Today, new economic powers have emerged, private investment to developing countries has soared, and new technologies have opened opportunities as never before. The nature of development is changing, with collaboration among diverse stakeholders now a central feature of the development landscape. In particular, partnerships with the private sector are playing an increasingly important role.
New opportunities for partnership, along with an ambitious sustainable development agenda enshrined in the Global Goals, leave us no longer asking whether we should partner, but rather how we can use partnership most effectively. The U.S. Agency for International Development has a long history of partnering, and we are constantly seeking to evolve our approach to partnerships to respond to the changing development landscape. There are three themes that we believe are critical to the next generation of partnerships in global development.
From shared interest to shared value
Big global challenges — from food security to climate change — affect businesses as well as communities, and it is in all of our interests to address these challenges together.
Multistakeholder initiatives are often the go-to option to take collective action on large-scale global issues. But should they be? Devex takes a look at a new report by the Global Development Incubator that checks when they are effective and the best way to set up multistakeholder initiatives.
We’ve seen a tremendous increase in partnerships that leverage the resources and capabilities of public, private, and nonprofit sector players to tackle a challenge where there are aligned interests.
More than addressing shared interest, shared value recognizes the business opportunity in addressing social problems, and the ability to generate business value while also achieving social impact.
Developing economies are now key markets for growth and consumers are demanding greater corporate accountability and social responsibility. That has led a growing number of the world’s leading corporations to proactively pursue shared value opportunities in order to drive growth and profitability while delivering impact for the communities and countries where they operate.
To help ensure we are finding these opportunities, USAID has created a number of tools that allow for co-creation with the private sector, and unlock local and international financing.
The Global Development Alliance — USAID’s flagship model for public-private partnerships — and Development Credit Authority guarantees — which incentivize private lenders to extend financing to underserved populations — allow us to partner broadly with the businesses to achieve shared goals that not only generate economic but also societal value.
Evidence from our partnerships globally has demonstrated that partnerships are the most effective when they have deep links between business strategies and development objectives. In Nigeria, for example, USAID partnered with Olam, an agricultural trading and distribution company, to enable the company to source rice from Nigerian smallholder farmers for the first time. This partnership increased farmer income and productivity, and spurred the development of the Nigerian rice sector.
We have seen that true partnerships with common objectives that share risks and rewards create more collaborative, effective, and impactful solutions to global problems. We believe the private sector is a valuable partner in addressing industrywide and systems level issues in areas such as environmental sustainability, education and workforce development, and governance and transparency.
Tackling systems change
We are also seeing a shift in how organizations are coming together to tackle development issues, with a desire to go beyond one-off partnerships and address a problem in a more enduring and systemic way.
These challenges often require collective action to bring stakeholders together around a common agenda, with specific goals and measures of success, to harness the collective strength of diverse actors. This is required not only at the project level but needs to be scaled to tackle the complex systems in which development challenges are embedded.
Our private sector partners are ready for these challenges. A U.N. Global Compact Survey of over 1,000 global CEOs from 103 countries found that 78 percent believe companies should engage in industry collaborations and multistakeholder partnerships to address sustainability and development goals.
Multistakeholder initiatives are one approach that development agencies like USAID are using. We’ve seen success through models such as Power Africa, a large multistakeholder alliance that brings together the strengths and resources of African governments, private sector investors and 12 U.S. government agencies to generate cleaner, more efficient electricity and increase energy access across the continent.
However, in practice, MSIs can be most complex and difficult to design, manage, and implement, challenges that were articulated in a report we released with several partners, which examined MSIs.
Looking ahead, we need to continue to develop ways to increase the impact and reduce the transaction costs of multistakeholder models — for instance, by promoting governance models that encourage streamlined decision-making and operating and funding models that enable multiple capabilities and funding sources to be combined effectively.
Rise of local actors
Child labor in Ivory Coast's cocoa production sector is a complex issue that can only be solved by dedicated and genuine collaboration between all stakeholders. Devex takes a closer look at what's being done to solve this persistent problem.
Finally, it is critical that the global development community more fully recognizes and leverages the unique and significant value that local private sector actors bring to partnerships. As developing economies become increasingly sophisticated, dynamic and globally oriented, so too have many local private sector actors.
While many of USAID’s high-profile partnerships are with multinational companies, USAID has numerous partnerships with national and local businesses.
In 2015 alone, USAID had more than 430 active public-private partnerships, 55 percent of which involved local actors. In some regions, USAID’s largest private sector partners were local actors.
Local partners’ unique capabilities — such as their access to local networks, deep local knowledge and commitment to the local market — are serving as important contributors to ensuring local ownership and the longevity of development efforts, which were among the findings in this recent report.
For example, in Tumaco, Colombia — a region that has long been a center for the illegal production of coca and violent crime — USAID is working with local, family-owned chocolate company Casa Luker to support and raise incomes for thousands of local farmers through a community-owned cacao cooperative that provides an alternative to coca production.
Global trends are beginning to “crowd in” the local private sector into the development arena. Engaging these local partners will be increasingly important as we work collectively to achieve sustainable development results.
Join Devex to network with peers, discover talent and forge new partnerships in international development — it’s free. Then sign up for the Devex Impact newsletter to receive cutting-edge news and analysis at the intersection of business and development.