The United States Agency for International Development has been engaging in public-private partnerships for more than 15 years, but understanding who the partners are, what the impacts are and the key trends of those partnerships has often been a challenge.
In recent years USAID has improved its data collection and made public past PPP data that provides a look into how the agency engages with the private sector.
This week the Brookings Institution, a think tank based in Washington, D.C., released a report that analyzes USAID PPPs between 2001 and 2014. The report, Brookings said, was created to enrich the considerable discussion that USAID and the development community has devoted to PPPs in recent years by providing the key data points to dissect the nature of those partnerships.
In total, USAID engaged in about 1,600 PPPs between 2001 and 2014, though only 1,481 were analyzed for this report. Here’s what you need to know about USAID PPPs:
A ‘typical’ partnership
Gayle Smith's beginning of the end
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The majority, or 63 percent, of USAID’s PPPs lasted two to four years, and 90 percent were complete in five years.
PPPs most often only have one resource partner, as was the case 41 percent of the time. Very few, just 16 percent, have more than five.
Seventy-seven percent of PPPs engaged at least one type of business sector partner, such as a company, corporate foundation or industry association. The remaining quarter involved nonpublic entities such as philanthropies or nonprofit organizations.
Budget wonders
The total investment in those 1,481 PPPs was $16.5 billion, equal to $1.18 billion on average per year. Nearly three-quarters of those investments were less than $5 million each.
Where in the world?
USAID has had PPPs in 119 countries, 54 of which have hosted 10 or more. Colombia has hosted the highest number of PPPs with 109, followed by South Africa, India, the Philippines, Georgia, Kenya, Afghanistan, El Salvador and Peru.
Sectors of interest
Economic growth, trade and entrepreneurship has the most PPPs, at 328, with health and agriculture and food security rounding out the top three sectors with the most PPPs. Of those sectors, health had the highest share by value, with 47 percent of total PPP investment.
Who’s involved
The company with the most PPPs is Microsoft Corp., which with 62 partnerships has done nearly double the next company on the list: The Coca-Cola Co., Chevron, Cisco Systems and Intel Corp. round out the top five. Those are just a few of the more than 4,000 organizations that that have been a resource partner in one or more PPPs. Of those that have been in more than five partnerships, about half are corporations, 21 percent are NGOs and the rest are other donors, foundations and educational institutions.
Rate of engagement
USAID has launched on average 105 new PPPs every year from 2001 to 2014, but the rate of new partnerships during those last few years dropped off slightly.
Between 2005 to 2007, USAID started an average of 145 new PPPs per year, but between 2012 to 2014, that average dropped to around 90 new partnerships per year.
While this may seem a surprise given the agency’s commitment to engagement with the private sector, there are several possible explanations, according to the Brookings report. In some cases the definitions for a PPP may have changed, so something that may have qualified in the past might not today. The other potential explanation is the rise of other forms of financial, political and business alliances that devote similar resources as PPPs, such as USAID’s Development Credit Authority or multistakeholder initiatives such as Power Africa or Feed the Future.
Biggest bang for the buck
When USAID partners, it does so in part to leverage resources from other organizations or businesses. Global PPPs provide the best leverage ratio — bringing in $7.68 in partner investment for every dollar of USAID investment. Compare that to the overall average leverage ratio of a dollar to $2.45 for all PPPs. So while those global PPPs are only 5 percent of the total, they account for 36 percent of the value of all PPPs.
That means that the $4.7 billion that USAID put toward those 1,482 PPPs between 2001 and 2014 was matched by $11.5 billion from partners.
Much like the total number of PPPs saw a decline in recent years, the average leverage ratio also seems to have dropped: to about 1-to-1, meaning that partner resources come closer to merely matching USAID inputs.
Going local
Only the most recent 2014 data details where a partner is based, but looking at that data shows that about half of the resource partners in active partnerships are local to the region. The other half were often headquartered in the United States. There is some indication that the investments of local partners are smaller than their foreign counterparts. While detailed data doesn’t exist to see how local partnerships are trending over time, Devex recently reported about the focus some USAID missions have put on them and how they differ from those with multinational corporations.
The Brookings report attempted to determine whether there was a pattern in why certain countries engage in more PPPs, and it found few answers. Some countries had dedicated staff and clear policies to encourage PPPs, like Colombia, but others, like the Philippines, did not.
Moving toward shared value?
Brookings also analyzed the data to evaluate how the business sector engaged in PPPs and whether they took a shared value approach. The findings, which Brookings determined by analyzing and coding the partnerships, reveal clear links between business interests and involvement in PPPs.
Of the PPPs that engaged the business sector, the report found that roughly half had a direct commercial interest tied to the partner’s business. That could mean the partnership was related to increasing product demand, strengthening supply chains or improving workforce productivity. An additional 29 percent had a “strategic” benefit for the company by strengthening the enabling environment or addressing other market externalities.
Interestingly, the analysis also found that large multinational companies and corporate foundations were more frequently associated with philanthropic PPPs rather than PPPs with shared value. Conversely, shared value was highest by far among business associations
The report also showed that it’s not just about the money. In 79 percent of PPPs with a business partner, those partners contribute technical expertise.
Devex reporter Naki B. Mendoza contributed to this article.
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About the author
Adva Saldinger@AdvaSal
Adva Saldinger is a Senior Reporter at Devex where she covers development finance, as well as U.S. foreign aid policy. Adva explores the role the private sector and private capital play in development and authors the weekly Devex Invested newsletter bringing the latest news on the role of business and finance in addressing global challenges. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
