The Business Linkages Challenge Fund (BLCF), financed by the British Government’s Department for International Development, supported commercially sustainable private sector partnerships which help reduce poverty in target developing countries.
Companies were able to access grants between £50,000 and £1,000,000 in order to increase access to markets, transfer technology, improve competitiveness, or address the policy and regulatory environment for business. While the BLCF has now closed, with the last funds committed in March 2005, the model succeeded in generating considerable interest from both private sector and donor organisations seeking to work more directly with private sector led poverty reduction initiatives..
The cost and risk-sharing grants made available to enterprises via the BLCF programme provided a vehicle through which DFID sought to achieve its objective of developing commercially sustainable business linkages that bring benefits to the poor. The aim was to work in demand driven partnerships with the private sector towards the shared goal of eradicating poverty.
Effectively acting as a private sector development instrument, the BLCF leveraged the significant capacity of the private sector to engage in projects with a high impact on development. Private sector companies were required to invest at least 50% of the total project funds. The BLCF shared and thus off-set the risk associated with their involvement in new initiatives.
A wide range of projects have been funded through the BLCF, all of which shared the following key features in order to meet eligibility criteria:
Real Linkages
Projects involved creation of commercial linkage between organisations, in which all parties invested in the project and shared as stakeholders in its commercial benefits.
Commercially viable Projects were commercially viable long-term after initial BLCF support, and in the interests of the linkage partners such as to ensure their sustained commitment to the project after the grant was spent, while maximising breadth of impact and the potential for replication or expansion. Achieving poverty reduction, of course, remained the overriding objective.
Poverty Impact
The BLCF seeks to support projects that bring benefits to the poor, either through employment or the provision of products or services. On the whole, the impact on the poor has been through the growth generated as a result of the commercial linkages, usually through the creation of new employment, improved livelihoods and access to markets for competitive projects.
Applications to the fund had to be led by a for-profit private sector enterprise, and involve two or more organisations, with at least one private sector partner coming from one of the 19 BLCF target countries in Southern Africa and the Caribbean. Many successful BLCF projects involve direct partnerships between two or more private sector entities, but in some cases third parties such as government partners and NGOs were also involved in implementation, as linkage partners, and at the interface between the formal and informal sectors.