Doing business in developing countries
Economic growth is an important weapon in the fight against poverty and hunger in developing countries. The government therefore encourages these countries to develop their private sectors. For example by helping entrepreneurs build their knowledge and skills.
Dutch contribution to a good business climate in developing countries
Entrepreneurs should not be held back by expensive, complicated procedures. That is essential for the creation of employment opportunities in developing countries. The Netherlands therefore focuses on the following conditions for sustainable business:
- increasing access to markets;
- good legislation;
- reliable official bodies and other organisations;
- good infrastructure;
- access to financial services.
Increasing access to markets for entrepreneurs from developing countries
Poor knowledge of markets and strict requirements for market access form constraints for entrepreneurs from developing countries. This also applies to the quality standards for products that may be sold on the European market. The Netherlands therefore helps entrepreneurs from developing countries to gain access to national, regional and international markets. And it helps them integrate into production and value chains, for example through the Centre for the Promotion of Imports from Developing Countries (CBI) .To promote East African exports and regional trade, the Netherlands is working through TradeMark East Africa towards clear customs regulations and compliance with them.
Good legislation in developing countries
Good legislation leads to higher revenues and a more attractive tax and business climate in low- and middle-income countries. The Netherlands therefore supports these countries in improving their legislation – to build a strong tax administration and simplify registration procedures for companies, for example. The Netherlands also helps to bring low- and middle-income countries more into line with international trade law.
Reliable official bodies and other organisations in developing countries
Reliable official bodies and other organisations that work both quickly and well are essential for a good business climate. The Netherlands wants to assist in this area and thus support entrepreneurs and investors in low- and middle-income countries. With its private sector instruments, the Netherlands promotes sustainable business.
The Netherlands also ensures transfer of knowledge and expertise. Through the Netherlands Senior Experts Programme (PUM) it provides local entrepreneurs with expert advice. Government authorities also receive assistance in setting up land registries. The Netherlands also supports food standards agencies, trade unions, and employers’ and producers’ organisations through, for example, the Dutch Employers Cooperation Programme (DECP).
Improving infrastructure in developing countries
A functioning, accessible infrastructure is essential to ensure a good business climate in developing countries. The Netherlands therefore operates programmes to develop both public and private infrastructure in low- and middle-income countries. Examples include the Private Infrastructure Development Group (PIDG) and the Infrastructure Development Fund (IDF). The largest programme targeting investment in infrastructure is the Infrastructure Development Facility (ORIO).
Access to financial services in developing countries
Access to financial services boosts economic activity and makes small businesses and people in low income groups more self-reliant. Examples of financial services include savings and payment facilities and insurance. The Netherlands therefore works closely together with various parties, for instance within the G20, on an inclusive finance agenda. It provides technical assistance through a public-private partnership involving the Dutch government, Rabobank and banks in Africa. The aim is to promote the financial infrastructure.
The Netherlands enables smallholders and small businesses in areas where banks do not operate to get access to microcredit. The Dutch government also helps mitigate the risks of doing business internationally, for example exchange rate risk through the TCX Fund.
The Health Insurance Fund (HIF) strengthens the insurance sector in low- and middle-income countries. The Dutch NGO PharmAccess International is responsible for administering this fund. The HIF, which is financed from public funds, has led to a private investment fund: the Investment Fund for Health in Africa (IFHA).
Dutch Good Growth Fund
The Dutch Good Growth Fund (DGGF) will be launched on 1 July 2014. The aim of this new, revolving fund is to promote development-related investment in and trade with developing countries. The focus will be on small and medium-sized enterprises (SMEs) in both developing countries and the Netherlands..
The government will allocate the following amounts from the Foreign Trade and Development Cooperation budget to the Dutch Good Growth Fund: €100 million in 2014, €150 million in 2015, €150 million in 2016 and €300 million in 2017.
For more information, contact the Netherlands Enterprise Agency (RVO).
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