Goal and structure of DGGF
By providing finance and insurance through the DGGF-programme, the Dutch Ministry of Foreign Affairs creates the conditions to development related trade and investment in 68 countries.
DGGF links aid to trade
The DGGF believes it is vital that Dutch and local entrepreneurs work responsibly in emerging markets and developing countries. By linking aid to trade, the DGGF improves access to finance for entrepreneurs in the Netherlands as well as developing countries and emerging markets. By increasing access to finance for entrepreneurs and investors DGGF links aid to trade. Entrepreneurs with strong proposals aiming to contribute to development can apply to the DGGF for loans, guarantees and share capital (via intermediary funds). When banks prove unwilling to provide funding, the DGGF can provide Dutch entrepreneurs and investment funds with direct credit. In doing so, the DGGF improves access to markets and strengthens the financial infrastructure in both the Netherlands and locally.
Priority to women and young entrepreneurs
In addition, the DGGF gives priority to women, young entrepreneurs and entrepreneurs in fragile states. It works with intermediary funds and finances the investment and export plans of Dutch entrepreneurs who also wish to increase access to finance for these target groups. Applications are specifically assessed on a project’s relevance to the target groups. Proposals by Dutch entrepreneurs can be screened on, for example, their gender aspects. This can, for instance, lead to the provision of technical assistance if a project involves local production by women. Technical assistance strengthens direct environmental factors such as training in the production method, primary medical care, the combination of work and childcare/education and equality in working conditions and pay. The aim is to strengthen the economic position of the women directly involved in the investment project. Where a project involves young entrepreneurs or entrepreneurs in fragile states, pro-active technical assistance may consist of, for instance, technical and/or marketing training.
International corporate social responsibility (ICSR)
We aim for the DGGF to combine long-term profit and viability with lasting economic and social benefits. To achieve this ambition both the Dutch and the local entrepreneurs must adhere to standards of international corporate social responsibility (ICSR). The main ICSR principle for the DGGF is that entrepreneurs bear their responsibility for their actions in accordance with the OECD Guidelines. They must be aware of relevant ICSR aspects and risks, and show that they take account of them (for example by having an ICSR policy and incorporating ICSR principles into their systems and procedures). This is checked by the fund managers that administer the DGGF, with the aid of the OECD Guidelines, the IFC Performance Standards and the FMO Exclusion List. This is the CSR framework.
A second key principle is that a project must provide opportunities for improvement. Conditions in low- and middle-income countries and emerging markets are often far from perfect. Where ICSR does not receive the attention it deserves, the fund managers make suggestions for improvement, sometimes in combination with training courses and assistance from the DGGF. During implementation, companies regularly report on their progress in ICSR areas.