Private Sector & Development proparco's magazine
N° 11 / July 2011 Combining funding and technical assistance Cyril Renault
Proparco
2 Achieving impact through technical assistance Halah Al-Jubeir, Gilles Galludec and Peer Stein
International Finance Corporation
6 Private equity and TA, a winning combination for SMEs Aziz Mebarek
Tuninvest-AfricInvest Group
10 Accelerating the expansion of microinsurance Nina Schuler
LeapFrog Labs Ltd.
13 Key data Technical assistance in figures
16 European Union support for the private sector Jan ten Bloemendal, Alessandra Lustrati and Sonia Pagliaro
European Commission
18 Impact assessment of technical assistance projects Tobias Bidlingmaier
Deutsche Investitions – und Entwicklungsgesellschaft mbH
22 Traps to avoid, lessons to be learned Klaus Niederländer and Peter Hinton
Cooperatives Europe Summit Development Group
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Technical assistance, a development tool serving the private sector Including consultancy as part of the investment package not only increases businesses’ chances of survival but also their ability to improve living conditions for local communities. EDITORIAL BY DOV ZERAH PRESIDENT OF PROPARCO
Consultancy and support are an important component of the service that development finance institutions provide to businesses in emerging and developing countries, particularly in Africa. Small and medium sized enterprises are deficient in these areas, especially in governance and financial management, and this hinders their growth as well as their ability to contribute to development. To support them more and encourage them to change, in recent years the universal development banks have been co-financing consultancy programmes to help them improve their information systems, develop new products and break into new markets. This approach, a combination of private investment and financial incentive, enhances both the stability and economic impact of the companies on the receiving end. But the legitimacy of providing grants to support private-sector development is questioned in many circles. How can we justify donating funds to profitable companies? This is the subject tackled in Issue 11 of Private Sector & Development magazine. Grants provided by development finance institutions may be justified when they contribute to the long-term survival of companies and boost their economic impact. But to ensure that this new tool is effective, fills a genuine lack and avoids distorting competition, the impact of funding provided for such projects needs to be measured. This is something to look at again in the future because the variety of different systems of measurement currently in place makes it difficult to evaluate and compare programmes between institutions. The experience built up over several projects nonetheless provides some lessons. With a strong commitment and ownership of the project on the part of the beneficiary company, and monitoring by the lender, a technical assistance programme increases the chances of success. And technical assistance in support of the private sector can become a valuable development tool, available to public development agencies to increase the leverage of their financial input. —