Co-operation with Emerging Markets (PSOM)
Frequently Asked Questions
for Development Co-operation of the Netherlands has
initiated PSOM in order to alleviate
through co-operation between Dutch businesses and businesses
in the PSOM countries* with a focus on private investments.
A total of EUR 51 million is yearly available for new
commitments to PSOM projects.
(50-60% of the initial investment costs is paid in
the from of a grant) is provided to joint
initiatives of at least a Dutch company
(lead-company) and a company in the PSOM country in
setting up joint innovative pilot-projects, making
use of international and local know-how, goods and
services. Companies from other countries may join
It is expected that
successful try-outs will be continued on a
commercial basis and/or duplicated by the private
The business projects
are expected to contribute to poverty alleviation.
Projects creating substantial local employment,
transferring knowledge, making extensive use of
local SMEs in the supply chain, operating in
geographically disadvantaged regions, generating
income for a substantial group of beneficiaries
and/or contributing in other ways substantially to
poverty alleviation will receive priority in the
selection process. Projects however have to be at
all times sound business proposals that lead to a
sustainable business relation.
shall - on behalf of the Government of the Kingdom of the
Netherlands- be executed by the Dutch Government Agency EVD,
in consultation with the Royal Netherlands Embassies and
responsible for the accurate implementation of PSOM.
PSOM pilot project must:
initiated by a private company from the Netherlands (applicant), together with a company from the PSOM
innovative for the PSOM country (new product, new
contain large commercial and/or financial risks
which make it unlikely that the project will be
initiated without PSOM's involvement;
pro poor effects (employment creation, positive
income effects etc.);
consist of a combination of technical assistance and
exceed a maximum budget of EUR 1,500,000 (or EUR
800,000 for LCD's);
finalized within two years;
to commercial follow up investments.
The EVD will
invite twice a year in March and August (consortia of)
companies to submit proposals for projects. The Dutch
company in the consortium will make the application to the
EVD and serve as the contact point with the EVD. The
proposals must be based on the tender instructions which are
available on the PSOM website
Also on this website there is information available on
information meetings, workshops and there is a description
of a number of successful PSOM projects. After appraisal all
companies that were successful will be awarded a
result-based PSOM-contract. During the appraisal process EVD
will consult the Netherlands Embassies in the PSOM
countries and visit both the Dutch and local project
Can starting companies
apply for PSOM?
All companies applying for PSOM should prove their financial
capacity to finance the own contribution of 40-50%. This
must be supported by audited financial reports of the last
two years. Starting companies normally cannot fulfill this
requirement and are then not eligible for PSOM. Starting
companies are recommended to look for a financially strong
business partner, which becomes the lead investor.
Can starting companies be
the recipient of a PSOM project?
Yes, but recipient companies should be duly registered in
the PSOM country and have substantial activities.
Q: Can the local
partner be a 100% subsidiary company of the Dutch company?
Yes, but the PSOM programme prefers a local partner company
with clear roots in the PSOM country. For PSOM projects in
China, the recipient must be a 100% Chinese company.
Q: Who decides which
countries are eligible for PSOM?
The Ministry of Foreign Affairs decides. The list is based
on the DGIS partner countries plus a few emerging markets
countries. No new non-partner countries are added
Q: Why are only
Mozambique and Uganda open for lead-investors from other
The partial untying of PSOM in these two countries is an
experiment. There are currently no plans to expand this
Q: Can foreign
companies outside the Netherlands and the PSOM country be
involved as partners in the consortium of PSOM projects?
Yes they can be project partners, however, they can be not
the applicant or recipient.
Q: Can the own
contribution be paid for by one of the project partners, not
being the recipient or applicant?
The project partners must show their commitment to the
project by contributing financially to the project. In case
of difficulty in financing the own contribution another
project partner can contribute partially.
Q: Can a project
consist of more technical assistance than hardware?
The type of project defines the balance between technical
assistance and hardware.
Q: Can a company
apply twice for PSOM?
In principle this is possible. The projects should have
different activities. The applicant must be able to manage
both projects and must be financially strong enough to make
multiple follow-up investments. Companies that have applied
for PSOM can also be project partners in other projects.
Q: Are there rules
for the division of shares between joint venture partners?
Ideally the division should be on a balanced basis (around
50-50). However sometimes the recipient is unable to cover
half of the own contribution. In these cases a different
division of shares may be proposed, but each partner must be
seen to contribute substantially.
Q: Can companies from
PSOM countries apply directly for PSOM to the EVD?
No, PSOM proposals are submitted by the lead company
(applicant) to the EVD. The lead company must be registered
in the Netherlands. Only for companies interested to start a
PSOM project in Mozambique and/or Uganda the lead company
can be another foreign company from a DAC-I country. PSOM
promotes foreign investment, so the lead company is always a
Q: Are there
organizations that can help a local company find a partner
from the Netherlands?
Local companies could consult the Netherlands Embassies for
assistance. They can also search for a (trade-) partner on
the website of CBI
EVD can provide lists of consultants and intermediary
organizations that specialize in match making.
Q: What role can
research institutes, universities and NGO's play within
They can not play the role of applicant or recipient, but
they can very well play a role as a project partner
providing training or services within the project.
Q: How is the
selection of the proposals carried out?
The selection is done by EVD. The proposal is firstly
checked on completeness and then judged according to set
criteria. These criteria are listed in the tender
instructions (www.evd.nl/psom). Subsequently EVD's ranking
is presented to an external board. Here the outcome of the
appraisal is decided upon. During the appraisal process EVD
will normally visit the applicant and the recipient. In most
cases external experts are also involved in the appraisal
Q: Is PSOM a subsidy?
No, PSOM operates through a tender procedure whereby
successful bidders get a contract with the EVD. The annual
budget is limited and only the best proposals are offered a
Q: How do projects
Depending on the MoU for the PSOM country concerned, either
the first two or the first four projects that score the
highest number of points (and at least above the minimum
required points) are awarded a contract. Should more
projects for a PSOM country qualify, then the proposals with
the highest points worldwide are awarded a contract
depending on the funds available.
Q: How often a tender
is held and where do I find information on the tender
Twice a year there will be a call for proposals. The
information on the exact dates for submission and the tender
instructions are available through the website www.evd.nl/psom.
Q: How are the
different criteria weighed in the selection process?
There are a number of criteria on which a project proposal
project plan, financial aspects and
capability, additionality and development effects.
for the tender instructions.
Q: Does the hardware
that is being purchased in the PSOM project have to come
from the Netherlands?
No, it can be bought wherever the companies get best value
for money, but the environmental standards of the equipment
must meet European safety and emission standards.
Q: Who becomes the
owner of all PSOM (hardware) investments?
The recipient in the PSOM country becomes the owner.
Normally a Joint Venture will be set up and becomes the
recipient and owner of these hardware investments. For
China different rules apply. The Chinese business partner(s)
will be the benificiary of the hardware part financed
through the programme (for details see the PSOM MoU with
Q: Can second hand
goods be purchased under a PSOM project?
Yes, on the condition that reasonable guarantee conditions
apply and that the price is checked on it's market
Q: What is market
The price of hardware with a value > EUR 25,000, that is
purchased under a PSOM contract, should be validated by an
independent validation organisation (SGS, Veritas etc.), on
its market conformity. The request to purchase hardware must
be accompanied by a market conformity document stating that
the price is fair and reasonable.
Q: What is a result
A PSOM contract is based on the results that are defined by
the applicant in the project proposal and agreed in the
contract. Once a result has been achieved, EVD will make a
payment as per the contract. When a result is not achieved
EVD will not reimburse the costs.