Models for Trade Related Private Sector Partnerships for Development

Symposium onPrivate Sector Partnerships in International Trade

Development ProjectsNovember 14-15, 2012

Based on a preliminary research report written by Shannon Kindornay and Kate Higgins with Michael Olender Governance for Equitable Growth program, The North-South

Institute

Presentation Outline

• Introduction

• Main Findings

• Models of Trade Related Private Sector Partnerships

• Comparing Models

• Lessons Learned and Key Challenges

• Cross-cutting Themes

• Conclusions

Introduction

• Context– Aid for trade– Private sector and development

• Research Objectives

• Symposium

Main Findings

• Hybrid model?– Sustainable development: Economic,

social and environmental consideration come together

– Poverty reduction one goal among many

• Assessing results– Commercial results sensitive– Development results in a hybrid model

Main Findings

• Private sector motivations– Different motivations exist for private sector

partners– Implications for development

intermediaries

• Risk– How much?– Mitigating and communicating risk– External factors (climate, human, etc.)

Models of Trade Related Private Sector Partnerships• Project Inclusion

– 30 projects– Criteria: buyer, seller, development

intermediary

International Buyer (retailer/manufacturer)

Developing Country Supplier (community/ company/ industry)

Development Intervention to

support growth/sustainability

of the exports

Donor (including IFIs and Foundations)

Implementation Actors (local/international NGOs, government

agencies, etc.)

Exports (goods, services)

$$$

Models of Trade Related Private Sector Partnerships

• Models

– Donor-led– Coalition – Company-led– NGO-business alliance– NGO-led

Models of Trade Related Private Sector Partnerships

• Donor-led (15 projects)– Specific programs aimed a harnessing

private sector funding, innovation, and/or expertise

– Shared risk, potential for scaling up– Partnership criteria varies across donors– Programs do not target trade-related

partnerships only

Models of Trade Related Private Sector Partnerships

• Coalition (6 projects)– Generally multi-stakeholder in their

funding, design, governing, and implementation

– Partners include governments, civil society, private sector actors, research institutions and private sector associations

– Value chain approach– Certification schemes common

Models of Trade Related Private Sector Partnerships

• Company-led (6 projects)

– Initiative developed / led largely by private sector partner

– Includes civil society implementing partners

– Donor/foundation funding for some components of the initiatives

Models of Trade Related Private Sector Partnerships

• Business-NGO Alliance (3 projects)

– Projects’ roots in business and/or NGO seeking to partner with one another

– May include donor funding but donor is not primary motivator

– Donor/foundation funding for some components of the initiatives

Models of Trade Related Private Sector Partnerships

• NGO-led (1 project)

– NGO initiatives that led to creation of a viable social enterprise or for-profit company

– Ten Thousand Villages included– Others identified but lacked international

buyer from project outset

Models of Trade Related Private Sector Partnerships• Project composition

– Sector composition• Agriculture – 24 projects• Artisanal – 6 projects

– Geographic composition• Africa – 17 projects• Latin America – 4 projects• Global Initiatives – 4 projects• Asia – 3 projects• Caribbean – 2 projects

Comparing Models

•Funding Strategies

•Key Activities

•Role of Private Sector Partners

•Development and Commercial Results

Comparing Models• Funding Strategies

– Donor-led • minimum funding matching requirements• private sector eligibility requirements vary • maximum cap on donor contribution levels

– Coalition• funded by public and private sector partners• different funding mechanisms (fee structure,

matching funds)• aim of decreasing reliance on public funds over time

– Other models

Comparing Models

• Key Activities• Improving quality (26 projects)

• Improving productivity (all projects)

• Training or technical support (all projects)

• Improved business models (23 projects)

• Added value explicitly targeted (13 projects)

• Fair trade, organic or other certification (20 projects)

• Services or programming beyond improving export capacities (15 projects)

Comparing Models • Role of Private Sector Partners – mixed

- Funders- Buyers- Implementing partner

• expertise • training activities• extension services

- Governance (coalition)- Establishment and promotion of industry

standards

Comparing Models

• Development and Commercial Results

- Hybrid model for sustainable development?- Commercial results lacking / sensitive- Quantitative development results for outputs- Qualitative development results available - Improved capacity as transformational for project

participants

Lessons Learned and Key Challenges• Risk

– Innovation versus risk– External factors matter: individual personalities,

human capacity, market fluctuations, etc. – Getting the incentives right

• Private sector partners– Benefits vary depending on the partner (large,

small, domestic, foreign, etc.)– Getting the ‘right people’ around the table

Lessons Learned and Key Challenges• Replication and Scaling Up

– Different models amenable to replication and/or scaling up

• Donor-led candidate for both depending on success• Coalition models more amenable to scaling up rather

than replication

– Balance visibility with support for broader coalitions– Remaining models more ad hoc but likely to

continue and grow given increase in socially conscious consumers and declining aid budgets

Cross-cutting Themes

• Which market-based approach?

– Mainstream market transformation (6 projects)• Do not necessarily make use of premiums• Seek to create consumer/industry demand• Holistic approach• Critical mass needed for success

Cross-cutting Themes

• Which market-based approach? – Niche markets (5 projects)

• Benefits to smaller groups• Demand for fair trade and organic certified projects

growing• May not be about fundamental changes to core

business practices

– Creating consumer demand• Artisanal sector • Success demonstrated across projects examined

Cross-cutting Themes

• The business case

– Securing sustainable supply (13 projects)– Company commitment to socially conscious practices

(6 projects)– Investment opportunities

Conclusions

• Hybrid model?– Sustainable development: Economic,

social and environmental consideration come together

– Poverty reduction one goal among many

• Assessing results– Commercial results sensitive– Development results in a hybrid model

Conclusions

• Private sector motivations– Different motivations exist for private sector

partners– Implications for development

intermediaries

• Risk– How much?– Mitigating and communicating risk– External factors (climate, human, etc.)

Thank you!

The North-South Institute

55 Murray Street, Suite 500

Ottawa, Ontario Canada

K1N 5M3

Tel.: (613) 241-3535

Fax: (613) 241-7435

Email/Courriel: nsi@nsi-ins.ca

Website: www.nsi-ins.ca

The North-South Institute thanks the Canadian

International

Development Agency for its core grant and the

International

Development Research Centre for its program and

institutional

support grant to NSI.