Public-Private Partnerships: Capitalizing on a New “Aidscape”

On October 17th, as part of USAID’s 50th Anniversary celebration, the agency kicked off Public-Private Partnerships Week to highlight the mutual benefit that development and business have in establishing public-private partnerships (PPP) and to celebrate the 10th anniversary of the Global Development Alliance (GDA) program. USAID marked the occasion with a host of blogs (see here, here, and here) to highlight successful agency partnerships and emphasize the role PPPs are playing in producing development impacts around the world.The week-long fanfare culminated in a speech by Administrator Raj Shah at the Public-Private Partnership Forum, which laid out a new vision for the future direction of USAID. In the coming years, USAID will pursue more partnerships with private sector actors in order to “embrace a new wave of creative, enlightened capitalism that connects profit, wealth and development.”The announcement of this new focus comes in the context of two major sea changes in the development landscape surrounding U.S. foreign assistance. The first is not so new. It involves a surge of new actors over the past 30 years pouring resources into developing countries. Non-governmental organizations (NGOs), private voluntary organizations (PVOs), cooperatives, faith-based organizations, foundations, corporations, and financial institutions now transfer an enormous chunk of resources to developing countries. Official U.S. development assistance today is dwarfed by these private sector investments in emerging and developing market economies.The second sea change is a much more recent development: a tightening fiscal environment. The ongoing budget battle looks like it may end in serious cuts to foreign assistance spending that could gravely undermine U.S. global engagement.So how does Administrator Shah’s new focus on public-private partnerships fit into this rapidly unfolding “aidscape”? First, it smartly seeks to leverage the enormous pool of new private sector resources waiting to be tapped for development purposes. In 2009 alone, the U.S. private sector invested around $1.2 trillion in emerging and developing market economies.[1]That’s a lot of potential green for a lot of good. It also leverages invaluable non-financial resources such as private sector capacity and expertise for a minimal price.Second, it provides an alternative “budget friendly” way to provide assistance in this age of austerity. Innovation is important when cash is tight and USAID may need to start looking for creative ways to leverage new resources. According to Dr. Maura O’Neill who leads IDEA, PPPs leverage approximately $4 in private sector cash and in-kind contributions for each $1 USAID invests.So kudos to Administrator Shah and his team for elevating the PPP initiative. It shows a real vision for the future of USAID and gives hope that the agency will adapt to and capitalize on future trends – i.e. a shrinking budget and a growing field of private sector actors involved in development. But before we celebrate, it would behoove us to scrutinize how USAID and other U.S. government agencies are undertaking new PPPs. As they say, the devil’s in the details.Here are a couple of themes I picked up from an excellent CSIS report and event on Public-Private Partnerships.More Cooperative PartnershipsU.S. government agencies need to be more inclusive, allowing private-sector actors to play an equal role in all stages of partnership – from planning and implementation all the way to the final evaluation phase. Traditionally, agencies have been slow to treat their private collaborators as co-designers in the partnership process. Priorities and principles are decided by the government before their partners are invited to the table to discuss the process. This makes PPPs less appealing to the private sector, whose interests and priorities naturally may differ. Ultimately, we wind up passing up on a lot of great potential opportunities for collaboration.But having different priorities doesn’t make partnering impossible. It simply necessitates inclusive engagement early on so that both sides can square their interests from the start. A cultural change is needed within agencies to adjust to the reality that government is no longer the primary player in PPPs.More Flexible PartnershipsThe procurement and planning phases of PPPs suffer from being too rigid and time consuming. Opportunities in the private-sector move far too quickly for the sluggish bureaucratic application process partners must go through to request partnerships with the government. Similarly, the planning and implementation phases of projects are slow and cumbersome and U.S. development agencies are often wedded to original project designs and are loath to adapt to new opportunities.In order to maximize our take of new opportunities, U.S. development agencies need to allow for their partnership arrangements to be more flexible. This could happen by instituting a system of exceptions or waivers to quickly approve or reapprove programs and by setting aside resources for funding on-the-fly opportunities that may arise. More flexibility will better prepare both sides to take advantage of new opportunities and prime programs for scaling up when appropriate to widen their impact.To fully capitalize on the new “aidscape”, U.S. development agencies must update their partnering mentality. That means adapting to their new role as conveners of partnerships, not as leaders, and reworking the partnering process so it’s able to quickly adapt to a rapidly changing 21st century development landscape. These are but a few challenges to be faced as USAID and other government agencies work to reap the benefits of PPPs in the years to come.