Public-private partnerships for development: From principles to practice?

There is a need to readily embrace the complexity and diversity of public-private partnerships and focus on how to translate broad principles into operational tools, reflects ECDPM's Sebastian Große-Puppendahl. Recently ECDPM was invited to contribute to two workshops on the role of public-private finance and multi-stakeholder partnerships for development. One was organised by World Vision Brussels under the title ‘Emerging trends in EU development finance and private sector partnerships­ - what are the implications for development NGOs?’ and the other one by the European Policy Centre (EPC) jointly with Oxfam International on the theme ‘Lifting people out of poverty - Can public-private finance truly deliver?’. Representatives from NGOs, CSOs, think tanks, EU member states, the European Parliament and EC officials came together to discuss some of the challenges and opportunities for public-private finance and its potential to deliver on development objectives.

Let’s avoid oversimplification

What sometimes surprises me in all these talks, is how often complexity is set aside for the sake of driving a simple message home. For instance,  all too often people refer to the private sector and the public-private partnerships, as if they are all the same and uniform. There is however a great diversity of businesses and partnerships and hence the urgent need to better understand the different forms of partnerships that exist. The objectives, interpretations, practices and incentives of the range of public and private actors are also diverse, as we have argued here, which leads to key questions such as who is leading whom and under what circumstances? Additionally, there are good examples provided by the private sector, which the EU and its member states can learn from, while at the same time thinking about new ways of making those business activities more development-friendly and inclusive. Another tendency is to jump too easily to conclusions and make sweeping statements. For instance, one failed experience among many PPPs - as for instance the Lesotho PPP in the health sector according to Oxfam - does not mean that all other public-private cooperation initiatives are useless or doomed to fail right from the start. Similarly, a failed purely publicly funded aid project does also not lead to dismiss all grant supported projects. The issue rather seems that both public and private actors need to harness the lessons learnt to do better in the future based on effectiveness criteria and defined principles.

Addressing key challenges

More interesting was the discussion on how to better address systemic challenges in public-private cooperation. A set of challenges relate to the use of scarce public funding to leverage private finance for development. These range from result measurement to the need to show development impact and the issue of additionality, so that the project or activity would not have been kicked off without the addition of public funding. One of the examples that development impact was not satisfying is the in 2014 suspended Danida Business Partnerships Programme, as an independent evaluation concluded that “the effect on job creation and sustainable growth in developing countries has not been sufficient”. At the EPC event, Oxfam presented the outcome of some preliminary research (undertaken together with CAFOD, ActionAid, Eurodad and WWF) on a principled approach to public-private finance for delivering sustainable development. The aim is to propose “a set of principles to assist governments to apply best practice, international standards and learning more systematically to help ensure best outcomes for sustainable development", when working with the private sector (finance). This is most welcome and a useful endeavour, as it correctly points to further challenges, such as issues of accountability, transparency and the difficulty to align with local and national development priorities. Having the right effectiveness principles, development criteria and standards in place can therefore help to not only justify public funding but also to achieve the prior defined objectives in a sustainable and inclusive manner. Yet, rather than add on a new set of principles, the ambition should be to build on and streamline already existing principles, guidelines and standards, such as the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises and the IFC Performance Standards on Environmental and Social Sustainability, to ensure that the regulatory environment is not further complicated but that the right conditions are in place so that business together with public actors can have a positive development impact. Discussions at both events stressed the danger of subsidising the private sector rather than focussing on real development outcomes while in particular reaching the most vulnerable and poor people. This however leads to the question of how to actually guarantee to reach those people that were originally targeted, and how to consider and assess not only the direct, but also indirect route to such impact. Participants also acknowledged the lack of trust between stakeholders needed in order to facilitate progress on cross-sector partnerships.

What does it take to achieve progress?

What we need is a deeper understanding and closer convergence of incentives and actions of multiple stakeholder partnerships. While all actors involved - business, public actors and CSOs - use the same words they often seem to speak a different  language. They need to develop their capacities to engage and hold each other accountable based on better mutual understanding. One future role for NGOs and CSOs therefore is building capacities among the beneficiaries and particularly building financial capacity to allow the desired benefits to be sustainable and have a trickle-down effect. We must also think about how we can make the principles and criteria more appealing for businesses to actually adhere to them. Once we get the policy right, it is time to think about how to get this into practice: that means to focus our attention on concrete modalities and instruments of engaging the private sector - and its financial resources - in a development-friendly way. Learning from current - good as well as bad - practices is essential to then be better equipped to address a broad range of opportunities public-private cooperation offers. There is a need though taking into account local and national realities and opportunities. ECDPM is therefore currently conducting research looking at those opportunities and challenges of the various instruments for working with the private sector to support economic transformation and development more broadly. The future of public-private cooperation, most importantly however, requires a greater recognition of developing countries’ own agenda and processes to not only achieve real impact on the ground but to get local ownership and leadership. The views expressed here are those of the authors, and not necessarily those of ECDPM. In addition to structural support by ECDPM’s institutional partners The Netherlands, Belgium, Finland, Ireland, Luxembourg, Portugal, Sweden, Switzerland, and Austria, this article benefits from funding from the Department of International Development (DFID), United Kingdom.