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Public-Private Partnerships in German Development Cooperation

This article explores the concept of public-private partnerships (PPPs) in German development cooperation and their effectiveness in achieving sustainable development goals. It discusses the principles, challenges, and lessons learned from different types of PPPs, including issue advocacy, developing norms and standards, sharing resources and expertise, and harnessing markets for development. The article also highlights the need to scale up PPPs, create sector-wide approaches, and emphasize both the business and development cases in order to maximize their impact.

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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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