What we do
The private sector of many developing countries consists primarily of informal microenterprises operating alongside a limited number of large firms. SMEs, which can be important contributors to equitable economic growth and job creation, are often lacking or few in number. Cordaid’s Private Sector Development efforts aim to address this ‘missing middle’ by supporting SMEs with an innovative two-track strategy: Resilient Business Development Services and Access to Finance.
In the Netherlands, Cordaid’s Cooperative Entrepreneurship program supports initiatives and municipalities that want to establish a social cooperative. In collaboration with various parties, such as local businesses and civil society organizations, Cordaid helps social cooperatives to become sustainable. Our program reaches out to people with a low income and/or a distance to the labor market in the Netherlands, who are thwarted in their plans to set up their own business for various reasons. Either because they do not fit the frame of a regular 9-to-5 job, or because their age makes it difficult to find a job. Or they may lack working experience, or a degree, or because they are socially isolated. Within a social cooperative people have the possibility to discover and develop their talents, become more self-reliant and actively take part in society again.
Resilient Business Development Services
Track 1 involves support for SMEs through Resilient Business Development Services (RBDS), before and after they receive a loan or equity investment. The RBDS program is designed to improve financial, social and environmental business performance and geared towards making enterprises ‘investment-ready’ and resilient. The RBDS program offers selected SMEs an integrated support system that includes business training, one-on-one coaching, in-business technical expertise, access to information and networking opportunities. SMEs receive group training and mentoring on key subjects, such as operational management, internal management, supply chain management, marketing, financial management, risk management, business rule of law, and access to finance.
Access to Finance
Track 2 leverages the success of RBDS by providing investment capital to eligible SMEs to catalyse business growth. Whilst foreign investors and local banks are rarely willing to invest in SMEs in transition economies due to the excessive costs and risks involved, Cordaid is confident that the RBDS program delivers investable SMEs and therefore reduces the risks.
This two-track approach ensures that capital is allocated effectively to those SMEs that have the capacity to create sustainable social impacts, while also generating competitive financial returns.
Social cooperatives in the Netherlands
In the Netherlands, Cordaid’s work with social cooperatives consists of three phases: the orientation phase, the start-up phase and the development phase. After two years of Cordaid’s support, social cooperatives should be (financially) sustainable to continue their business.
In the orientation phase Cordaid provides information, assesses the business plan of the social cooperative and discusses the meaning and interpretations of the Participatiewet with the municipality (this law, amongst other things, aims to bridge the labor gap for people with a distance to the labor market).
The start-up phase includes the formal establishment and registration of the social cooperative. Cordaid advises on legal, fiscal and financial matters, drafts statutes, agreements and general conditions.
In the development phase we provide custom made support. Our trainings help social cooperatives to improve key skills, work out a business plan, as well as pricing and marketing strategies. We also assist the board with day-to-day business.
Once the cooperative is strong enough, we keep track of progress of its individual members and operate as a sounding board.