Strengthened efforts to promote private sector development

In the white paper Working together: Private sector development in Norwegian development cooperation (Meld. St. 35 (2014–2015)), the Government sets out how it will intensify its efforts to create an enabling environment for private sector investments in poor countries, and establish new schemes for public–private cooperation.

‘The intention is not that our development assistance funds should create the jobs needed, but we will help developing countries to build an enabling environment for economic growth. Education and good governance are also of key importance in this context,’ said Mr Brende.

The Government will also offer more information and advice for Norwegian companies operating in challenging markets. In countries that have substantial Norwegian investments, the Government wishes to cooperate more closely with the private sector on measures that can increase the local economic spill-over effects generated by Norway’s engagement, making the development impact of this engagement greater.

‘To a greater extent than before, Norwegian development assistance funds will be used to co-finance projects together with the private sector, for example with a view to reducing risk. In this way we will use aid strategically to mobilise private investments that promote development,’ said Mr Brende.

Just as business activities stimulate growth, Norwegian knowledge institutions can contribute to economic development through capacity-building and the transfer of expertise. Cooperation with Norwegian higher education and knowledge institutions will therefore be important in connection with our efforts to promote private sector development.

‘We will make better use of the various actors’ strengths than we have done before. We will cooperate with the Norwegian private sector and knowledge institutions in areas where they can make a particular contribution, especially in the energy, ICT, agriculture, fish/marine resources and maritime sectors. In other areas, the multilateral financial institutions and the UN will be key partners for Norway.

‘We will look for opportunities to co-finance education projects or other measures, in areas where the private sector and the development aid sector have interests in common. But private sector engagement must be based on the competitiveness of the projects concerned, and not be a form of subsidy,’ said Mr Brende.

Other key actions that the Government announces in the white paper include:

• Increasing Norway’s support for private sector development in developing countries.
• Increasing the use of innovative financing mechanisms that can be used to mobilise capital or other input factors from the private sector.
• Facilitating strategic cooperation with the Norwegian private sector and knowledge institutions, with a view to achieving better performance.
• Strengthening collaboration between the authorities and the private sector in developing countries, for example relating to the local economic spill-over effect of major business investments.
• Establishing a business information and advisory service for Norwegian companies operating in developing countries. 
• Strengthening Norfund (the Norwegian Investment Fund for Developing Countries) as a key channel for support to private sector development and investments in renewable energy.
• Replacing Norad’s current application-based scheme with a new, competitive scheme.
• Using trade as an instrument of development policy to a greater degree than before.
• Encouraging partnerships with the Norwegian private sector, with a view to enhancing the expertise of the local private sector.
• Working to improve the conditions for human rights and workers’ rights, protecting the environment, promoting anti-corruption work and basing Norway’s efforts on best practices in the area of corporate social responsibility.
• Supporting targeted efforts to reduce political, economic, legal and other structural obstacles to women’s participation in the private sector; and

Improving the global environment for business through dialogue with and support for the multilateral development banks and the UN system. Efforts will be focused on fewer – and more large-scale – projects.