News

• 26 January, 2024
• Posted by: EuroCham Cambodia

This week, Communications Coordinator Brian Badzmierowski interviewed Swisscontact CEO Philippe Schneuwly. Mr. Schneuwly has over 20 years of experience working in international development in eight developing countries. SME development has always been at the core of his work, and he's spent the last 15 years at Swisscontact, working primarily in South America before ascending to the CEO position. Swisscontact Cambodia and EuroCham Cambodia recently signed an MoU and willl partner to assess the skills gap in the country and develop innovative methods for addressing this skills gap. Read more below and check out Swisscontact's recently launched Digital Literacy Initiative here.

Brian: Welcome to Cambodia! It’s a pleasure to have you visit the Kingdom, where we at EuroCham have been able to successfully partner with Swisscontact on several occasions. Given your vast experience and knowledge in the development sector, we’d love to hear your initial thoughts on Cambodia. Does it remind you of other countries you’ve visited or worked in? 

Philippe: No, to be quite honest, it's very difficult to compare countries. Rather than comparing Cambodia to other countries, I would like to stress the differences between countries in Southeast Asia. Cambodia is quite unique, I think, because of its history. But also the level of economic development is so different from the other countries. It's difficult to compare, to be quite honest.  

What are your initial thoughts on Cambodia?

I have not seen much, I visited Siem Reap and Angkor Wat four years ago, and I just arrived yesterday. What strikes me, what’s obvious here in Phnom Penh, is that it’s very busy, people are quite active. You feel that there is a lot of initiative in the private sector, which is a good thing, people are eager to do something. They are very entrepreneurial and very creative.

In the rural areas, it is quite a different picture. Yesterday I was at Smiling Gecko and they told me what they found in the countryside when they arrived 10 years ago. The stories that I heard are similar to what I’ve seen in certain parts of Africa, which is to say that the people have lost some of their ancestral heritage. After the Khmer Rouge period, certain aspects of the history and culture were lost, and you have to start from scratch. This is a very difficult thing to do.

At Swisscontact, you primarily focus on private sector development with a special systems approach. Could you explain this systems-based approach and why it’s proven effective for you? 

Philippe: Swisscontact was created by the private sector and I think the biggest lesson was that the private sector cannot develop without a conducive environment. The private sector, from our point of view, is really the engine of growth. You cannot use a top-down approach by the government to oblige people to develop. That has not worked. The private sector and the people have the incentive to grow if you give them the right space to move, but they need to have a conducive environment.  

And that is the starting point. Systems development for us means that we do not want to come with predefined solutions. The public and private space needs to be defined locally, and we want to strengthen the actors that are part of these systems. We would like to transform the systems in a way that creates opportunities for growth and for more people to come in. 

It should not be a growth that can collapse quickly and that relates to the stability of the system.  So we want to look at the public and private ecosystems, and help transform them to be more inclusive and resilient. 

Yes, you need to feel empowered as an entrepreneur, right? And you need trust between the people and the government.

Philippe: Absolutely. There’s lot of talk in the systems development area about the importance of institutions. And that's not necessarily physical institutions or entities. There are also informal institutions like you say, trust.  

This is basic. You cannot work if there’s not trust, you cannot work if there are no unwritten rules that you respect. Sometimes the written rules are important, but there are also unwritten rules that are very important.  

The monitoring and evaluation aspect is also very important to Swisscontact.

This is absolutely key for us because when we implement projects, we know that you cannot simply replicate experiences because the context is always different. Every project we implement is experimental and if you're experimental, you will fail also. You will need to adapt. This is why the monitoring and results measurement part is so important because it allows us to test our hypotheses and then to adapt the interventions.  

We need to be able to measure progress as quickly as possible to see if interventions work the way we thought. Because otherwise we need to change the hypothesis and adapt the project. And if you don't have data, you're just working on the basis of a hypothesis and you may be heading in the wrong direction.  

You do a lot of follow up afterwards too to check back in and make sure things are still going as you left, to make sure the project has lasting results.  

Philippe: This often happens in international cooperation. You have a project and a framework and when you finalize, you look at what you've achieved and then it's over. We are now starting a new pilot to assess two years after the project, what has happened. The results that we have achieved, are they sustainable?  

Because this is key for us to learn to improve our interventions and to learn.  

In the past, have you faced any difficulties when your ideals, with context ideals or missions sort of rub against our conflict with local norms or regulations? That could be just culture or government regulations and how do you navigate them?  

Philippe: There are contexts where it's really difficult to work because the government controls everything and we have asked ourselves the question if it is meaningful to continue, and in certain situations we have decided not to continue. 

I can give you two examples. One is Nicaragua because of the strong repression but also because you simply could not rely on the government any longer. The other case was Haiti because it is so chaotic, there is no control any longer. It's so insecure that you can hardly do anything, not even work with the private sector.  

In Nicaragua, we tried to work only with the private sector but the problem is, when you only work with the private sector, you cannot do the other half. As I said we try to strengthen ecosystems. We believe that to have a sustainable and long-term effect, you need to work on both sides, with the public sector and private sector. If you only work with the private sector you cannot do anything any longer with the public sector it's just very limited. It's not impossible but it's limited. 

For example in the Sahel (a region in Africa that marks the transition between the Sahara Desert to the north and the savannahs to the south) we have several projects where we just support the smallholder farmers knowing the public sector is very weak.  

You can do very, very grassroots stuff. You can still strengthen smallholder farmers by showing them some techniques but real growth is practically impossible for them. It's really then just food security and basic survival.  

The other case, like in Haiti, where you have practically no possibility to work even with the private sector because you cannot invest. You cannot invest because everything can be lost from one day to the other. That's also practically impossible to do anything and that's very sad. 

In such cases you're focusing on humanitarian aid. At Swisscontact, we don't do any humanitarian aid. Our focus is economic development. And if the situation is too fragile then you probably need to step in with different means and you just support people so they can stay alive.  

There are other kinds of restrictions as well. As I said, you need freedom to do business in any stable framework conditions. But there are limitations here as well. If you give too much freedom and there is no control, then the problem may be that development may become unsustainable. 

The private sector often asks for less regulation. But interestingly, some companies that have high sustainability standards in fact don’t appreciate the kind of competition that drives prices down since this presents a risk to them and also to society. You will always have potential competitors that don't care about anything. And if you have these unethical businesses that  create a race to the bottom, this is also not good for business, at least not in the longer run. So, I think some minimal regulation is oftentimes also appreciated by the companies. No regulation is not a solution.  

We just signed an MOU, Swisscontact and EuroCham, and this is going to be about identifying the skill gap and trying to close it. What you want to share a little bit of insight on how Swisscontact generally addresses capacity building in developing countries?  

Philippe: What we try to do quite consistently is to look at the demand side. So we don't start with the technical vocational education training system and just look at the schools of what kind of skills they could produce.  

What is really important to us is that there is a demand and an opportunity for the people that get trained to get a job afterwards. And this is why you need to start with demand. What does the private sector actually require? What kind of competencies? How many people? Get this in place before you start producing and training. That is how we look at it.  

I see, keep it very results-oriented.

Absolutely. That implies that it is really just a very, very clear case of public-private coordination. So there cannot be skills training just from the public sector, it's impossible. You need some sort of assistance that is public-private. And this is why we are so fond of the Swiss system, which is dual and driven by the private sector. 

Yeah, I think in the past a lot of money has probably been used for programs where you think this will build capacity or skills, but then where are the jobs?  

Philippe: The problem in many developing countries that I see is that they see vocational training and skills development as a social program and not as a competitiveness program. And we look at it from the competitiveness point of view, this is necessary. And that also means that skills development is not the solution for everybody. It will not eliminate in the short run the huge social challenges that you have.  

If you don't have any economic development there are no jobs. It's very difficult. You cannot simply train and then hope there are jobs. There will not be.  

The world is a bit of a crazy place right now. We can talk about geopolitics, COVID, shifting supply chains, climate change. All of this to say the global market is constantly changing, adapting and reacting to these different forces. Has all of this in the past few years, caused a shift in Swisscontact’s overall, philosophy?  

Philippe: So what we try to do is support the government and the private sector to have very quickly adaptive systems. The second thing that has come across very clearly over the past couple of years is the promotion of soft skills, because soft skills allow people to adapt to changing needs and the needs are changing massively and increasingly, not only because of crises, also because of the digitalization of the world.  

Jobs are disappearing, job requirements and skills requirements are changing. This makes lifelong learning extremely important and we try to promote that. That is certainly important.  

What we have at the institutional level, where we have invested a lot is into climate change issues, promoting green skills and green jobs that support adaptation or mitigation. This is certainly a big area that we have invested in during the past couple of years.  

Yes, at EuroCham we also launched our Responsible Business Hub about a year ago. Europe is now instilling guidelines through their supply chain, HREDD, human rights and environmental due diligence. So we're trying to work with Cambodian companies to make sure that they have proper grievance mechanisms in place, there's no child labor, proper health and wages, things like this.  

Philippe: And what is interesting maybe to mention, is that we have now also defined an ESG strategy for Swisscontact. Today, businesses are required to have an ESG strategy. So we decided that Swisscontact, who supports the companies to be compliant and responsible, we should have an ESG Strategy as well as, even as an NGO.  

I mean, many NGOs think they're the good guys and they don't need that. We don't think so. We think we also need an ESG strategy and a net zero strategy. Of course, we don't call it ESG strategy because we are not looking for investors. In our case we  call it Sustainability Strategy. We have identified nine material topics with clear targets and a timeline in which we want to achieve them. I think we are the first NGO in the world that has such a strategy.

This kind of goes into the last question too. Talking in general about your strategy for 2028 and if you wanted to share some highlights? 

Philippe: What we just talked about is part of our strategy. Beyond that, our Strategy 2028 is about going back to the roots 

What we mean with that is that Swisscontact was created by the private sector. However, we are now over 50% funded by the public sector. This is not what we want. We want the private sector again to fund Swisscontact. And we see a big window of opportunity because of the pressure on sustainability issues that many companies are facing.  

So for example in the EU a new EUDR, the Deforestation Regulation has been approved. More corporate social responsibility regulation is coming up in the EU and beyond on different fronts and companies are under huge pressure. 

 Last week there was a report on Swiss television that became very big on Lindt & Sprüngli, the Swiss chocolate brand, related to child labour in Ghana. In the US there have been lawsuits against major chocolate producers related to similar situations. In California a federal judge recently refused to grant a motion to dismiss a proposed class action against deceptive marketing of chocolate products as sustainably sourced. 

This is just to show an example of the huge challenges that exist for many companies and the regulations is coming into place in Europe. EU regulation is also relevant for Switzerland because Switzerland exports, a majority of products and services to Europe, so it applies also to Swiss companies.  

With our strong presence in developing countries and the understanding of the needs of the private sector, I believe we can play a pivotal role in addressing these issues and the underlying causes.  Companies now realize that they cannot solve the problem through communication, you really need to be compliant and that is a huge headache.  

Because, yeah, the reputation hit, not to mention the actual, the money you lose if you get caught on the wrong side of that.  

Philippe: We are present in 40 countries, we are in many countries where these companies source their inputs and I think they need reliable partners for that.  

For example, large chocolate producers rely on very complex supply chains. Often they outsource commodity trading to one or a few major trading companies. Now, these might be caught in a conflict of interest, because they provide the chocolate company with the inputs but at the same time are responsible to implement the chocolate company’s sustainability program. And I believe, these traders are not set up to deal with the complexity of the underlying issues. 

Consider that child labor is just a symptom. To eliminate child labor you need to eradicate poverty in your supply chain. Unfortunately, higher prices will unfortunately not do the trick.  You also need to make sure that the children go to school, so there need to be schools. You need to make sure that the families don’t fall sick because if they fall sick, they will end up back in trouble and turn to child labour or cutting down trees. And you will want to make sure the additional money is wisely spent and not on alcohol. This is where you dive into social, cultural and gender issues. More importantly, price increases will also not solve the problem because higher prices create an incentive to produce more.  

However, increasing production will again drive down the prices. That’s simple microeconomics. We have seen what happened with the Living Income Differential in Ghana which was quickly crowded out by lower prices for Ghanaian cocoa. So you need to work on many fronts, and this is where I think we can help.