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Public-Private Partnerships in German Development Cooperation

Public-Private Partnerships in German Development Cooperation. Jörg Hartmann Executive Director Centre for Cooperation with the Private Sector German Technical Cooperation joerg.hartmann@gtz.de Berlin, May 5 2006. About GTZ. 30 years experience in development cooperation

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Public-Private Partnerships in German Development Cooperation

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  1. Public-Private Partnershipsin German Development Cooperation Jörg Hartmann Executive Director Centre for Cooperation with the Private Sector German Technical Cooperation joerg.hartmann@gtz.de Berlin, May 5 2006

  2. About GTZ • 30 years experience in development cooperation • 9.500 employees in more than 140 countries • Offices in 67 countries in Africa, Asia, Latin America, the Middle East and Eastern Europe • 2.700 projects worldwide • Working mainly on behalf of the German Ministry for Economic Cooperation and Development (BMZ) • Project management for international institutions such as EU, UN, World Bank and bilateral donors

  3. Capacity Development Building the capacities of people, organisations and societies Objective: Partners make effective and efficient use of resources in order to achieve their own goals on a sustainable basis.

  4. Fields of Competence State and democracy Economic and employment promotion Agriculture, fisheries and food Environment and infrastructure Health, education, social security

  5. PPP in German Development Cooperation • Programme and facility launched by BMZ in 1999 • Both sides achieve their goals more effectively and rapidly, results are more sustainable • Implementation mainly by GTZ and DEG • About 1200 proposals from EU companies • About 400 projects in more than 60 countries • Average project size: 400 000 € • Total volume of PPP so far: about 160 Mio. € 65% private contribution, 35% public contribution

  6. PPP Principles • Comply with development policy principles • Joint planning, shared cost and risk • Private partner bears at least 50% of the cost • Beyond the limits of normal commercial activity of the private partner - but driven by a business case(“neither subsidy nor charity”) • No tendering, individual negotiations • Avoid windfall gains and market distortions • Clear definitions and contracts

  7. Mainstreaming PPP in Technical Cooperation • In addition to special PPP facility, PPPs can also be set up in “regular” official development cooperation • Strength: Companies from developing countries are also eligible, PPPs are close to bilateral programmes • Weakness: Less “demand oriented” from a business perspective • PPPs are strictly bound to focus areas of bilateral programmes • funds depend on respective situation • planning may take longer

  8. PPP Challenges • How do we scale up? Are we bound to micro-level or can we make a structural impact? • Need to create more sector-wide approaches on a multi-stakeholder basis • Need to state both, the “business case” and the “development case” • How do PPP relate to regular bilateral cooperation? • Need for PPP on political level, e.g. contribute to good governance, enabling framework, regulatory impact assessment, fight against corruption, PPD

  9. Public-Private Partnershipsin German Development Cooperation Jörg Hartmann Executive Director Centre for Cooperation with the Private Sector German Technical Cooperation joerg.hartmann@gtz.de Berlin, May 5 2006

  10. 4 Types of PPP in Development Cooperation Source: GPPi, Business UNusual, 2005 Issue advocacy e.g. Health (HIV workplace policies with car manufacturers) Developing norms & standards e.g. Supply chains (Sector-wide PPP in textiles and coffee) Sharing & coordinating resources & expertise e.g. Infrastructure (Waste management with cement industry) Harness markets for development e.g. BOP (Micro-insurance with commercial insurer)

  11. Lessons Learnt (1) Issue advocacy • Local ownership critical • Public scrutiny high: Be clear about the balance of the “good cause” and the business case; communicate accordingly Developing norms & standards • Mainstream or niche? • Multistakeholder approach, brokering skills • Implementation is key and to be considered early • Political implications high

  12. Lessons Learnt (2) Sharing & coordinating resources & expertise • No blueprints in difficult sectors, e.g. water, utilities • Often rather regular business than partnership • Community involvement and sector policy critical Harnessing markets for development • BOP-modells currently seen as the most promising approaches of private contribution to development • Must be demand-driven, not supply-driven • About business modells, not only about products • Sales and distribution channels are a challenge

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