Cooperation with the private sector

Since the 2015 Addis Aba­ba Action Agen­da on Financ­ing for Devel­op­ment, it has been wide­ly recog­nised that it is now essen­tial to har­ness the dynamism of the pri­vate sec­tor in order to help imple­ment the sus­tain­able devel­op­ment goals (SDGs) glob­al­ly. It is with this in mind that the for­ma­tion of a clos­er rela­tion­ship between the Lux­em­bourg Devel­op­ment Coop­er­a­tion and these actors has been encour­aged, with the spe­cif­ic aim of iden­ti­fy­ing inno­v­a­tive solu­tions and mak­ing them avail­able to help achieve devel­op­ment objec­tives in the Lux­em­bourg Devel­op­ment Coop­er­a­tion part­ner coun­tries. All the avenues explored in this frame­work place a cen­tral focus on the respon­si­ble con­duct of com­pa­nies in rela­tion to human rights and com­pli­ance with envi­ron­ment criteria.

On the basis of an inter­nal review of the instru­ments avail­able and ongo­ing projects, the year 2022 fea­tured prepara­to­ry work for a ded­i­cat­ed and coher­ent port­fo­lio avail­able to LuxDev for coop­er­a­tion with the pri­vate sec­tor, in par­tic­u­lar for mobil­is­ing com­pa­nies in the Glob­al South on eco­nom­i­cal­ly viable projects, con­tribut­ing to the SDGs and address­ing struc­tur­al defi­cien­cies iden­ti­fied in local markets.

Thus, the teams of the Direc­torate for Devel­op­ment Coop­er­a­tion and Human­i­tar­i­an Affairs and LuxDev have worked togeth­er to devel­op a set of three instru­ments: (1) the Busi­ness Part­ner­ship Facil­i­ty (BPF), (2) the Chal­lenge Funds, and (3) demon­stra­tion projects. The BPF is part of the pack­age in its revised ver­sion, while the Chal­lenge Funds will rep­re­sent a new tool avail­able to the Lux­em­bourg Devel­op­ment Coop­er­a­tion. This makes it pos­si­ble to launch calls for pro­pos­als on a theme ded­i­cat­ed to the local/​regional lev­el, to which com­pa­nies in the Glob­al South will be able to respond by propos­ing inno­v­a­tive solu­tions, which will sub­se­quent­ly be co-financed by LuxDev. The third instru­ment, demon­stra­tion projects, will allow these local solu­tions to be scaled up, if they have demon­strat­ed ade­quate poten­tial. For the lat­ter project type, three pilot coun­tries have been iden­ti­fied: Sene­gal, Koso­vo and Rwan­da. The planned financ­ing takes the form of co-financ­ing, its imple­men­ta­tion will be super­vised by a sci­en­tif­ic mon­i­tor­ing sys­tem designed to demon­strate the out­comes of the inter­ven­tions, and the award of funds will be con­di­tion­al on spe­cif­ic com­mit­ments relat­ing to due dili­gence. It should be not­ed that the Lux­em­bourg nation­al con­tact point for the OECD Guide­lines for Multi­na­tion­al Enter­pris­es is sup­port­ing LuxDev to imple­ment an ambi­tious approach in terms of due dili­gence in the con­cep­tu­al­i­sa­tion of these new instruments.

It should also be not­ed that these are three sep­a­rate instru­ments tar­get­ing direct col­lab­o­ra­tion with enter­pris­es. They will there­fore be com­ple­men­tary to the var­i­ous instru­ments avail­able to the Inclu­sive and Inno­v­a­tive Finance Ser­vice, which seek to mobilise pri­vate financ­ing through inno­v­a­tive financ­ing tools and projects.

The Busi­ness Part­ner­ship Facil­i­ty (BPF), a tool that aims to encour­age the Lux­em­bour­gish and Euro­pean pri­vate sec­tor to link up with part­ners in devel­op­ing coun­tries (busi­ness­es, admin­is­tra­tions or NGOs), is there­fore oper­at­ing accord­ing to pro­ce­dures that have been revised since April 2022. The part­ner­ship approach, which lies at the heart of the instru­ment, pro­mot­ing the North-South and South-North trans­fer of tech­nolo­gies and exper­tise, has been pre­served. In order to bet­ter meet the pri­vate sector’s demands, the facil­i­ty has gone from one call for pro­pos­als each year to a mode of oper­a­tion with two selec­tion process­es per year, with one clos­ing date at the end of April and anoth­er at the end of Octo­ber, thus allow­ing com­pa­nies to sub­mit projects through­out the year. The eli­gi­bil­i­ty areas were aban­doned, and so any inno­v­a­tive project that can demon­strate a con­tri­bu­tion to the SDGs in a devel­op­ing coun­try is now eli­gi­ble. How­ev­er, pri­or­i­ty is still giv­en to inno­v­a­tive solu­tions based on the smart use of emerg­ing tech­nolo­gies that appear promis­ing for imple­men­ta­tion in often dif­fi­cult con­texts, prefer­ably in the Lux­em­bourg Devel­op­ment Coop­er­a­tion part­ner coun­tries and/​or coun­tries with projects. In addi­tion, the web­site bpf​.lu has been redesigned, and an online match­mak­ing plat­form has been added, thus facil­i­tat­ing the cre­ation of North-South part­ner­ships, which is an essen­tial con­di­tion for eligibility.

In 2022, four high-qual­i­ty projects were select­ed, tak­ing the num­ber of projects cho­sen by the BPF to 38 since 2016.

Mul­ti­lat­er­al­ly, the Lux­em­bourg Devel­op­ment Coop­er­a­tion has con­tin­ued its com­mit­ment with the Enhanced Inte­grat­ed Frame­work (EIF), a mul­ti-donor pro­gramme direct­ly linked to the World Trade Orga­ni­za­tion (WTO). The pro­gramme aims to pro­vide spe­cif­ic sup­port to the least devel­oped coun­tries to enable them to play a more active role in the glob­al trade sys­tem. Luxembourg’s finan­cial com­mit­ment for 2016 – 2022 amounts to EUR 4.5 mil­lion, bring­ing Luxembourg’s over­all con­tri­bu­tion to EUR 9 million.

The Lux­em­bourg Devel­op­ment Coop­er­a­tion also con­tin­ued, togeth­er with the LuxDev teams, its involve­ment in the Donor Com­mit­tee for Enter­prise Devel­op­ment (DCED), which is a net­work of prac­ti­tion­ers placed in dif­fer­ent the­mat­ic work­ing groups, with the aim of exchang­ing good prac­tice and exper­tise between inter­na­tion­al actors work­ing on the mobil­i­sa­tion and engage­ment of the pri­vate sec­tor in devel­op­ment contexts.

At nation­al lev­el, two spe­cif­ic issues should be not­ed: the Direc­torate for Devel­op­ment Coop­er­a­tion and Human­i­tar­i­an Affairs has also par­tic­i­pat­ed active­ly in the work of the ​“Busi­ness and Human Rights” work­ing group, respon­si­ble for imple­ment­ing and mon­i­tor­ing the sec­ond nation­al action plan on busi­ness and human rights (NAP 2), and in the inter­min­is­te­r­i­al com­mit­tee respon­si­ble for defin­ing the broad guide­lines on the duty of care for Lux­em­bourg com­pa­nies, and even prepar­ing Luxembourg’s posi­tion for nego­ti­a­tions in rela­tion to a Euro­pean direc­tive in this field, sched­uled for 1 Feb­ru­ary 2022.

In 2022, the Direc­torate for Devel­op­ment Coop­er­a­tion and Human­i­tar­i­an Affairs also took part in the Cir­cu­lar by Design Chal­lenge imple­ment­ed by Lux­in­no­va­tion, with a spe­cif­ic cat­e­go­ry aimed at encour­ag­ing the Lux­em­bourg econ­o­my to work on inno­v­a­tive solu­tions to meet the chal­lenges faced by pop­u­la­tions and/​or prac­ti­tion­ers in the fields of devel­op­ment coop­er­a­tion and/​or human­i­tar­i­an action. The selec­tion process runs until spring 2023 and will close with an award cer­e­mo­ny in May 2023.