Can public-private partnerships work for aid?

This man has set up his own small textile workshop thanks to SSACI's help Deza

For many years the concept of donor agencies and companies working together in development work was greeted by scepticism on all sides.

This content was published on January 10, 2008 minutes

But such arrangements are gaining ground, as the development sector looks to tap into the dynamism of the commercial world and firms start to consider their social obligations.

The concept of Public-Private Partnerships for Development (PPDPs) already has the support of the Swiss Agency for Cooperation and Development (SDC), which is currently hosting a three-day conference on the subject in Nottwil, near Lucerne.

The SDC believes that to meet the United Nations ambitious goal of halving poverty by 2015, the public versus private barrier that has dominated the development sector will have to be broken down.

SDC head Walter Fust said that many in the community were afraid to take risks or did not believe that the private sector could help.

"We have to learn as development actors not to behave like in a protected market, we have to face these tremendous challenges together to combat poverty," Fust told swissinfo as the conference got underway.

This is why the SDC entered into a microinsurance PPDP with Zurich Financial Services and the International Labour Office (ILO) early last year.

Microinsurance offers insurance – life or against risks such as natural disasters - to low-income populations.

The SDC, which sees microinsurance as a way of helping families combat poverty, finances the ILO's technical assistance to the scheme.

Corporate benefits

Raymond Risler, from Zurich Financial Services microinsurance unit, said there were good reasons for signing up to the partnership.

"For us, the initiative is an excellent opportunity to support the development of communities and at the same time provide value to our shareholders," Risler told swissinfo.

The company sees the main benefits as growth in an untapped market, as well as in innovation and reputation, he added.

But opponents argue that there is too much of a gap between donors' and companies' goals. They also point to the risk of companies commercially profiting from such arrangements, which often involve public money.

Both the SDC and ZFS acknowledged these concerns, agreeing that commercial and developmental goals had to be recognised in partnerships.

Success story

Other projects highlighted at the conference, such as Swiss South Africa Cooperation Initiative (SSACI), seemed to show that public-private partnerships could work.

SSACI - supported by the SDC and a number of Swiss companies active in South Africa, including the bank Credit Suisse and food giant Nestlé - provides financial and technical support to job creation and vocational training programmes for unskilled young South Africans.

More than 50 per cent of the country's young people are unemployed - a major factor in violent crime and other social problems, according to SSACI chief executive Ken Duncan.

The scheme has enrolled nearly 5,000 youngsters in vocational training, of whom 90 per cent have graduated and of these, three-quarters have found a job. It has also developed special training courses.

Duncan acknowledges that is not always easy to establish common ground between so many partners.

"However everybody does have a common interest which we always come back to as a kind of touchstone," he told swissinfo.

"There needs to be a foundation for stability and economic development in South Africa otherwise there will be no place for companies to trade and all of the SDC's inputs into development in South Africa over the past 12 to 15 years will be lost."

swissinfo, Isobel Leybold-Johnson in Nottwil

Private sector cooperation

Types of cooperation as defined by the SDC:

Public-Private Development Partnerships (PPDP): agreements with private companies on cooperating along value chains, in skills development, infrastructure projects and other initiatives.

Corporate Social Responsibility (CSR): commitments from private companies to respect human rights, social, ethical, environmental and workplace standards and support peace-building actions.

Social Investment: private investment funds with social objectives and contributions to development programmes.

Multi-Stakeholder Initiatives: initiatives and platforms for improving framework conditions for trade and development, built by the government, civil society and the private sector.

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Nobel-winning concept

Microfinance refers to loans, savings, insurance, transfer services and other financial products for low-income clients.

The idea first introduced in Bangladesh in 1976 by Professor Muhammad Yunus and was taken up by Grameen Bank and extended to other poor countries. Both Yunus and the Bank were jointly awarded the Nobel Peace prize in 2006.

Up to 90% of the people in poor countries have no access to financial services, according to the Swiss Agency for Development and Cooperation (SDC).

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