The secret to successful public-private partnerships

In the past decade, the international aid community has come to the realization that global challenges such as poverty, health, education and climate change need pioneering and transformative thinking. Creating innovative public-private partnerships between governments, businesses and civil society has thus assumed greater importance in recent years. But despite the general enthusiasm, fundamental questions remain about how to implement these partnerships and turn them into viable mechanisms for sustainable development. Operating on a continuum between full privatization and traditional government services, PPPs can involve myriad partners from the public, private and nonprofit sectors, all of whom agree to share money, skills, knowledge — but also risks and benefits — to accomplish a common goal. During its very first Partnerships Forum in Manila, Devex convened delegates from donors, international aid agencies and Asian development organizations to discuss various issues facing the global aid community. Following an exclusive panel discussion on the role of PPPs in addressing climate change, here are some of the general lessons and best practices we've learned on how partners can make these alliances work. Know your partners Before even starting a partnership, prospective partners should know who they are pairing with by investing time and energy into understanding each other’s background, reputation, experience, financial strength, motivations, expectations and goals. Gaining a full appreciation of counterparts is the basis of any successful PPP, which demands a rigorous focus on effective planning and structural appropriateness if it is to be internally sustainable. “Having a strong sense of who your partner is, should it be through a rigorous due diligence process or through the trust that has been built in a relationship over time, is the most important starting point,” underscored Joseph Foltz, acting director of the office of environment, energy and climate change at the U.S. Agency for International Development in the Philippines. The agency’s reform agenda, formally titled USAID Forward, actually puts great emphasis on the promotion of PPPs to achieve sustainable development. Predicting all possible contingencies is impossible, but this getting-to-know-you stage enables partners to deal with any existing gray areas and address most risks associated with the premature failure of a PPP agreement. “There are a lot of risks you can address in the upfront negotiation of a PPP,” Foltz highlighted. Find a win-win formula The general perception is that PPPs mainly benefit the public sector by enabling them to pool together much needed resources and inject them in the delivery of cost-effective projects. But when framed correctly, PPPs are also good business for the private sector, beyond the traditional reputation enhancement they offer. Achieving a win-win situation for all is thus critical to the success of any PPP, and the onus is on governments to design PPP models offering substantial business growth opportunities that will convince the private sector to invest, innovate and propose optimal solutions to development challenges. According to Diwata de Castro-Paredes, communications and outreach specialist at Engility, government incentives and benefits can go a long way in making PPPs more appealing to companies. Based on her lengthy experience with securing funds from public and private stakeholders to support environmental initiatives, she noted that the private sector often requests for “some tax incentives or other benefits from the governments they are working with.” But the public sector also needs to provide an adequate regulatory and legal environment if it wants to spur more private sector involvement and innovation. This can for example be done through the consideration and enforcement of intellectual property laws. Even though the private sector is willing to provide innovations as part of a PPP, it “is quite concerned about its intellectual property and making sure that they can keep it,” pointed out Glen Anderson, senior climate change expert with Engility. Currently serving as chief of party of USAID’s Climate Change Resilient Development project, he has extensive experience encouraging private sector participation in donor-funded projects. Have a long-term vision PPPs often involve projects that have a lifetime of three to five years. To sustain impact beyond the project’s duration, there are several strategic choices partners can make to embed their partnership in a long-term vision. According to Anderson, local ownership is extremely important to sustaining the impact of a PPP. Strong governmental commitment increases the certainty that efforts to achieve the PPP’s common goal will be pursued even if the project ends or encounters delays. “The government, whether it’s local, regional or national, have to own the PPP from the very beginning … because the donor and the facilitator are going to walk away at some point,” Anderson stressed. Elections — especially when it results in a change in the ruling administration — can affect the sustainability of PPPs. Changes in the political landscape might mean the PPP’s government counterpart may be replaced by someone who is not as invested in the partnership or has different goals in mind. Establishing and nurturing relationships with wider groups and organizations is thus necessary, de Castro-Paredes pointed out. She suggested looking for “champions” or members of the government or civil society who have the ability and will to keep advocacy efforts alive. In the Philippines, Engility has found such a champion in the League of Local Environments and Natural Resources Officers of the Philippines. Unlike local mayors, these officers are mostly career officials who aren’t subject to political terms. This allows for climate mitigation and adaptation efforts to be pursued even if projects end and elected officials change. Establishing an exit strategy from the start so that expectations are leveled also helps ensure sustainability, Foltz noted, adding that there are many relevant ways to think of an exit strategy — whether it’s through the licensing of intellectual property or access to capital markets. Finally, regardless of the PPP envisioned, all panelists agreed that community consultation and engagement is critical to the long-term success of a PPP. Local communities and civil society have the ability and networks to assist the government in defining objectives, thus enhancing the relevance of the PPP. “In my experience, community socialization is very important because it helps you define the problem that you are trying to address through potential PPPs,” Foltz emphasized. At the same time, the active participation of civil society and community stakeholders can help sustain the benefits of PPPs. Because the impact of climate change is at the local level, Anderson noted community members have an important role to play as watchdogs by holding governments accountable. Be inclusive and creative In order to achieve results, public and private partners shouldn’t hesitate to go beyond their respective sectors and reach out to civil society, affected communities, academia, the nonprofit sector and even foreign countries. Despite being a potential source of tension, the involvement of different — and sometimes divergent — voices in PPPs can foster strategic decision making, pertinent innovation and effective collaboration. The very mixture of different approaches and expertise is what constitutes the added value of PPPs and makes them far more than just the sum of their parts. “We should be creative when we think about PPPs, and not just think about formal partnerships, but also informal partnerships and other types of cooperation,” Anderson recommended, emphasizing the importance of diversity and originality for PPPs to achieve maximum impact. Partners in PPP should also demonstrate flexibility to effectively respond to the changes that are bound to happen over years of partnership, as well as an openness to experiment with the design of their projects. Framing PPPs correctly often takes time, and can be the result of a series of incremental changes. In fact, some of the most interesting business models can be achieved through a continuous design and assessment process. How do you think partners can further ensure the success and sustainability of PPPs? Let us know by leaving a comment below. 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