Models for Trade Related Private Sector Partnerships for Development Symposium on Private Sector Partnerships in International Trade Development Projects.

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!

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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.