Interview with Bernt Hagenlocher, Senior Investment Manager in the Business Support Service Team of DEG Impulse gGmbH, a wholly owned subsidiary of DEG-Deutsche Investitions- und Entwicklungsgesellschaft in Cologne.

Can development cooperation (DC) bring about institutional change in Germany’s partner countries? Skepticism as to whether this claim can be fulfilled has grown in the development policy debate in recent years.

In contrast, the Business Support Services program that DEG Impulse offers to existing and potential corporate customers is an impressive example of how technical assistance (TA) must be designed in order to bring about real change on the ground. The starting point is always the customer’s willingness to change. They must make change a top priority for their company, mobilize employees to drive the change process forward and put up their own money. If these conditions are met, DEG covers up to 50% of the costs of highly specialized consultants who accompany the change process at the customer’s company. The consultants’ assignments usually last a few weeks or months. The aim is always to empower the company as quickly as possible.

The BSS program also has a very lean and efficient structure and differs from many other development cooperation programs in this respect. However, the program is aimed exclusively at corporate clients and only in individual cases at other private sector actors, such as associations. Nevertheless, key experiences can also be transferred to TC with state or para-state actors. This applies in particular to the focus on a clear objective of the measure (not overloaded with a multitude of objectives) and DEG’s internal lean management of the program. Particularly in times when development cooperation is being called into question by the public, development cooperation actors need to learn more from each other in order to become more efficient.

DEG Impulse’s Business Support Services program will be presented in the following interview:

Question: What is the scope of the Business Support Program (BSS), how much funding are we talking about and how many DEG Impulse employees are involved?

We are 12 employees with a capacity of 9 full-time positions in the BSS team and work on approx. 90 – 110 new projects per year, i.e. approx. 12 new and approx. 20 existing projects per full-time specialist. The TA projects financed range from a minimum of EUR 40,000 to a maximum of EUR 400,000, with 50% of the costs being borne by the customer. In some cases, the partner share is also higher.

Since the TA or Business Support Program was founded 12 years ago, 1,230 projects with a funding share of 69 million euros have been implemented. Part of the funding comes from the BMZ and part from DEG’s own funds.

Question: Which questions or problems are typically dealt with using the BSS program?

We mainly work on the following problems:

  • Impact of the company’s activities on employees, local residents, suppliers and others. What measures can be taken to improve the position of the stakeholders involved?
  • Resource efficiency and climate protection: What measures can be taken to reduce the pressure on natural resources and a company’scarbon footprint ?
  • Economic sustainability: What changes in the company organization, in work processes or in market cultivation are necessary to put the business model on a sound economic footing in the long term and thus create and secure good local jobs?
  • Corporate governance: How can good corporate governance be ensured in the long term? This includes, for example, the development of succession plans in a family business or the streamlining or reorganization of corporate structures so that they become transparent for potential lenders.

Question: How does a BSS project come about, how is it awarded and how is it handled?

The starting point is that the DEG customer, the DEG account manager or members of the BSS team see the need for such a measure. The BSS project objective and the scope of the project are then defined (Terms of Reference), the customer provides a “change team” (usually involving the management level) and commits to covering at least 50% of the costs. DEG Impulse puts the consultancy project out to tender on this basis. It can draw on a pool of several hundred highly qualified specialists worldwide and increasingly also in the client’s partner countries. Customers can therefore be sure that they will be provided with world-leading expertise for their specific problem.

Once the project has been completed, follow-up projects may arise. A final report and a final meeting are held at the end of the project. Customers are also systematically asked about their satisfaction with the project implementation. The approval rates are generally high.

Question: We would be interested in 3 typical examples of BSS projects?

Let’s take a German medium-sized company that operates forging plants for aluminum parts in Asia, among other places. Our BSS team has been working with this company since 2017. It started with a resource and energy efficiency check to identify potential savings in energy and water, which was a game changer for the company in terms of economic potential. A follow-up project then focused on implementing the recommendations and setting up a management system to continuously improve energy efficiency. With the successes that followed, the local management caught fire and, with the help of BSS, implemented a circular economy approach in the third phase, in which innovative concepts for reducing waste, water efficiency and heat utilization were tested: for example, the heat generated in the forge in summer is now stored in an underground pipe system for the heating period in winter. Today, we are working with the company on further climate transformation: the focus is on reducing the CO2 footprint in the supply chain, for example by recycling used aluminum and converting logistics.

The second example concerns a Mexican customer that rents out complete operating theaters, including nursing staff, to hospitals. This customer had a high level of staff rotation, particularly in the foreign branches. The fluctuation rate was up to 50% p.a. in some cases. By bringing in a competent personnel consultant, it was possible to greatly improve employee satisfaction and reduce staff turnover to 10% p.a. within a short period of time.

One of Cameroon’s leading banks had to record and process a large amount of daily data in such a way that reliable and standardized data was available for the entire company on a daily basis. Each department worked with its own Excel sheets. As a result, lenders, customers and the central bank often received significantly delayed and sometimes contradictory information. With the help of DEG BSS Support, the bank was able to recruit consultants who, in cooperation with a task force of the bank, set up a consistent and up-to-date data management system. This has significantly helped the bank to become the leading institution in Cameroon. Locally, the more efficient processes have improved access to financing for local companies and consumers.

Question: Seen from the outside, it is remarkable how many projects a year are managed by a relatively small team. The projects are also usually designed and launched in just a few months. How is this efficiency achieved?

It is essential that we decide on the projects in direct cooperation between the DEG account manager and the BSS team. We also work with standard contracts. When recruiting consultants, we work with both framework contracts and package tenders for typical consulting projects. This means that we do not have to put each project out to tender individually. Other departments within the company are called in on their own initiative if our team sees a need for support with unusual legal, environmental or social issues. This reduces time-consuming coordination processes with other departments.

We have agreed efficient processes with the BMZ as the funding body. New projects are reported on once a quarter. Coordination on individual projects only takes place in rare cases, e.g. if this is necessary due to the size of the project.

And last but not least, it is essential that we work on an equal footing with local companies that know what is needed locally and are so convinced of the project that they contribute their own share of the costs. This leads to very reliable partners who implement jointly developed concepts quickly.

Cover photo: DEG / Photographer: Andreas Huppertz

Autoren

  • 70 years old, married, 3 children and soon 4 grandchildren. I studied economics at the University of Münster and then completed a postgraduate course at the German Institute for Development Policy (now IDOS).

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  • View all posts Senior Investment Manager im Business Support Service Team von DEG Impulse gGmbH
DEG technical assistance brings about institutional change in the Global South

Roger Peltzer


[wpml-string context="pb-bioinfo" name="info-1"]70 Jahre alt, verheiratet, 3 Kinder und 4 Enkelkinder. Ich habe an der Universität Münster Volkswirtschaft studiert und anschließend den postgraduierten Kurs am deutschen Institut für Entwicklungspolitik (heute IDOS) absolviert.[/wpml-string]


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