Can Public-Private Partnerships Actually Benefit the Poor?

Can Public-Private Partnerships Actually Benefit the Poor?

Can Public-Private Partnerships Actually Benefit the Poor?

Ajmal Abdulsamad, Shawn Stokes and Gary Gereffi of Duke University’s Center on Globalization, Governance and Competitiveness for ACDI/VOCA
Funding from USAID/E3’s Leveraging Economic Opportunity (LEO) project.
February 2015. 41 pages

While private sector development is not new to the development community, the focus on development PPPs has important implications for development policy and practice. Little is known about the impact these partnerships have on smallholders in developing countries. Most studies on the impact of PPPs rely on information about the delivery of outputs, rather than an understanding of the industry context in which the PPPs take place. None of the available studies has systematically examined development PPPs against the interconnected context of local, regional and global industries, or market systems.

Thus this report does not evaluate partnerships according to the traditional format and criteria (efficiency, effectiveness, impact, relevance and sustainability). Rather, drawing on the available Global value chains (GVC) literature, as well as information and reports related to three cases in the export-oriented agricultural sectors (Cocoa in India, Coffee in Rwanda and Horticulture in Kenya out of 135 PPP cases initially reviewed), this research examines the main concerns over the potential of PPPs to truly bring about inclusive development: 
  • The alignment of business and pro-poor development interests; 
  • The actors and institutions that determine how the system works; and 
  • The outcomes that can be achieved.

The report concludes at the following:

  • There are a number of roadblocks in global value chain PPPs that prevent the poor from benefitting, even when the project itself leads to growth and increased outputs.
  • While the three cases analysed are not representative of the diverse range of partnership programs, there are some lessons that may provide insight for new and ongoing partnerships. 
  • Industry gains through PPPs — be they increased exports, investment or production — do not automatically translate to smallholder, producer or household level economic benefits.
  • If the partnership isn’t designed properly, it may end up merely reinforcing existing power dynamics in the value chain, which could result in some actors profiting more than others.
  • Certification costs often fall to the producer, which can increase a smallholder’s production costs. Certifications are often touted as a way for smallholders to gain access to greater markets or earn premiums on their product, but in reality, their costs can outweigh potential benefits. 
  • PPPs that subsidize certification costs can increase farmer income, but only when farmers are paid price premiums, which are often not guaranteed. As a result, such programs are not the most sustainable
Uploaded on 19 Feb 2015

Contextual changes characterized by the globalization of agricultural value chains not only influence patterns of production, competition, and trade; they also offer potential for public-private partnerships (PPPs) to achieve development objectives. These PPPs often result in economic growth. However, they have not always brought about significant and sustained benefits for the poor.

Drawing on the concepts of global value chains, representatives from Duke University’s Center on Globalization, Governance and Competitiveness (CGGC) examined evidence contributing to three main debates surrounding the potential of PPPs to truly bring about inclusive development:

  1. The alignment of business and pro-poor development interests; 
  2. The actors and institutions that determine how the system works; and, 
  3. The outcomes that can be achieved.

This panel presented research findings on USAID-supported partnerships and upgrading trajectories experienced in the cocoa sector in Indonesia, the coffee sector in Rwanda, and the horticulture sector in Kenya. This research examines what historical PPPs can teach us about how to use this approach to actually benefit the poor.

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