Photo by Madelline Romero/CIAT
Public-private partnership (PPP) has been touted as the sustainable way forward for development interventions. But how do you know whether the intervention is creating the positive impacts that project developers hope it would?
Recently, the International Center for Tropical Agriculture (CIAT) completed analyses of various PPP schemes in investment projects by the International Fund for Agricultural Development (IFAD) within the Adaptation for Smallholder Agriculture Programme (ASAP).
Upon analyzing IFAD’s private sector engagement schemes in the four case study countries of Bhutan, Nicaragua, Niger, and Vietnam, the study – launched in Rome on June 14th 2018 – concluded that IFAD has been very successful in leveraging additional investment, whether in cash or in kind, from the private sector in aid of development objectives.
IFAD does this through various engagement strategies – development of new enterprises; supporting start-up businesses or existing MSMEs (micro, small, or medium enterprises) and farmer organizations; leveraging investment of private corporations; leveraging resources of micro-finance institutions or commercial banks – and through combinations of various direct – education and training; fostering of market linkages; capital investment; financing mechanisms – and indirect approaches, such as creating an enabling environment for private business development.
“The “engage-with-the-private sector” prescription has been tossed around quite a lot, but not many among those working in development actually know how to work with the private sector in ways that make both public and private sectors – and the local communities – happy,” Peter Laderach, CIAT Climate Change Program Leader, said. “The study presents case studies illustrating ways of engagement that were proven to have resulted in economic, environmental, and social returns, benefiting all parties, particularly the most vulnerable to impacts of climate change.”
How do you measure PPP schemes’ impacts to the society and environment?
Photo by Le Nghiem/CIAT
To answer this question, researchers from CIAT and the CGIAR Climate Change, Agriculture, and Food Security (CCAFS) Research Program used social return on investment (SROI) analysis, an appraisal, and evaluation methodology that captures financial, social and environmental outcomes by using indicators and proxies to go beyond the standard financial measurement. They also measured the counterfactual, which considers the outcome that would have happened in the absence of IFAD, in order to understand the added value of the IFAD investments. They conducted the analysis in a stakeholder-informed process, during which all relevant stakeholders – enterprises, local government, existing and new farmers and workers, – provided their opinion on the progress of the project, its outcomes, alternative scenarios, and future prospects.
They found that as a result of these engagements with the private sector, direct benefits to the local farmers and vulnerable households have increased, as evidenced for example, by improved meals and assets. The farmers have also observed some non-quantifiable social benefits in the community, such as improved relationships between members of farmers and workers groups, and increased trust between farmers/workers and private sector actors, as well as enhanced commitment levels from all.
By promoting growth of businesses, local farmers and workers have benefited from the resulting increase in demand for workers, upgrading their skills and earning more income as they respond to that demand. By making inclusion of vulnerable groups as a condition of its investment, IFAD has made sure that returns to the investments are distributed fairly among members of the community. The counterfactual analysis shows that certain rural development gaps would not have been addressed had there been no IFAD investment and guidance.
Moreover, the study found that the investment schemes did not cause negative environmental impact, and in fact has generated modest positive environmental returns as a result of the adoption of sustainable crop management practices, for example, organic farming.
“As researchers interested in learning what works and what doesn’t in terms of engaging the private sector, the study is valuable to the global movement trying to address climate risks, particularly, of the most vulnerable,” Laderach noted.
CIAT presented findings of the study at a panel discussion on the sides of the Sixth GEF Assembly held at Danang, Vietnam, last month, while the Vietnam case study was presented at the recently concluded Knowledge and Learning Fair, organized by IFAD Mekong Hub, also in Danang.