling Environment risks: IFC implements its work in many low-income countries and fragile states where the political and investment climate can be unpredictable. This can result in changes to program design and targets. IFC has teams working in the regions carefully scope and adapt interventions to minimize this risk. Client Commitment risks: IFC depends on the commitment of client companies and partners to implement its work. In some instances, companies are not able to commit resources to implement recommendations during the initial stages of pilot development and before benefits are proven. To mitigate this risk, IFC will reach out to companies in priority geographies and industries, and support their involvement by reducing their perception of risk. Environmental and Social risks: In the past, investments in certain sectors (e.g. palm oil) have been on hold while IFC and the World Bank developed a strategic framework for re-engagement. There is always the risk that such moratoria will occur in other sectors that IFC operates in, and this could impact on the activities of the program. The mitigation for such risks will often lie in the adoption of voluntary standards consistent with IFC s performance standards, so the work undertaken via the program forms part of IFC s risk mitigation for being engaged in these risky sectors Limited Funding risks: In spite of IFC s strong development partner relationships, client contributions, and IFC s own strong commitment to its Advisory Services, there is a risk that sufficient funds may not be crowded in alongside Danish funds. In this regard, IFC will work with existing key development partners to mobilize complementary resources. 4.4 Results Framework and monitoring of the partnership with IFC IFC has a strong track record in results measurement for private sector development. Core metrics are well established and include, but are not limited to: greenhouse gas emissions reduced; energy saved; number of people or businesses without improved access to services and/or financing; and private 9

11 sector financing facilitated. These metrics are captured at the project level and then aggregated for the program as a whole. Targets at the partnership/project level will be established in tandem with the development of project selection criteria, cf Results (outputs, outcomes and impacts) will be monitored on an annual reporting cycle as well as at project completion. In addition to the core metrics that focus exclusively on the parts of the agreement where funds are implicated, annual meetings/consultations between the IFC and Denmark will be organized to review all objectives of the partnership. 10

12 Annex 1 Innovation in select sectors Examples of innovative approaches that can drive substantial development impact, and scale up private sector investment include: 1. In Energy, supporting new storage technologies, including scaling up the adoption of superefficient direct current (DC) appliances, e.g. cooling and refrigeration, to enable off-grid solar to deliver higher levels of energy service (moving households up the energy ladder ), improving energy storage (taking advantage of advances in solar and battery technologies, in particular to help those with an unreliable electric grid service and to cut out the pollution associated with using diesel/gas generators), supporting the use of smart meters, promoting the use of advanced electronics for the power grid, as well as demand response and energy management solutions. 2. In Agriculture, advancing access to finance among smallholder farmers through support for new agrifinance and risk management products, and promoting uptake of off-grid energy for productive uses through developing, testing, and scaling adoption of new technologies (e.g. solar irrigation, solar motors, dryers, and cold chain refrigeration). 3. In Manufacturing, advancing the efficiency, productivity, and diversity of value chains, including by mobilizing private sector investment in innovations that advance resource efficiency (i.e. use of water and energy) and in business models and organizational approaches that improve productivity and promote women s economic empowerment. 4. In Finance, supporting fast growing SMEs in fragile markets, with a specific focus on helping scale up IFC s SME Ventures program 4, in addition to advancing agrifinance solutions. 4 The SME Ventures program will identify and assess new fund managers for potential investment, and following any investment, will develop tailored Advisory projects for each client fund manager. Each Advisory project will include activities to support the fund manager through (1) strategy and organizational setup; (2) staffing and training; (3) corporate governance and Environmental and Social compliance set up and capacity building; (4) investment pipeline and investment process; (5) financial management systems and SME Diagnostics for other areas of attention. Specific interventions for each fund will be based on a diagnostic In parallel, SME Ventures is working in collaboration with the Finance & Markets Global Practices to conduct regulatory assessments of approximately three countries per year; these will contain recommendations to the government for addressing any related regulatory or ecosystem challenges. 11

13 Annex 2 Process Action Plan Time line Activity Documentation Responsible 31 January 2017 Concept Note finalised and delivered to Concept Note VBE KFU 2-15 February 2017 Concept Note in public hearing Concept Note KFU 23 February 2017 Programme Committee Meeting Minutes from KFU/VBE meeting End of February 2017 Revise strategy document Final Programme VBE Document Beginning March 2017 Strategy document with appropriation Final Project VBE/KFU cover sheet delivered to KFU Document and additional documents (t) 21 March 2017 Council for Development Policy Minutes from KFU meeting End March/beginning Presentation to the Minister for Signature KFU April 2017 Development Cooperation March/April 2017 Develop trust fund agreement with IFC Final documents VBE April 2017 Signing ceremony WB VBE spring meeting) Trust Fund Agreement, incl. annex on strategic partnership agreement April Disbursement request from IFC Money transfer VBE Formulation and quality assurance It is suggested that MFA s strategic partnership with IFC is exempted from the normal appraisal procedures. The main reason is that the responsible department (Growth and Employment - VBE) has good technical capacity within the area of the support. 12

14 Annex 3 Examples of results achieved through the 2010-MoU Examples of results achieved through the supported provided under the framework of the 2010 MoU include: Inclusive Green Growth Trust Fund: Interventions through the Green Growth Platform provide direct support to first-of-a kind projects in specific markets, including support to first-movers that establish new models of investment, as well as sector-wide collaboration to mobilize investment and transform markets. The interventions have been underpinned by knowledge management activities to support replication across IFC and by the private sector within the target markets. Focus areas as follows: Clean and Resource Efficient Growth - utilizing clean technology and innovation to promote low carbon economic development and efficient resource use; Resilient Growth supporting growth that is capable of withstanding shocks (including climatic events) without permanent impacts on local communities; Key development results: The trust fund has to date supported close to 50 Advisory projects, 75% of which have been in IDA countries or have been umbrella projects with IDA components. These projects have enabled considerable progress on core aspects of the 2010 MoU: Leverage of funding - The funds from this trust fund have seeded and supported advisory projects that are expected to cost almost $90 million. Denmark has contributed USD 7.9 million, other donors have contributed around $49 million to date to the same projects. In addition, IFC has contributed a further $3.2 million and IFC clients are directly contributing USD 2.5 million in fees to support implementation of the IFC advisory program. Some of these projects still need additional funding to cover the full implementation costs, and hence USD 26 million are still being sought. Hence, each $1 of funding is expected to leverage around USD 7 dollars in other funding.this ratio is expected to exceed 1:10 once all selected projects are fully financed 5. Climate mitigation and adaptation - Reducing GHG emissions by more than 7 Million Metric Tons/Year, enabling 6 million MWH of energy use to be avoided each year, and helping to catalyze over $5 billion in private sector investment by innovating new business products and models. This is over 3 times the trust fund s aspirational target of $1.45 billion Inclusive, Gender-smart Growth - Over 7 million people have obtained improved access to energy and water (mainly clean, safe, affordable off-grid solar services), with an expectation that 28 million will gain access over the life of the projects. This has been particularly beneficial for women and children, who are most exposed to the considerable health dangers of using the more unsafe alternative of kerosene lamps or candles. Additionally, women are important distributors of off-grid solar products. Private sector development in FCS - Support to critical agricultural irrigation work in Niger, off-grid energy access development in Afghanistan and Myanmar, and hydropower development in Nepal. Corporate Social Responsibility (CSR): The partnership for Advisory Services relating to CSR was established in 2015 as a complement to the existing partnership on Inclusive Green Growth - to further catalyze inclusive, sustainable practices in the private sector, 5 Information as of 31 December

15 beginning with support for two IFC Advisory Services programs: Small and Medium Enterprises and Value Chains; and Environmental and Social Risk Management in Financial Institutions. Key development results: SMEs and Value Chains - Expanding the reach and impact of Inclusive and Sustainable Value Chain programs offered by more than 90 large firms and financial institutions - increasing the business capacity of over 65,000 SMEs, including smallholders and retailers. - Offering online SME business development resources that were accessed by 6.7 million people in 43 countries. - Helping to expand the IFC/ILO Better Work partnership to 60 global clothing brands and adding 94 factories as program participants in Bangladesh, thereby advancing the goal of improving the working conditions of more than 3 million factory workers. Environmental and Social Risk Management in Financial Institutions - The Sustainable Banking Network grew from 14 to 20 countries expanding to include Kenya, Turkey, Pakistan, Honduras, Morocco, and Paraguay. This brings the program two-thirds of the way towards its long-term aspiration of 30 countries countries (Bangladesh, Brazil, China, Colombia, Indonesia, Kenya, Mongolia, Nigeria, Peru and Vietnam) have now launched national policies, guidelines, principles, Africa Development Partnership: The Africa Advisory Services Trust Fund (TF072345), since renamed the Africa Development Partnership Trust Fund, was launched in 2014 to finance advisory services in countries in Sub-Saharan Africa 6. Denmark joined the trust fund in 2015 as part of the existing Denmark/IFC partnership. The Africa Development Partnership is an IFC-led multi-donor partnership that seeks to strengthen and develop the private sector in Sub-Saharan Africa in order to foster inclusive economic growth and eradicate extreme poverty. It focuses specifically on addressing development needs in the infrastructure and energy sectors; to advance industrialization; and to create employment, support entrepreneurship and enhance skills. Drawing on the learnings of the Private Enterprise Partnership for Africa, the Africa Development Partnership focuses on innovation, scalability, knowledge sharing, and impact. Key development results: Overall, projects supported by Danish funding in the past ten years have helped to generate over 18 billion in financing for micro, small and medium-sized enterprises, saved the private sector more than $162 million by simplifying regulatory compliance requirements, and helped to improve basic services for at least 18 million people in the region. The overall Development Effectiveness 7 rating for projects funded by Denmark is above 75 percent (indicative). Some examples of successful closed and ongoing projects include: Investment Climate Reform Programs are very important in Africa and essential for private sector development in particularly in fragile and conflict-affected situations (FCS). The Somalia Investment 6 Denmark supported the predecessor to the ADP, Private Enterprise Partnership for Africa (PEP Africa), over the past ten years. 7 The development effectiveness rating (DE Rating) is a combination of the performance of five project components: strategic relevance, output achievement, outcome achievement, impact achievement and efficiency. These are combined in a synthesis rating which indicates the development effectiveness of projects on a six point scale. Projects rated as highly successful, successful or mostly successful are overall rated positive, whereas projects rated as mostly unsuccessful, unsuccessful or highly unsuccessful are overall rated negative. 14

16 Climate program started a few years ago, and played a very important role to address the issues of poor and unevenly enforced regulatory environments that result in high levels of informality and uncertainty. Because of the program, a presidential decree established a Doing Business taskforce to address recommendations of a comprehensive Doing Business reform memo for Hargeisa (Somaliland). A coordination office for Public-Private Dialogue was established with the Ministry of Trade and Investment, and Doing Business reform trainings were delivered through training events in Hargesia. A peer-to-peer learning events were held in Addis-Ababa (Ethiopia) and Juba (South Sudan). As of December 31, 2015, the program enabled to register 750 firms that filed tax returns and one government entity that implemented recommended changes. The Energy and Resource Efficiency Solutions in Africa program, a regional initiative which aims to catalyze the uptake of resource efficiency and clean energy solutions that reduce the use of energy, water, and other resources, with a view to increase the competitiveness of companies in the manufacturing, agribusiness and services sectors. The program helps to GHG emissions. Interventions include solutions that combine solar photovoltaic technology with biomass-to-energy facilities to supply up to 80 percent of Hans Merensky Holdings 8 timber and avocado processing facilities in Limpopo province (South Africa), equivalent to three megawatts. Another example is helping LafargeHolcim, a cement producer, to source refuse-derived fuel to partially offset natural gas usage in its kilns as well as generate additional power (up to 14 megawatts) to supply directly industrial consumers or the national grid and iii) developing practical business, technical and organizational solutions for alternative-fuel use in target countries (Ethiopia, Kenya, Nigeria and Senegal). Human Resources: Denmark seconded two senior advisors to IFC under the frames of the 2010 MoU. 8 Hans Merensky Holdings (Pty) Ltd is a South Africa renewable bio-resource company that operates in forestry and lumber processing and agribusiness. 15