PPDPS

Jean - Christophe FavrePublic – Private Development Partnerships (PPDPs)

Market stall owner: Jean-Christophe Favre, SDC Senior Policy Advisor–Partnerships with the Private Sector

What is a partnership? Why should we develop partnerships with private companies for achieving development goals? What mutual obligations and benefits can be expected by each party?

P1060194Actually, the Message on Switzerland’s International Cooperation 2013 – 2016 recognized the importance of the private sector as a key actor of development; the Swiss Cooperation has been requested to join forces more actively with private companies in order to increase impact at scale and sustainability in the achievement of its development goals. To be noted that since the inception of its activities in 1961, SDC has always been working with and for the private sector. Projects aimed at developing the private sector in the less developed countries where SDC is active, mainly through small enterprise promotion, skills development and financial services. The focus was on micro and small enterprises.

P1060196In the last decade, SDC started to explore ‘new’ ways of working with the private sector. New concepts – or sometimes simply new catch – words – have emerged: inclusive markets, social business, bottom of the pyramid, corporate social responsibility, creating shared value, impact investment, sponsoring, etc. These diverse concepts refer to different dimensions – e.g. goals, modalities, type of companies.

Resources:

SDC Institutional position on partnerships with the private sector (internal document, will be updated 2015).

SDC note on PPDP (in French, English version coming coon)

2 Responses to PPDPS

  1. jean-christophe favre, senior policy advisor for partnerships with the private sector says:

    Participants to the market stalls on PPDP expressed their uneasiness towards partnerships with the private sector: On one side, they feel a strong pressure from Bern for them to work more in alliance with private companies; on the other side they feel badly equipped for doing it.

    While the importance of developing collaboration with – and for – the private sector has been stressed, it is not always easy for SDC program officers to distinguish the ‘new’ partnerships paradigm as introduced in the Message for international cooperation 2013-2016 from traditional forms of collaboration with private stakeholders SDC has been working with for decades.

    An intense and constructive discussion has been engaged to address many issues related no so much on the ‘why’ but on the ‘how-to’. The institutional dimensions of these partnerships have been addressed.
    Comments? Questions? Do not hesitate to reply to the present post or to contact us

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  2. jean-christophe favre, senior policy advisor for partnerships with the private sector says:

    Hereafter the principal issues dealt with in the group:

    A – about partnerships with the private sector for development
    Partnerships with private companies aim at expanding and deepening significantly the impact of development assistance. Impact at scale (outreach), sustainability and efficiency in the achievement of development goals are looked for by public partners. It requires each partner to contribute its own set of skills and resources to collaborate on co-designed and co-managed projects.
    Considering partnerships with the private sector, we have to be clear that it is not only about employment and income creation or private sector development; it is about achieving our development goals in food security, health, migration, water, climate change, education, etc.; it is about poverty reduction.

    B – about private partners
    SDC can enter into alliances with Swiss companies, of course, but also foreign companies, being from developed countries or countries where SDC is active. What is important is not the origin of the company but the way to engage with it. However, there is a political pressure for having a certain proportion of these partnerships with Swiss companies.
    A company do not need to be labelled as ‘social’ to enter into an alliance with SDC. Important is the impact the partnership may have on development and poverty reduction. Many companies qualified as ‘for profit’ do offer opportunities for high developmental impact.
    More and more, private companies recognise the importance of sustainable development and work on adapting their business model accordingly. They are not doing it for altruistic reasons: They are aware that it is the only way for them to secure good business opportunities in the long run.
    To be noted that speaking about ‘the private sector’ may be misleading as there are strong variations from one company to the other; working with leader companies may have an impact on the whole industry. Even within a company we may observe different views between the top management, the strategy-makers, CSR people and purely commercial units; we have to look therefore for influent allies within the company. By the way, the same is valid for ‘the public sector’ or ‘the NGOs’.

    C – about building a partnership
    Entering into a partnership with a private company is not just the results of our will. It is not because a Swiss company is present in the country you are working in that it will be interested to enter into an alliance with you; it is not because you have developed a good product over years in your project that private companies will necessarily knock you door for scaling up its production and marketing.
    Building a partnership need sharing common goals even if interests are different. There are many ways to come to a partnership, from seizing an opportunity to building it in a strategic way, based on a shared vision.
    In all cases, at the basis of any partnership is trust; trust is something which is not given: it has to be built. That is why, before springing into an alliance, partners have to enter into a dialogue which can take time – See it as an investment: It will allow you avoiding many time consuming problems afterwards! Attention should be paid in particular to the following points:
    >> Values and principles – Partners may not share the same values and principles. But they have to recognize the values and principles of the other and have to be able to accept them. If not it is probably better to renounce entering into a partnership.
    >> Language and culture – Partners do not speak the same language and are not sharing the same corporate culture. As it is conditioned by the different nature of the activities and finality of public and private entities, you cannot fight against it. You are not asked to speak the same language of your business partner but to be able to understand it.
    >> Interests – Each partner has it owns interests; fair enough. But the respective interests have to be shared in a transparent way to avoid misunderstanding.
    >> Risks and benefits – Partnerships often aims at sharing risks. It is therefore legitimate to share benefits too: Commercial benefits of the private partner have however to be well balanced with the achievement of development objectives and poverty reduction goals.
    >> Roles and responsibilities – Roles and responsibilities have to be agreed on by the partners before starting to work together.

    D – about institutional arrangements
    Institutional arrangements SDC is working with while working with its ‘traditional partners’ do not always fit to alliances with private companies; e.g.:
    >> Subsidies – Subsidies are often considered as a taboo in development cooperation. Public actors who partner with private companies are often criticized for subsidizing the latter. SDC is not subsidizing private companies; SDC subsidies poor people for accessing goods and, above all, services.
    >> Intellectual property – SDC applies the saying “public money, public good” in its activities. While working in partnership with a private company, it may not be so simple: If the private partner contributes with his own set of skills and resources, bringing his expertise, experience and infrastructure, he may not be willing to share the results of his contribution with his competitors. Pushing him to do it anyway may be a negative incentive for him to enter any new partnership. Public and private dimensions of an alliance have to be negotiated with the partner beforehand.
    >> Risks management ¬– Partnerships with private partners can create specific risks in particular the ones related to reputation. SDC has defined criteria for engaging with private partners, related to human rights, social and environmental aspects, or labor standards. A dialogue on these issues will be maintained with the company.
    >> Due diligence audit – In the future, an external due diligence audit will be made for each private partner SDC will work with before engaging; it will be repeated periodically. The audit will address the conformity with SDC criteria and controversies the company has been exposed too over the last years.
    >> Legal arrangements – New forms of legal arrangements – binding or not binding – have to be found to respond to the different form a partnership with private companies may take.

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