Vietnam Business Challenge Fund

Vietnam continues to be one of the fastest growing economies in the world, demonstrating sustained growth rates over the past decade. The development of Vietnam’s private sector, marked by rapid and steep growth, is largely due to foreign investment, the transitioning of the country from an agrarian-based economy to one based on manufacturing of value-added products and an increase in exports and industrialisation. Despite the remarkable economic achievements that made Vietnam a middle-income country, the poverty gap and inequality are increasing.

Many Vietnamese, particularly in rural areas, continue to lack access to markets, employments and basic services. All these factors create a significant and untapped opportunity for a market-based approach to generate wealth and sustainably grow the private sector while at the same time contributing to poverty eradication. The Vietnam Business Challenge Fund (VBCF), funded by UK Aid and managed by SNV, supported private companies operating in Vietnam to develop innovative Inclusive Business models that deliver both commercial benefits for the company and developmental benefits for people in low income groups, in terms of job creation, income improvements and availability of more affordable goods and services.

VBCF provided technical assistance, training, mentoring and non-reimbursable funding of up to 49% of the total investment in selected Inclusive Business projects that were innovative, inclusive and commercially viable. VBCF challenged businesses to become competitive leaders, pioneering win-win business models that created:

• Increased market share and profits in emerging markets for businesses

• Jobs, increased income and affordable goods and services for low income people

The VBCF project, which was implemented between September 2012 and December 2015, operated in three main sectors, agriculture, low-carbon growth and infrastructure, which were  identified as the areas in which private sector investment could deliver big impacts on poverty reduction, respond to development challenges of Vietnam and also produce good returns on investments. In total the VBCF signed 23 contracts with companies working in agriculture (10), low carbon growth (7) and infrastructure and basic services (6) with a value of more than USD 5 million and 21 initiated activities.