Kontakt oss

Telefon: 22 03 31 50
E-post: post@framtiden.no
Mariboes gate 8

Støtt arbeidet vårt

Liker du arbeidet Framtiden i våre hender gjør? Med din støtte kan vi gjøre enda mer.
Bli medlem nå!

Ja til miljørabatt!

Kutt moms på reparasjon og utleie av klær, utstyr og elektronikk!
Les mer

Vi jobber for en rettferdig verden i økologisk balanse

×

Advarsel

JUser: :_load: Kan ikke laste bruker med id: 80

Too easy to get money from NORAD: Development aid down the drain

NORAD's appropriation to feasibility studies only led to a small degree of business establishments in developing countries. NorWatch has gone through the payments to Norwegian companies in the years 1991 and 1992, and it appears that as much of 68% of the money, more than 10 million NOK, never led to anything. (1 USD is app. 7.5 NOK) NORAD even provided money to companies which were practically bankrupt. It is good reason to question the quality requirements NORAD put down for project seriousness, but NORAD itself is happy with the situation.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
NORAD's appropriation to feasibility studies only led to a small degree of business establishments in developing countries. NorWatch has gone through the payments to Norwegian companies in the years 1991 and 1992, and it appears that as much of 68% of the money, more than 10 million NOK, never led to anything. (1 USD is app. 7.5 NOK) NORAD even provided money to companies which were practically bankrupt. It is good reason to question the quality requirements NORAD put down for project seriousness, but NORAD itself is happy with the situation.


By Harald Eraker and Morten Rønning
Norwatch

An increasing number of Norwegian companies get support from NORAD (Norwegian Agency for Development Co-operation) to investigate the potential for establishment of business activities in developing countries. The NORAD funds for such studies are primarily used for travels, consultancy fees and market research.

NorWatch's investigations of countless project plans by Norwegian companies in the years 91 and 92, reveal the most incredible stories of project failures, unrealistic plans and companies which no longer exist.

In many of the companies which got such support in 91 and 92, it seems like the knowledge about the potential for establishment has been zero prior to start of the project.

As an example, a paper recycling project in Africa was stranded because the use of paper in the country is too small! The company behind the feasibility study considered import of used paper from other countries in order to at least get the project going, but dropped the plans. The project went down the drain.

«Nothing became of the project. The marriage broke up, can't exactly remember why.»
Recipient of feasibility study support from NORAD, 1991 and 1992.

68% out the window.
NORAD financed 39 feasibility studies for projects in 1991 and 41 in 1992. 59 companies were behind the total of 80 projects. The support from NORAD represented 9.328.000 NOK in 1991 and 5.678.000 NOK in 92. Today it appears that as much as 28 of the 39 projects which received support from NORAD in 1991 (72%), never materialised. 6.3 million NOK, or 68% of the money, were thus lost. For the following year, the number of projects down the drain is 29 of 41 (71%), and the money lost were 3.9 million NOK, or 69%. In other words, two thirds of NORAD's financial support to feasibility studies led to nothing at all. For the two years NorWatch looked into, this represents a waste of more than 10 million NOK, distributed among 80 projects. In the period since the support arrangement started in 1987, NORAD has paid out more than 62 million NOK to Norwegian companies. If the two years NorWatch has studied is representative, this means that around 42 million NOK has been given to Norwegian companies for projects that were never realised. - We actually think that it is pretty good that every fifth feasibility study has led to establishments. The risk factor in many of these countries is high, and the point of these studies is to ensure that NORAD does not supports projects on unsteady ground, says Raymond Johansen, division head in NORAD.

«We dried out before we got the project started.»
Recipient of feasibility study support from NORAD, 1991 and 1992.

Yachts and rich mans club.
In addition, the aid element of the projects is often difficult to find. One of the recipients of NORAD support wanted to build yachts and a rich mans club in Thailand. The Norwegian company in question boasts of the fact that the Thai partners involved, are massively rich.

NorWatch is told that one of the partners lost millions of Thai bath a weekend at the casinos in Macao. But, according to the Norwegian company which received a total of 240.000 NOK from NORAD during 91 and 92, slow proceeding in NORAD led to the failure of the project.

Some of the lost money went to multinational companies like Norsk Hydro, Dyno Industrier and Kværner. One can ask why large and resourceful companies gets support for projects which are highly uncertain.

- We wish the large, influential companies to establish themselves in the poorest countries. But in order for them to take the chance to establish an activity in high-risk areas, we need to reduce some of that risk. If not, they establish themselves in richer development countries, says Raymond Johansen, who understands it may seem strange that support is given to companies with billions in profit.

- But Dyno Industrier has been given support for studies in Indonesia, where they are already established?

- I agree that one may question the risk factor in this case, answers division head Johansen.

The amounts range from 6000 NOK to more than 2 million NOK. The largest amount in 1991, as much as 2.070.000 NOK, went to a ferry company which wanted to replace poor bus connections in Cuba with a ferry. After the ferry had waited for licence in Cuba for three months, it was rejected. Today the ferry operates in the Adrian Sea.

«You know what Sri Lanka is like, corruption and things. Nothing more happened.»
Recipient of feasibility study support from NORAD, 1991.

Dissolved companies
The recipients of NORAD support for feasibility studies the two years in question vary from the large locomotives in Norwegian industry to small one man business ventures. Many of the companies are impossible to find. The reason for this is, among other things, that 10 of the 59 companies which received support, or app. 17%, have since been closed or gone bankrupt.

According to the Brønnøysund register (Norwegian business register), the company Green Wool, which received 60.000 NOK from NORAD in 1991 to investigate the feasibility to start up a project in Pakistan, handed in their last accounts in 1988 (three years before they received the support) and was foreclosed in 1992.

- If this is true, NORAD's routines unfortunately failed in this case. In any case, we can predict as little about the future as everybody else, Johansen says and adds that NORAD's routines for checking companies seeking support is thorough.

The company Oxynor AS went bankrupt in 1991, the same year they received 273.000 NOK from NORAD. Other companies still registered in the Brønnøysund register, only exists on paper and is otherwise impossible to trace.

In the search for companies receiving support, NorWatch has encountered the most incredible stories. One company wanted to start production of leather clothes in Africa - today the company sells car parts in Norway.

Many companies have problems explaining why things went wrong. One company says that it was the previous executive director who ran the project by himself, and consequently the company is unaware of why it failed.

Many companies claim unprofessional partners in the relevant countries, corruption, political instability and that the developing country is not ready for the Norwegian projects.

Raymond Johansen emphasises that the purpose of the support for the feasibility studies is to divide the feasible from the non-feasible project, in order to avoid that NORAD ends up supporting the establishment of unsustainable projects in high risk areas.

- One has to remember that very little functions in many of the poorest countries, be it phones, postal systems or other things we take for granted in Norway, Johansen says.

Several companies makes a point of the fact that they themselves lost large sums of money on the projects, but that the potential for establishment in developing countries are not impossible.
 
The actors
Export Finance (Eksportfinans) offers long term and export oriented financial services to the export industry often in close co-operation with the Government. Eksportfinans is owned mainly by the large Norwegian banks.

The Guarantee Institute for Export Credit (Garanti-instituttet for eksport kreditt - GIEK) is the central governmental body for guarantees and credit insurance for exports, and has as its aim to improve Norwegian exports in general. GIEK was responsible for the proceedings during the Ship export Campaign.

The Directory for Developing Aid, NORAD, was responsible for approving the developing country element of exports to developing countries during the Ship Export Campaign.

Norwatch Newsletter 4/97

- Annonse -