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Funded by the Grand Duchy of Luxembourg, the Private sector engagement funds are implemented by LuxDev, the Luxembourg Development Cooperation Agency, for the period 2023-2026.

Through open calls for proposals or proactive research by our teams, these three co-financing tools target businesses offering innovative solutions to major challenges in the priority countries of Luxembourg development cooperation. Complementary in nature, they cater to the needs of each entrepreneurial initiative supported, based on its stage of maturity. To find out if you are eligible, please return to our home page and visit the section “Find the right tool for your project!”.

Each co-financing fund has specific geographical target. The BPF is aimed at European businesses partnering up with entities based in developing countries. The LuxAid Challenge Fund is implemented in the priority countries of the Luxembourg Cooperation. The LuxAid Demonstration Fund is exclusively deployed in Kosovo, Rwanda, and Senegal.

Each co-financing tool follows its own schedule.
BPD calls for proposals are open continuously, with application deadlines and selection processes roccuring every six months.
The LuxAid Challenge Fund and the LuxAid Demonstration Fund calls for proposals are organized periodically in the targeted countries.
For the LuxAid Demonstration Fund, interested enterprises are encouraged to explore open opportunities in specific sectors within the targeted countries and to submit their innovative solutions.
To find out more, visit our Opportunities page!

Co-financing is a non-refundable grant. However, the final instalment of the co-financing will be limited to the actual expenses incurred for the supported project.

The targeted sectors vary for each fund. The BPF is open to all sectors. The LuxAid Challenge Fund and the LuxAid Demonstration Fund target different sectors based on the strategic priorities of Luxembourg development cooperation in the specific country. All details are available on the dedicated pages for open opportunities.

The amount of co-financing awarded varies for each fund. The BPF provides co-financing of up to EUR 200,000, covering a maximum of 50% of the total project costs. The LuxAid Challenge Fund generally offers an average co-financing of EUR 120,000, covering up to 70% of the total project costs. The LuxAid Demonstration Fund offers co-financing of up to EUR 350,000, covering on average 50% of the total project costs.

For the Private sector engagement funds, innovation is a new solution with the transformative capacity to accelerate impact. It involves creating, finding, adapting, and applying new ideas, approaches, products, services, or methods to address existing problems or meet unmet needs. Innovation isn’t limited to creating something entirely new. It also encompasses significant and creative modifications to existing solutions or their application in a new context. Additionally, innovation may provide a solution that previously had no local demand because it was unknown but meets a real need in terms of impact.

To be considered “innovative”, the solution must be distinct enough from other products, services, or approaches already present in the market in the relevant country. This could manifest as differences in:

• product/service design features to better meet needs;
• distribution models;
• target customer segments (such as providing new products or services to previously underserved populations);
• economic models (who pays and who benefits, pricing);
• and the resilience of the product or service (anticipating future developments).

Forging entrepreneurial partnerships to tackle key societal challenges

Recognizing the crucial role of the private sector in advancing the United Nations’ Sustainable Development Goals (SDGs), Luxembourg’s Ministry of Foreign and European Affairs, Defence, Development Cooperation, and Foreign Trade set up the BPF in 2016.

This initiative supports projects led by businesses based in Luxembourg or the European Union, and their partners established in a developing country. Through innovative co-financed projects, the BPF addresses significant societal challenges for the partner country’s development, including poverty reduction, food security, climate change mitigation, access to quality education, decent work or clean drinking water, among others.

Biannual calls for proposals offering up to EUR 300,000 in co-financing

Luxembourg and European Union enterprises, along with their partner(s) in a developing country, interested in BPF co-financing, can apply to one of the two annual calls for proposals, with deadlines set at the end of April and the end of October.

Selected projects receive up to EUR 200,000 (EUR 300,000 from 2026 onwards) in co-financing, covering a maximum of 50% of the total project cost.

Innovations in all sectors are welcomed, as long as they contribute to the SDGs.

The BPF is open to enterprises registered in Luxembourg or the European Union for more than 3 years, with an annual turnover of at least EUR 500,000 (or three times higher than the co-financing requested), and at least 5 employees (lead partner role).

At minimum, the partnership should consist of:

• A lead partner/project leader: a private-sector enterprise based in Luxembourg/European Union, responsible for submitting the application, coordinating the project on behalf of the other partners, and signing the co-financing agreement and
• A local partner: public or private entity, university, research institute, or civil society player established in a developing country eligible for official development assistance, as defined by the Development Assistance Committee. The local partner is involved and committed from the outset of the project.

The BPF supports the implementation of innovative business partnerships that address major societal challenges for the partner country’s development.

Co-financed projects can take various forms, including:

• Conducting feasibility studies for innovative projects in the target country;
• Implementing pilot versions of innovative solutions in new markets;
• Structuring production chains or deploying an innovative solution on a larger scale.

The selected partnerships can benefit from co-financing of up to EUR 200,000 (EUR 300,000 from 2026 onwards), representing a maximum of 50% of the total proposed project budget.

The co-financing is considered as aid falling under the “de minimis” regulation.

Co-financed projects must contribute to the achievement of the SDGs. In concrete terms, the ultimate aim is to enhance the lives and livelihoods of populations in the countries where the projects are implemented.

Proposed projects are assessed against the following selection criteria:

• Innovation and cost-effectiveness: For a solution to be considered innovative, it must sufficiently distinguish itself from products, services, or approaches already present in the local market. This may involve differences in design, distribution, target audience, economic model, and anticipated resilience to future developments;
• Societal impact and futureproof: The solution must contribute to the Sustainable Development Goals, such as job creation, poverty reduction, access to healthcare, preservation of ecosystems and biodiversity, and combating climate change, etc. Projects must take into account adaptation to future risks and trends;
• Project viability and financial sustainability: Partners must demonstrate that the project will be able to generate revenue in the short or long term, ensuring its continuity beyond the co-financing period. Projects with opportunities for additional funding after the project ends will be valued;
• Additionality and neutrality of co-financing: Projects must provide added value that would not have been created without the financial support of the BPF. The BPF committee pays special attention to avoiding market distortion by co-financing projects similar to initiatives already present in the market;
• Added value for all partners: Partnerships must be balanced, efficient, and mutually beneficial for each partner, demonstrating complementary skills and expertise mobilised by each of them within the project;
• Potential of technology/know–how transfer: Projects must detail technology transfers from North to South, including specific technologies, skills and know-how. Emphasis should be on training employees in developing countries, assessing the effectiveness of the skills transfer and ensuring its sustainability.

Applications are assessed against the following selection criteria:

• Innovation and cost-effectiveness: For a solution to be considered innovative, it must sufficiently distinguish itself from products, services, or approaches already present in the local market. This may involve differences in design, distribution, target audience, economic model, and anticipated resilience to future developments;
• Societal impact and futureproof: The solution must contribute to the Sustainable Development Goals, such as job creation, poverty reduction, access to healthcare, preservation of ecosystems and biodiversity, and combating climate change, etc. Projects must take into account adaptation to future risks and trends;
• Project viability and financial sustainability: Partners must demonstrate that the project will be able to generate revenue in the short or long term, ensuring its continuity beyond the co-financing period. Projects with opportunities for additional funding after the project ends will be prioritised;
• Additionality and neutrality of co-financing: Projects must provide added value that would not have been created without the financial support of the LCF. However, the LCF cannot create market distortion by co-financing projects similar to initiatives already present in the market;
• Execution capacity: enterprises must demonstrate sufficient execution capacities for the size of co-financing granted. This includes but is not limited to management capacities, production knowledge and accounting standards.

Accelerating impact through direct support to local innovative entrepreneurs

The LuxAid Challenge Fund targets impactful start-up enterprises in countries where Luxembourg’s Development Cooperation is active.  It is designed to propel innovative solutions with high impact potential to enhance living conditions and safeguard the environment in these countries.

Interested enterprises can apply to specific open calls for proposals. The average co-financing amount is EUR 120,000, covering up to 70% of total project expenses.

Each call for proposals is unique, open to applications from either a single country or multiple countries.
The sectors targeted by each call are defined based on the strategic priorities of Luxembourg’s Development Cooperation in the respective countries.

We’re seeking groundbreaking projects that address country-specific societal challenges, aligning with the themes outlined in the open call for proposals. The LuxAid Challenge Fund aims to strengthen innovative and inclusive economic models addressing the vicious circle of poverty and access to basic socio-economic goods and services. Examples include improving access to education, enhancing food security, and access to essential resources such as water and energy. Ideally, the projects propose systemic solutions that target the root causes rather than just the symptoms of structural problems.

The LuxAid Challenge Fund supports enterprises in executing projects spanning 1-2 years, addressing challenges such as expanding marketing efforts and customer base, aligning business models with market needs, bolstering teams, and preparing for initial external investments.

The selected partnerships can benefit from an average co-financing of EUR 120,000, representing a maximum of 70% of the total proposed project budget.

Support can be used for any expense related to marketing, equipment acquisition, or intangible needs such as technical assistance.

The LuxAid Challenge Fund aims to achieve the following:

• A proven and cost-effective solution that delivers direct and measurable commercial, financial, social, and/or environmental results;
• A strengthened business model ready to be accelerated/scaled, expand its impact on the target community, and achieve commercial viability;
• Additional capital mobilised (ideally private) to enable the expansion of the solution within two years of the end of the project.

In the longer term, the objectives include:

• Contribute measurably to identified societal goals;
• Leverage external capital to facilitate its scale-up for the benefit of local populations.

Scaling innovative entrepreneurial solutions for amplified impact

Businesses play a pivotal role in both economic and social development of their countries. Through their innovations, they strive to address the essential needs of the population, thereby contributing to the achievement of the Sustainable Development Goals.

An initiative of Luxembourg’s Development Cooperation, the LuxAid Demonstration Fund offers co-financing to scale up the impact of innovative solutions developed by enterprises in Kosovo, Rwanda, and Senegal. By tackling development challenges head-on, these solutions not only enhance living conditions but also promote environmental sustainability in the respective countries.

The LuxAid Demonstration Fund targets small and medium-sized enterprises that are spearheading innovation in their primary business sector. These businesses have a track record of over 2 years with consistent sales performance. While they are in a phase of growth or expansion into new market segments or geographical areas, they may not yet be investment-ready.

Each edition of the LuxAid Demonstration Fund is unique. The themes selected are closely aligned with Luxembourg’s Development Cooperation’s priorities in the respective country.

The approach to identify initiatives is tailored to each context: typically, an active search for innovations involves mapping entrepreneurial solutions already identified by partners in the country. However, in certain instances, a call for proposals may be initiated. Furthermore, enterprises are encouraged to directly submit their projects to LuxDev via this website (“Explore country-specific opportunities!”).

The maximum amount of co-financing is EUR 350,000 (representing on average 50% of the total project expanses).

We are seeking innovative solutions that have already demonstrated their commercial viability and impact. The goal is to assist the enterprises to achieve even greater growth and impact by overcoming barriers to accessing capital, while reducing market disruption risks.

The LuxAid Demonstration Fund provides support to enterprises for project implementation spanning 1 to 2 years, assisting them in addressing various challenges such as expanding their customer base, adjusting their business model to cater to new market segments, enhancing production capacity, and preparing for external investment, among others.

The LuxAid Demonstration Fund offers co-financing of up to EUR 350,000, representing on average 50% of total project costs.

Support can be used for any expenditure relating to the acquisition of equipment, intangible goods or technical assistance, etc.

In the short term, the LuxAid Demonstration Fund support aims to scale up supported solutions, extending their impact to new market segments and broader geographic areas.

In the longer term :

• Mobilising external capital to facilitate solution expansion, resulting in a tenfold impact for local populations;
• Inspiring other businesses to develop similar products or services, increasing the number of beneficiaries, especially among vulnerable populations;
• Measurable impact on achieving the SDGs.

Applications are assessed against the following selection criteria:

• Innovation and cost-effectiveness: For a solution to be considered innovative, it must sufficiently distinguish itself from products, services, or approaches already present in the local market. This may involve differences in design, distribution, target audience, economic model, and anticipated resilience to future developments;
• Societal impact and futureproof: The solution must contribute to the Sustainable Development Goals, such as job creation, poverty reduction, access to healthcare, preservation of ecosystems and biodiversity, and combating climate change, etc. Projects must take into account adaptation to future risks and trends;
• Project viability and financial sustainability: Partners must demonstrate that the project will be able to generate revenue in the short or long term, ensuring its continuity beyond the co-financing period. Projects with opportunities for additional funding after the project ends will be prioritised;
• Additionality and neutrality of co-financing: Projects must provide added value that would not have been created without the financial support of the LDF. However, the LDF cannot create market distortion by co-financing projects similar to initiatives already present in the market;
• Execution capacity: enterprises must demonstrate sufficient execution capacities for the size of co-financing granted. This includes but is not limited to management capacities, production knowledge and accounting standards.

LuxAid Demonstration Fund aims to strengthen innovative and inclusive economic models acting on the vicious circle of poverty and access to basic socio-economic goods and services. A “do no harm” selection approach is applied.