By Bond Robertson 
But the financial return isn’t the most important thing, says Fred owner Johan H. Andersen. The company is now collaborating with the Ikea Foundation and Norad on an entirely new model for development aid financing.
First time: Norad, here at Bård Vegar Solhjell (left), has never joined any private actor in helping refugees. Now they collaborate with Ferd from Johan H. Andresen. The project was initiated by the Ikea Foundation, with Senior Director Per Heggenes (right).
– I answered yes as soon as I heard about it, says Fred owner Johan H. Andersen.
It has recently entered into an agreement with, among others, the IKEA Foundation and the state aid agency NORAD. Together, they will fund activities that will create businesses and jobs for refugees and communities in Jordan.
The project budget is $9.9 million over four years. This corresponds to approximately 83 million Norwegian kroner.
The method in which the project is financed has not previously been used in Norwegian development assistance work. In short, this means that private capital is raised up front and the return that investors get is determined by how well the project achieves certain social outcomes.
The criteria include the number of new companies established and the number of people who receive an increase in income over time.
– Those who get ahead take risks, while we pay for results afterward, explains Ikea Foundation’s Norwegian director Per Heggenes.
The model provides a dynamic where we hope two things will happen: that we can free up more private capital for development assistance and also create an incentive that will produce better results.
The Entrepreneurship and Job Creation project will particularly help young men and women refugees in Jordan, so that they can start their own businesses and earn an income.
The need for more private capital
While Johan H. Andresen has been unreservedly positive from the start, it has been a long process on Norad’s part.
– We use tax money and have to be careful, so we can’t immediately say yes in the same way, says Norad Bård CEO Vegar Solhjell.
He explains that the fact that NORAD is using this method of financing development assistance for the first time now relates to the agency’s desire to use more innovative solutions in its development assistance work.
If the project is successful, Solhjell hopes it will lead to more and more similar projects.
If we are to achieve the set development and sustainability goals, there is a need to stimulate much larger private investment. Therefore, innovation like this is an essential part of NORAD’s new strategy.
You can lose 20 percent
Jordan is severely affected by the conflicts and turmoil in the Middle East, with approximately 660,000 Syrian refugees in the country.
Stimulating business development and job creation is critical to helping the country’s population further. And in a way that makes them self-sufficient, so that they are not dependent on annual aid money. The problem is that these job creation programs in weak areas often carry very high risks for private investors, according to Solhjell.
Too Little: Johann H. Andersen would like an individual to contribute more than $2 million to the Jordan Project.
Andersen, says Johann Andersen, the inclusion of an aid actor like Norad made it possible for an individual to think very differently about the case.
Circumstances in the project mean that Ferd as an investor will lose up to 20 percent of the amount invested if sufficiently good results are not achieved.
In terms of potential returns, the purely financial risks are very high. We usually have a 10 percent return expectation. And when you do something that hasn’t been done before, it’s usually 20 percent. Here it is at best 5 percent.
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He was a prince of tobacco, an heir, a wonder, and a model. Then Johan H. Andresen (60) became the investor who measures success in the number of lives saved.
social back
But in this project, everyone enters knowing that it is not about the return in dollars or krona, as the individual owner points out.
– It’s just about social returns. We have to reach these people. And I firmly believe that if you give people the opportunity to change their future, they will take it.
Initially, an individual subtracts only two million dollars. The rest comes from DFC, the American equivalent of Norfond.
– To work with this for two and a half years, two million dollars is actually less than necessary. So we hope there will be new rounds and opportunities for expansion.
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One in ten are refugees
Since 2017, the Jordanian economy has gradually deteriorated, and before the outbreak of the Corona epidemic, unemployment was close to 19%, according to the World Bank.
Jordan, along with Lebanon, is the country with the highest proportion of refugees compared to the local population (9 percent). The vast majority live below the poverty line.
The vast majority of Syrian refugees in Jordan are unemployed. This is especially true for women.
Meanwhile, E24 and Aftenposten recently shared the revelation that Jordan’s King, Abdullah II, has used tax havens to hide luxury properties around the world worth hundreds of millions of dollars.
Is Jordan a risky country to invest in due to corruption and lack of transparency?
– If the project included the Jordanian authorities, it would be a good question. But here the work is done on the ground by a civil society representative, so I think it looks very different, says Norad Bård president Vegar Solhjell.
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