MAE/023
Private sector partnership instruments

Recognising the essential role that the private sector plays in tackling societal challenges in developing countries and achieving the Sustainable Development Goals (SDGs), the Luxembourg Ministry of Foreign and European Affairs mandated LuxDev to launch a new private sector engagement project in February 2023.

Through this project, LuxDev will identify innovative solutions spearheaded by private sector actors that contribute to the achievement of Luxembourg Cooperation objectives. The project builds on the existing Business Partnership Facility and integrates other two distinct, yet complementary co-financing instruments, creating a more flexible and richer private sector engagement offering for sustainable development.

The first instrument, the Business Partnership Facility, supports economic partnerships between Luxembourgish or European private companies and organisations in the South (list of countries available here) targeting sustainable business projects in developing countries. The partnerships can support transfers of know-how and capacity building, technology transfers, proof of concept or a feasibility study for a new sustainable business opportunity that drive the implementation of the SDGs. The existing portfolio includes over 39 companies and through the project, up to 32 new projects will be supported with co-financing grants of up to 50% of the project cost, capped at 200 000 EUR per project.

The second instrument, the Challenge Fund, targets innovative and impact-driven companies which have a solution for a specific development challenge identified by the Luxembourg Cooperation in one of the partner or project countries. Through open calls for proposals, companies in these countries can apply for co-financing grants of up to 50% of their project costs, capped at 150 000 EUR per project. The Challenge Fund will support up to 32 projects providing quasi-experimental and innovative approaches to solve a societal challenge and pilots aimed at demonstrating the cost-benefit of the intervention. Additional non-financial support will be offered, including for monitoring and measuring the positive impact generated.

The third instrument, the Demonstration Projects, targets companies in three pilot countries, Senegal, Rwanda and Kosovo. Demonstration Projects will typically focus on scaling an innovative solution that has been tested on a smaller scale and whose impact has been proven. LuxDev offices will actively scout for 24 promising innovations in these countries based on the challenges identified in the bilateral cooperation projects. Similar to the other two instruments, selected companies will benefit from a co-financing grant of up to 50% of their project costs, capped at 350 000 EUR per project.