Approved by: Villa Kullid
English Translation of Grant Scheme Rules for Application-Based Support for Private Sector Actors
Chap. 161, Post70 Private sector development
These Grant Scheme Rules have been designed in line with Section 6 of «Reglement for økonomistyring i staten»(«Rules for state financial management») andChap. 6 of «Bestemmelseromøkonomistyring i staten» («Provisions on state financial management»). TheseGrant Scheme Rules cover Norad’smanagement according to Chapter Post161.70 and are subordinate to the rules for and provisions on state financial management.
1Objective of the scheme
The objective of the scheme is private sector development (PSD) in developing countries.
The support scheme intend to pave the way for long-term commercially viable investments through financial support for risk-reducing measures and/or measures that promote the sustainability and feasibility of private investment projects.
Support will be provided within the political instructions current at the time, in particular those from the annual national budget proposition to Stortinget (the Norwegian parliament), (Prop. 1 S). Financial support is also contingent on annual allocations over the national budget.
2Target group for the grant scheme
The scheme’s target group is private sector and industry actors in the developing countries. Companiesthat can document the will and ability to invest in developing countries are relevantgrant recipients.Other possible grant recipients would be professional organisations and business-related institutionsthat are able to implement measures whichare particularly suited to promote the objective of the scheme.
Business and industry is a key channel for promotion of the objectives of the scheme, but it is emphasised that the intention with the scheme funds is not to promote Norwegian private sector and industry. In accordance with a decision in the OECD Development Assistance Committee, support through this scheme is untied to national companies.
3Criteria for achievement of the objective
The application and subsequent reporting to Noradmust describe the measure’s key activities and products/services («outputs»). Depending on the nature of the measure, an assessment must be made of whether one will be able to achieve / has achieved the objective of the measure («outcome»), any deviation from the planned outputs andoutcomes, risk handling in the project period and the sustainability of the measure, as well as lessons learnt from the measure. It must as far as possible be established as probable that the funds are resulting / have resulted in the desired impact on society, in line with the overall objectives of the scheme. Special reporting criteria will be specified in the agreement between the grant recipientand Norad.
4Award criteria
Support is awarded on the basis of applications from individual players. Grantsmay be provided in connection with measures that contribute to long-term, binding investments or the establishment oflocal enterprises within the scheme’s geographic impact area.
Geographic impact area and high-priority sectors
Measures in the least developed countries (LDC), countries in Sub-Saharan Africa and long-term cooperation countries for Norwegian Official Development Assistance (ODA), are given priority.In addition to the geographic prioritisations in the scheme, the measure also needs to take place in an ODA-approved country with a gross national income per capita that is lower than the World Bank’s ceiling for providing loans on particularly favourable conditions, currently USD 7035.
Priority is given to measures that promote investments in renewable energy, environment and climate-related technology, agriculture, forestry and the marine and maritime sector. Within the prioritised geographic focus areas, interesting projects in other sectors might also be considered for support. Particularly interesting measures within the prioritised sectors might in exceptional cases qualify for support even if they are located outside the geographic areas prioritised.
Support categories
Grantmay be provided forfeasibility studies, including preliminary investigations as well as pilotprojects / pilot production. The purpose will be to reduce the risks present before an investment decision is made. Grants may also be given for training of local employees in connection with a company being established, necessary basic physical and social infrastructural investment, as well as measures to do with health, safety and the environment. The purpose of these last-mentioned support categoriesis to secure the sustainability and feasibility of the investment project. In order to reduce the importers’ risk when importing directly from developing countries, a guarantee scheme has been established under the scheme, cf. decision VIII in Prop. 1 S. Further information on each support category can be found together with the announcement on Norad’swebsite.
The applicant’s equity interest, commercial risk, technical/administrative/financial ability
The criteria for achievement of the objectives weigh heavily in the assessment of each support measure. Commercial players who seek support through this scheme should normally have /plan for an ownership of at least 25% in the established/planned company, and should be able to document their technical, administrative and financial ability to implement and follow up the investment, both during the agreement period and after the support measure has been implemented.It is crucial that the grant recipient undertakes some risk in connection with the measure/investment. Companies seeking support through this scheme should normally have a turnover of at least NOK 10 million for the last year, in order to be considered. Applicants unable to show satisfactory financial statements for three years, must document in some other way that they have access to the financial resources needed to implement and follow up the investment.
Development effects
It is important that measures that receive support though the grantscheme, result in development effects/impact in the recipient country. Development effects from investments in developing countries may be job creation, transfer of technology, labour force participation for women, tax revenues, currency earnings and/or economic spill over effects for local businesses.
Scope of the support
Under normal circumstances, the grantproportion of the total budget for the measure will not exceed 50% for feasibility studiesand training measures and 80% for the other support categories, but these upper limits may be exceeded under special circumstances. Noradmay also reduce the grantif the applicant haspreviously received support through Chapter Post 161.70. Measures with a total budget of less than NOK 250 000 will generally not be granted.
Norad’sconditions and requirements
Noradpresupposes that the grant recipient of lives up to the Government’s expectations regarding corporate social responsibility[1]. It is required that:
- The main project and the measure for which support is granted, are based on ILO’s basic conventions on social and labour standards
- The main project and the supported measure are in line with international environmental commitments and national environment-related requirements
- The grant recipient respects the principle of zero tolerance for corruption, cf. Item 6Follow-up and control
- The grant recipient has ethical guidelines for its developmental activities
Private sector activities that produce weaponry or other military materiel, intoxicants such as alcoholic drinks and narcotics, as well as tobacco, will not be supported. Applications for private sector activities in a grey zone, or when doubt arises for other reasons, will be presented to the head of department, and if necessary be discussed with Norad’s Director General before a final decision is made.
5Information to potential grant recipients
The grant scheme is published on Norad’swebsite (
6Follow-up and control
Applications
Applications should be submitted to through the postal service to Norad, Section for Private Sector Development, P.O. Box 8034 Dep., NO-0030 Oslo, Norway. The application form (S51, or S52 if appropriate) is available below the announcement text on Norad’s website and should normally be used in addition to any other project documents. The required content of the application has been specified in guidelines to the application form.
Applications are processed continuously. The applicant will be informed in writing when the application has been receivedand when a decision has been made. Norad’sdecision may be appealed to the Ministry of Foreign Affairs pursuant to the provision in Chapter VI of the Public Administration Act. Any appeal must be presented to Norad in writing within three weeks from the date the information of Norad’s decision was received. The applicant is entitled to access the documents in the case, pursuant to Sections 18-19 of the Public Administration Act. Reasons for the appeal must be given.
The applicant must be able to identify any risks associated with realisation of the objectives for the measure, and assess what countermeasures should be implemented or what type of risk is acceptable.
Follow-up
Support measures under this scheme will primarily be managed according to the Ministry of Foreign Affairs’/Norad’sManagement Regime III «Small Scale Grants.If it is appropriate, grantsare managed according to Management Regime I «Project and Programme Support»[2].The need to follow up each support measure will be considered in the decision documentation and integrated in the agreement.The choice of management regimeand how close the follow-up shouldbe, will be made based on an assessment of the significance and risks of each measure.
The grantrecipient commits to report concerning the objectives and associated activities that have been stipulated in the agreement with Norad, see Item 3 Criteria for achievement of the objective. The report must be so designed that it can be compared with information in the application and the signed agreement, and it must contain a brief summary of the measure, including key outcomes and activities. Any deviation from the application must be commented on. If relevant, the measure’s impact on the environment, the climate and gender equality must be described in brief. As a main rule, the final report which includes the financial report, etc., must at the latest be presented to Noradtwo months after implementation of the measure. Terms and conditions for disbursement of the grantwill be included inthe agreement.
The need to audit the accounts for one-off grants awarded through this scheme will be considered carefully. Requirements on auditing of accounts will be included in the agreement between Noradand the grant recipient, and the need will depend on the risk and importance of each measure,as well as current practice for the support category in question.
Notification of suspicion of financial irregularities:
Norad practises zero tolerance for corruption. This means that the grant recipienthas a duty to organise the activity in such a manner that it efficiently combats corruption, misuse of money and irregularities throughout the organisational chain right down to the end user.
Any suspicion of corruption or other misuse of money in a project financed under these Grant Scheme Rules, will normally lead to an immediate halt in the planned disbursements until the matter has been sorted out. Where misuse of money has been documented, repayment of such money will be demanded.
If financial irregularities are suspected, the Notification Team (“Varslingsteamet”) inNoradmust be alerted in line with «Norad’s guidelines for dealing with suspicion of financial irregularities », valid from 25 January 2011).Norad has established a so-called “Whistleblowing Channel” where one can also provide information anonymously, in accordance with the procedures describes on Norad’s web pages:
Public information
All documents that are relevant for the processing of the case, the application, decision document, agreements, reports, etc., will be recordedand are available to the publicpursuant to the Freedom of Information Act.
7Evaluation
Evaluations will be conducted as necessary for parts of or all of the scheme or for more general topics/objectives/countries that cover several grantschemes.
1
[1]Cf. StortingWhite PaperNo. 10 (2008-2009) Næringslivets samfunnsansvar i en global økonomi (Corporate social responsibility in a global economy).
[2]The management regimes are described in «Om å forvalte tilskudd selv» (Managing aid yourself), a handbook on aid management developed for the Diplomatic Service.