Thursday, May 12, 2011

Going in Together: The Promise and Pitfalls of Partnerships

From Africa to India to the Philippines, partnerships are making headlines as a vehicle for advancing national development agendas and private-sector business interests. Last week, the Africa Progress Panel released its Africa Progress Report 2011, which focuses on the potential of partnerships to accelerate growth on the continent and "drive sustained social and economic development." The report notes that the recent improvement in African economic growth has had only a limited impact on employment and income. It cites a number of models that are successfully increasing access to services and identifies ways in which these models can be scaled and replicated. Public-private partnerships (PPPs), which involve joint investment and shared risk between government entities and private-sector partners, are also being used to jumpstart infrastructure and development projects in India and the Philippines, as well as in many developed economies. The growing appeal of partnerships comes at a time when actors in each sector recognize the need for cross-sector cooperation. 

Private capital, led by foreign direct investment, has eclipsed official aid contributions as the largest financial flow to developing countries. In the last decade, institutions such as USAID have placed a strategic focus on the formation of public-private alliances. Multi-national corporations are increasingly partnering with NGOs and public sector actors to improve supply chains, test new business models and gain entry into new markets. There are now numerous examples of governments, firms and NGOs benefiting from each other's unique set of expertise and resources, especially as constrained government budgets and continued tightness in capital markets make funding and implementing large-scale projects a challenge. Yet partnerships hold peril as well as promise. A new blog, The Best Intentions, exemplifies the maturing discussion around the opportunity and challenges afforded by PPPs.  It also explores the dynamics of how PPPs fail when the "secondary interests" of private sector, NGO and government partners are not aligned or diverge down the road.

To mitigate risk, managers have learned to create comprehensive strategies for partnership development. Multinational firms, governments and NGOs can successfully arrive at long-term partnerships that serve their interests when their goals align. Investing in business intelligence to evaluate primary and secondary incentives for traditional and non-traditional partners may allow organizations to avoid ad hoc arrangements or alliances doomed by misaligned objectives.

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