Public Private Partnerships and Development in the Caribbean Pt. 1
Upcoming SlideShare
Loading in...5
×
 

Public Private Partnerships and Development in the Caribbean Pt. 1

on

  • 159 views

Part one of investigation into Public Private Partnerships and the potential scope and role for their application to development interventions in the Caribbean- presented as a webinar for the PMI (c) ...

Part one of investigation into Public Private Partnerships and the potential scope and role for their application to development interventions in the Caribbean- presented as a webinar for the PMI (c) International Development Community of Practise (IDCoP)

Statistics

Views

Total Views
159
Views on SlideShare
159
Embed Views
0

Actions

Likes
0
Downloads
4
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Thank you for the introduction Madame Chair. Colleagues, thank you for allowing me to share some initial thoughts and findings on the subject at hand, “Public Private Partnerships and their role in the present and future development of the Caribbean region.” <br /> Before proceeding, I wish to emphasise that the views and opinions expressed during this presentation are solely mine and in no way do they represent any official position or policy of the Caribbean Community (CARICOM) Secretariat. <br />
  • As you may be aware, this is the first session of a two-part presentation that will seek to explain and explore Public-Private Partnerships in the context of managing (construction and other types of)projects with development and regional integration objectives, in the Caribbean region. In this first part we will look at some of the definitions and variations of the PPP or P3 arrangement and will briefly examine the recent history of the modality. We will also consider some of the global and regional factors which create a favorable context for the strategic application of P3s as a modality for implementing development projects in the Caribbean, including the 2011 Global Partnership for Effective Development Cooperation, and other international accords on Aid Effectiveness/ Aid for Trade ; the EU Agenda for Change; the financial graduation of CARICOM Member States to Middle and Upper Income Countries (by the World Bank) and the resulting impact on regional access to Overseas Development Aid (ODA); the CARICOM Single Market and Economy ( flagship of the regional integration movement in the former Commonwealth Caribbean) and the new CARIFORUM-EU Economic Partnership Agreement. We will look at some advantages of the P3 modality and possible constraints to their effective application in the Caribbean; and then briefly consider a few examples of existing or previous P3s in key development sectors in the region. Finally, we close with some key questions or matters for Project Managers’ consideration in the second part of this investigation. <br />
  • So, the most obvious point for starting our discussion is finding a suitable definition and/or description of the particular arrangement. <br /> What is a Public Private Partnership? Well, there is no single, generic definition available; it varies from country to country or from organisation to organisation… so I will share with you a few which I found to be most in keeping with my own personal understanding and vision: <br /> Authors K. Buse and G. Walt, in an Article on Global Public-Private Partnerships in the health sector published in the Scielo Bulletin of the World Health Organisation in 2000, opined that (and I quote) “the essence of partnership is a relationship based on agreement, reflecting mutual responsibilities in furtherance of shared interests.” <br /> The United States Agency for International Development (USAID), in its 2006 publication, “ Public-Private Partnerships for Development- A handbook for Business” defines P3 as “a voluntary alliance between various equal actors from different sectors whereby they agree to work together to reach a common goal or fulfill a specific need, that involves shared risks, responsibilities, means and competencies.” <br /> A World Bank 1998 Discussion Paper sees it as “a collaborative relationship between entities to work toward shared objectives through a mutually agreed division of labour.” <br /> However, the United Nations Development Programme- Special Unit for South South Cooperation (UNDP-SSC) is the most specific in its definition of P3s as “a contractual agreement between public sector and private sector (for-profit) where resources and risks are shared to meet a specific public need.” <br />
  • The World Economic Forum in its 2005 publication “Building on the Monterrey Consensus- the growing role of Public-Private Partnerships in Mobilising Resources for Development” lists the following as key characteristics of a P3: <br /> -Voluntary or contractual relationship ( this could take the form of formal, legally binding contracts or informal agreements like MOUs) <br /> -Reciprocal obligations <br /> -Mutual accountability <br /> -Sharing of investment or risk (these could be financial, reputational or otherwise.) <br /> -Joint responsibilities in design and execution <br /> The NGO publication, INFORESOURCES also adds that, for PPPs in development cooperation, the following additional criteria are applicable, namely: <br /> • The public partner does not finance the private partner’s core business but <br /> offers subsidiary support. <br /> • The Partnership does not distort trading conditions. <br /> • The private partner’s commitment exceeds the duration of the project. <br /> • The Partnership enables the private partner to pursue their economic goals (such as <br /> profitability and opening of new markets) and the public partner to pursue <br /> their development policy goals (such as sustainability and poverty reduction). <br /> But some of these will be explored in more detail in the latter part of this investigation. <br />
  • So, who are the players involved? As we saw in the UNDP-SSC’s definition, the public sector is one of the Parties to the P3. The public sector is quote “that part of an economy controlled by Government ( national, state, provincial or local)”; it aims to provide public services; includes police/ military, public roads/ transit, primary education and healthcare, street lighting, other social programmes, and it also encompasses state-owned enterprises and nationalized industries. <br /> The other key Player is the private sector; it is defined as “that part of an economy run by private individuals or groups, usually as a means of enterprise for profit”; it is not controlled by the State. For our discussion today, private non-profit organizations (NGOs) are also considered as members of the private sector. <br /> Though I have provided these abbreviated or high level definitions, the truth is that the differentiation between public sector and private sector can be rather complex in the present context. It is one of those conceptual issues that policy makers in the Caribbean will eventually have to address as a foundational element for the institutionalisation of P3s for development. For example, in a 2009 IMF Working paper by Ian Lienert, titled “Where Does the Public Sector End and the Private Sector Begin?” the author points out that in many countries the provision of services in health, education, social protection, and environmental protection is shared between the public and private sectors depending on political and cultural factors, and consensus on the role of government in society. Concepts of function, ownership and level of control will need to considered if clear boundaries between the two sectors are to be delineated. <br />
  • So, having established that there is no single generic definition for P3, and having noted the complexities in arriving at clear classifications for Public versus Private sector, I will present a few of the more traditional forms of P3s and touch on some newer variations that are emerging in the context of international and national pursuit of development objectives. <br /> P3s are considered to be a ‘tool” (and not an end in themselves), and as such, the form they take will, of course, be a function of the objectives/ goals they were created to achieve. P3s can be used for design and construction, research and product development, service delivery, reform of the regulatory framework, institutional and human capacity building and oversight of performance… and these are just some of the functions suggested by the World Economic Forum. <br />
  • The most common form that comes to mind when we refer to P3s is the “Concession model”- where for example, the private sector provides initial payment( to the public sector entity) for the right to lease an infrastructure asset, operate and maintain the asset and retain all or most of the revenues generated by same. This model includes a range of formal contractual arrangements from “operation and maintenance only” to more complex “Design, build, finance, operate and maintain– or DBFOM contracts.” (As an aside, DBFOMs are also known as PFIs –based on the UK Government’s Private Finance Initiative which will be given specific mention shortly.) As you can see from the slide, the acronyms change to suit the particular project contract and funding model. However, it is worth noting that these contracts are often structured to still allow for some level of public sector control, to ensure that the best interests of the public are achieved. <br />
  • Since P3s are not only limited to construction or infrastructure projects, in the international development arena today, there are product-based and issues or systems-based P3s. Accordingly, various other ways of classifying P3s have emerged, again based on the nature of the activity they undertake. These activities include: <br /> - Consultation between public and private actors <br /> - Concertation (or agreement) of policy between actors; collaboration on standard setting <br /> - Operational functions such as joint research and product development or programme implementation… <br /> According to authors, C. Mitchell-Weaver and B. Manning in a 1990 lecture on P3s for Third World Development, some P3 models are based on “the degree to which private interests participate in strategic level decision making in the public interest.” They make the case for: <br /> The Elite Committee (also known as a board or conference) where there is negotiation among partners as equals; decisions are taken by consensus and the Committee does not actually implement projects, but rather Members return to exercise influence in their respective sectors/ organizations for those to act in ways that achieve the partnership goals. <br /> The NGO Model, which entails delegation to a non-governmental organisation; in this instance the public-sector transfers material or financial resources to enable the private sector partner to carry out a ‘public programme.’ <br /> The Quasi-public Authority, which is a hybrid organisation, with both public and private characteristics, created by the public sector. The special entity provides goods or services or enables the private sector to enter a particular market. <br /> In this slide I tried to draw some correlation between the “nature of the activity” and the models identified by Mitchell-Weaver and Manning. But, of course, this list is not exhaustive, and human inventiveness and creativity mean that these partnerships or alliances could be structured in many different and innovative ways to achieve any or many mutual objectives. Whatever their final form, authors Buse and Walt posit that most P3s have: <br /> Clearly specified, realistic and shared goals <br /> Distinct benefits for all Parties <br /> Clearly delineated and agreed roles and responsibilities for all Parties <br /> The perception of transparency <br />
  • The World Bank in documentation on its 5 year “Business Partners for Development” initiative, expressed the view common in the international system at the time, that (and I quote) “we are moving from a world in which the state has sole responsibility for public good and where business maximized profits independently of the interests of society at large, to a world where success depends on the close synergy of interests among business, civil society and the State.” <br /> The truth is Public Private Partnerships have existed for a very long time, even if they weren’t labeled as such. As the current figure ( borrowed from the WHO archives) shows, there has been a shift over time in the relationship between organisations and entities in the public and private sectors. Today there are many types of interactions among these various actors. <br /> However, because we have limited time for today’s presentation, I will fast forward a couple centuries to the early 1990’s, and commence with the Private Finance Initiative (PFI) of the United Kingdom Government, launched in 1992. Again, I reiterate that my timeline is not intended to be exhaustive, but merely points to some key events, developments, and changes in policy or attitudes which have led us to today’s intimate engagement between the public and private sectors. <br />
  • So, the UK’s Private Finance Initiative or PFI was essentially (quote) “a way of creating ‘public–private partnerships’ by funding public infrastructure projects with private capital.” (Wikipedia) Initially implemented in 1992 by the Conservative government in Britain at that time, and further developed under the subsequent Labour Government, it was often justified on the grounds that the private sector is better at delivering services than the public sector. The PFI used contracts which involved the transfer to a private party of obligations ( and commensurate risks) for executing infrastructure projects or for the provision of public services; in return for temporary rights (for up to 30 years) to use the facility or service and to charge fees to external users or receive simultaneous payments from the budget of a public entity. (Remember the “concession model” referred to earlier?) This was applied to projects for schools, hospitals etc. <br /> During the 1990’s this model was duplicated in Australia, and in France, Germany, Spain and several other European countries. <br /> Authors Buse and Walt also argue that the 1990’s was marked by an “ideological shift” in market theory based on the realisation that there were significant shortcomings to “pure market mechanisms,” which were resulting in inefficiencies and inequalities at various levels. There was also movement towards “neo-corporatism’ which basically ruled that the private sector should have a say in public policy-making. These leanings were becoming more and more evident in the international system. From the WTO to the World Bank and even in major NGOs, there was exploration of partnerships with private sector interests. <br />
  • The first decade of the new Millenium saw a deepening of the dialogue and the emergence of new and varied forms of partnership between the public sector and private sector, especially at the global level. UN Secretary-General Kofi Annan, leading what he termed, “a quiet revolution” proposed the Global Compact, which recognised as mutual spheres of interest for both public and private sector, areas such as “human rights, labour standards and environmental protection” among others. <br /> Signatories to the Monterrey Consensus emanating from the International Conference on Financing for Development in 2002 agreed that, and I quote, “while Governments provide the framework for their operation, businesses, for their part, are expected to engage as reliable and consistent partners in the development process” and urged that “businesses to take into account not only the economic and financial but also the developmental, social, gender and environmental implications of their undertakings.” The Consensus outlined other ways in which both public and private sector partnerships could be exploited for development objectives. <br /> And for good measure, I will also include the establishment of the Bill and Melinda Gates Foundation, which today is one of the largest, private, not-for-profit foundations involved in development projects which span several continents and which involve partners from international and national public sectors, the civil society and other stakeholders. <br /> There are some other key events which have taken place since 2005, but these will receive specific treatment as we move to examine the present context. <br />
  • Now that we have cleared some of the foundational elements of our discourse, namely the definition of P3s, and recent history of the modality, it is a necessary ‘next step’ that we take stock of current environment (at different levels) within which Caribbean countries have to operate. In an era of dynamic globalization, with its imperatives for interdependence, there are global factors, events, issues which have direct, positive and negative impacts on the Region and which influence the matter at hand- public-private partnerships. <br /> One online business directory defines globalization as “the worldwide movement toward economic, financial, trade and communications integration.” Further, “it implies the opening of nationalistic perspectives to a broader outlook of an interconnected and interdependent world, with free transfer of capital, goods and services across national frontiers.” We all know that this ongoing process also affects many social, cultural and political aspects of national life in ways that are visible daily. But I wish to examine some specific global events that directly influence the decisions and actions of Caribbean Countries and which are pushing overtly to the increased used of Public-private partnerships for development. <br />
  • For the past decade, most countries have pursued the Millennium Development Goals, as detailed in the United Nations Millennium Declaration. The MDGs have been translated into specific development objectives at the individual National level, and have informed Country Development Strategies and the various implementation methodologies over the years. As the 2015 deadline looms closer, the UN, other multilateral organisations and individual countries in the international system are keenly aware of the fact that, despite the significant progress made towards achieving these goals, much more work is required to meet the global ideal of “eradication of poverty and inequality.” The stark reality is that the State cannot succeed in realising these goals on its own. <br />
  • The Declaration on the Busan Partnership for Effective Development Cooperation was issued at the end of the Fourth High Level Forum on Aid Effectiveness, in Busan, Republic of Korea, on the first of December 2011. To date, it has received over 190 endorsements from countries and territories, multilateral and regional organizations, public and private sector and civil society representatives. <br /> The global partnership is (quote) “founded on shared principles, common goals and differential commitments for effective international development.”(end quote). These shared principles include, “the ownership of development priorities by developing countries, a focus on results, inclusive development partnerships and the recognition of the complementary roles of all actors; and transparency and accountability to all stakeholders. <br /> The common goals to be pursued include, ”poverty eradication, social protection, economic growth and sustainable development.” To this end, partners will “facilitate, leverage and strengthen the impact of diverse sources of finance to support sustainable and inclusive development.” As the declaration explicitly states, (quote) “new financial instruments, investment options, technology, knowledge sharing and public private partnerships are called for.” <br />
  • The Busan Partnership is particularly relevant in that, not only does it “recognize the central role of the private sector in advancing innovation, creating wealth, income and jobs, mobilizing domestic resources and in turn contributing to poverty reduction”, it also sets out specific actions that will be undertaken to exploit that potential. <br /> Therefore, it is assumed that the Parties endorsing this Global Partnership (and you will recall that individual Caribbean Countries and the Caribbean Community (CARICOM) have done so) will: <br /> - engage the representative business associations, trade unions and others to improve the legal, regulatory, and administrative environment for the development of private investment…( collaboration in standard setting) <br /> Enable the participation of the private sector in the design and implementation of development polices and strategies to foster sustainable growth and poverty reduction (consultation) <br /> Further develop innovative financial mechanisms to mobilize private finance for shared development goals <br /> Promote Aid for Trade as an engine of sustainable development… <br /> Invite representatives of the public and private sectors and related organizations to play an active role in exploring how to advance both development and business outcomes so that they are mutually reinforcing. <br />
  • To back track a little bit, the Aid for Trade Initiative, referred to in the Busan Declaration, also provides an important context for framing the role of P3s in the Caribbean. The AfT initiative was launched by the World Trade Organisation (WTO) in 2005 at its Hong Kong Ministerial. At its core, Aid for Trade is intended to mobilise resources to address trade-related constraints identified in developing and least developed countries. <br /> Aid for Trade is considered that part of Overseas Development Assistance (ODA) which helps developing countries build trade capacity and necessary infrastructure to allow them to benefit from trade opening. For the period 2012 to 2013, the global AFT Work programme is to be focused on 5 key areas: <br /> Resource Mobilisation; Mainstreaming trade into development plans and programmes; Regional trade integration; Private sector development; Monitoring and evaluation of AfT <br /> Global flows of Aid for Trade have been estimated at between $25-30 Million per annum , approximately 30% of total Overseas Development Assistance. It can take the form of grants or concessional loans to finance trade-related needs ( these loans often have a grant element of about 25%); technical assistance to develop trade strategies or to facilitate better negotiations; investments in industries or sectors identified for diversification. Aid for Trade can come from bilateral international development partners or even via multilateral and regional financial and development organizations. <br /> For Aid for Trade to really have impact, the participation of the Private sector in designing, planning and implementing key interventions is critical. <br />
  • This initiative again reinforces the perceptions of positive linkages between trade and development and the role of trade in the development of developing and least developed countries. <br /> ( Slight pause for persons to view slide) <br />
  • Ok. So if you will forgive the somewhat non-linear progression, the next major international event which I think deserves mention, is the European Commission’s release of communication in October 2011 entitled, “Increasing the Impact of EU Development Policy: an Agenda for Change.” With the EU being one of the Caribbean’s largest donors ( at both regional and bilateral levels), the “Agenda for Change” proposes several revisions to EU Development Cooperation policy which cannot be ignored… and even more so since these revisions are intended to inform the next development programming cycle which spans 2014 to 2020. <br /> As part of the justification for its proposed course of action, the EU cites the (quote) “difficult economic and budgetary times” which make it “even more critical to ensure that aid is spent effectively, delivers the best possible results and is used to leverage further financing for development.” ( end quote.) The “Agenda for Change” will see changes in EU development cooperation actions based on ,among other things, “increased differentiation between developing countries;” and more intense exploration of collaboration with “the private sector, foundations, civil society and local and regional authorities.” <br />
  • What do these mean? Well firstly, in taking a “differentiated approach”, it is proposed that “grant-based aid should not feature in geographic cooperation with more advanced developing countries, already on sustained growth paths, and/or able to generate enough own resources.” In doing so, the EU recognizes that this could result in “less or no EU development grant aid” for some countries. Therefore, the EU intends to have “political and policy dialogues with all Partners to define the most appropriate form of cooperation.” <br /> Well… with several Caribbean and in particular CARICOM States “graduating” financially and now being classified as “upper middle” or “high income countries” by the World Bank , the “differentiated approach” is cause for concern. Despite the fact that the World Bank itself clearly notes that “classification by income does not necessarily reflect development status”, the Development Assistance Committee of the OECD (in which several EU Member States participate) still bases its List of countries and territories eligible to receive ODA largely on the World Bank classification by Gross National Income (GNI). As a matter of fact, Caribbean countries like Trinidad and Tobago, Barbados and the Bahamas have recently “graduated” OFF of the DAC ODA list- since they were classified as HICs for 3 consecutive years. <br />
  • Keeping in mind the shift to a ‘differentiated approach”, the EU Agenda for change reiterates that “inclusive and sustainable economic growth is crucial to long-term poverty reduction…”, this becomes evident when people are able to “participate in, and benefit from wealth and job creation.” The Agenda for Change further calls for “public actors to forge partnerships with private companies, local communities and civil society” and urges, “corporate social responsibility.” <br /> So moving forward, the EU will focus on supporting the development of “competitive local private sectors,” buttressed by “better and more targeted ‘Aid for Trade’ and trade facilitation.” Partners will see the EU developing new ways to engage the private sector, “with a view to leveraging private sector activity and resources for delivering public goods.” Additionally, “a higher percentage of EU development resources will be deployed through existing or new financial instruments like blending grants and loans and other risk-sharing mechanisms in order to leverage further resources and thus increase impact.” So, while differentiation may lead to reduction in grant aid for Caribbean States, but on the other hand new financial instruments will become available, accessible mainly through initiatives implemented using some form of Public-private partnership. <br /> Furthermore, Caribbean countries and in particular those participating in regional and sub-regional integration movements, will have taken note of the Agenda for Change’s reference to regional development and integration in this context. Since regional development and integration are seen to encourage trade and investment, the EU intends to give support for integration efforts and south-south initiatives in areas such as markets, infrastructure and cross border cooperation on other key matters. These will inevitably be linked to the EU’s Economic Partnership Agreement (EPA) with the region. <br /> So in summary, the impending reduction of access to ODA and in particular Grant Aid, and the emphasis in multiple international fora on the growing role of the private sector in the delivery of public goods, are undoubtedly significant drivers for the development of P3s in the Caribbean. <br />
  • So, now it’s time to take a look at the “environment” or context closer to home. The CARIFORUM- EU Economic Partnership Agreement (EPA) was signed by the 27 European Union member states and 14 CARIFORUM states with the exception of Haiti, in October 2008 and was provisionally applied in December 2008. It replaces the trade provisions of the Cotonou Agreement, signed in 2000, in which the European Community unilaterally granted African, Caribbean and Pacific (ACP) countries non-reciprocal market access to Europe on more favourable terms than those enjoyed by goods from other countries. <br /> The new EPA, touted as a “trade agreement with development components”, is designed to open up and enhance trade between Europe and CARIFORUM by removing the barriers to trade between them and by improving CARIFORUM’s capacity to trade competitively. <br />
  • As outlined in the 2009 summary overview prepared by the then Caribbean Regional Negotiating Machinery, it is expected that, through enhanced open trade, the EPA will: <br /> • Expand and improve CARIFORUM’s industries and economic growth by enabling States to develop exports in services and a wider range of goods in which they have a comparative advantage; Increase employment and business opportunities; Improve CARIFORUM’s access to European technology and technical ‘knowledge’; Increase competition within CARIFORUM to improve efficiency in production processes. <br /> Therefore, the CARIFORUM-EU EPA provides yet another reason for strengthening the nexus between public and private sectors in the Caribbean…and more so, it provides specific legal and regulatory conditions which must be considered when forging P3s in the region. <br /> Permit me to interject at this point, that none of this is “new news” really. How so? <br />
  • A look at the Caribbean Community (CARICOM) Regional Integration process and in particular the move to establish the CARICOM Single Market and Economy ( or CSME) provides evidence of leaders’ recognition of the importance of the private sector in the development of their countries and the region as a whole. The CSME is enshrined in the Revised Treaty of Chaguaramas Establishing the Caribbean Community including The CARICOM Single Market and Economy, signed in 2001 by Heads of Government. Caribbean leaders, as stated in the preamble to the Revised Treaty, were already “convinced that market-driven industrial development in the production of goods and services is essential for the economic and social development of the peoples of the Community.” <br /> Since then, much of the work of CARICOM has been directed towards the creation of “ a single enlarged economic space” characterized by the free transfer or movement of goods, services, skills and capital; and the right of establishment among participating Member States. According to the many provisions of the Revised Treaty, the actions required to achieve the CSME are to be undertaken by the Community, its various organs and bodies, “in collaboration with competent national, regional and international agencies and organisations…” Therefore, it is understood that there is sufficient scope for P3s within the framework of the regional integration process led by the region’s Governments. <br /> However, the Treaty does not provide any specific recommendations or structures for the participation of the private sector in the policy and decision-making exercises of the Community. My humble opinion, in light of the factors/ events elaborated earlier and giving due consideration to the wealth of information available today about P3s, the opportunity now exists for Caribbean countries, both individually and as a region, to craft a policy framework for Public-private partnerships which best suits their various development objectives. <br />
  • So, after we have taken definitions, history, international and regional factors into consideration, why really should Caribbean countries use P3s as a tool for attaining development objectives, among the panoply of other ways and means available? What are some of the most notable benefits of P3s- both for the public sector and the private sector? (Again, this is not an exhaustive list…) <br /> P3s can enable the public sector to fulfill its functions and mandates in several ways, and especially in the current economic situation. It allows public sector entities to leverage significant amounts of financing from the domestic and international private sector and other sources to advance work in relation to development mandates. Critics and sceptics would counter that this may lead to a dependence on “fickle donors” or compromise the public sectors’ integrity and independence. They suggest that development priorities would eventually be sidelined in favor of narrower interests ( aka profits) of corporate shareholders. However, as we have already seen, with the Caribbean facing an inevitable reduction in grant aid ( not only from the EU) but other traditional donors as well, P3s will be critical for resource mobilization for development imperatives. <br /> Recent assessments of Aid effectiveness and efficiency in the Region point to “an implementation deficit”- or a failure to translate development objectives into tangible results. P3s also allow the public sector to mobilise non-financial resources- human and material, for more timely, efficient and effective implementation of development projects. It is commonly held that the private sector tends to be more efficient at managing and implementing some types of projects, more innovative and up-to date with newer technologies among other advantages. Under P3s, the public sector’s capacity constraints and other resource limitations can be overcome. <br /> P3s can also ensure the sustainability of development in the Caribbean. The inclusive nature of modern P3s which also entail the participation of civil society, should allow for more appropriate design/ conceptualisation of interventions, and greater stakeholder acceptance and involvement at various levels, which are key to obtaining more lasting impact. From creating jobs or opening opportunities for entrepreneurs, to consulting with industry on standard setting and regulatory frameworks, the more scope there is for stakeholder participation in development processes, the more likely that the results will have a more permanent effect. <br />
  • Yes, we know that for many private businesses, “the bottom-line” is what matters- but remember that for our purposes, the private sector isn’t limited to privately owned for-profit organizations, but also includes not-for profit organizations (foundations etc.). In this regard, “profits” are not the only or principal benefits of P3s to the private sector. So in addition to the types of ‘secure, long term investments’ that concessions provide, what else do they get out of these partnerships? <br /> Through P3s, the Private Sector in the Caribbean can have increased influence in the decision-making/ rule-setting processes, which affect the environments they operate in, at both national and regional levels. (It may eventually extend to the global level). It will affect and preferably, enhance their access to financial and other resources, markets and other strategic business opportunities (as we see under the CSME and the EPA), which are key to their survival and growth ( or achievement of results in the case of issue-specifis NGOs)- which in turn is important for the economic and social development of the nation. <br /> P3s also serve as a vehicle for brand and image promotion, leading to regional/ global recognition and reputation- all of which, again, work to the advantage of business in pursuing its profit objectives. There are those who counter that companies with bad records for environmental impact or labour relations/ human rights violations may try to “green-wash” their reputations through philanthropic P3s, but I prefer to see it as them taking a step in the right direction. The benefits they observe from the public’s positive perception can influence further positive changes in the how business exploits ( no pun intended) and manages its natural and human resources. As the for-profit private sector matures, Corporate Social responsibility which evolves into ‘Common Shared Value’ will be entrenched as a key business strategy for realizing greater and longer-term shareholder value. <br />
  • Though I prefer to start from an idealistic and optimistic position, I am not unaware that there are some significant challenges and constraints to be taken into consideration as we move towards using P3s as a tool for development in the Caribbean. <br /> Political will, trust, legitimate representation, governance and accountability, competence and access to resources are areas, along with other logistical and administrative concerns which may require some skillful navigation or manipulation if we are forge sustainable and effective P3s in the region. The USAID Handbook on Public Private Partnerships for Development states that “ the success of P3s relies on the strength of the alliance and on the competencies brought to the project.” <br /> The issue of leadership- and in particular the need for a political champion for P3s- both in the domestic arena and in the regional integration movement, could be problematic. Issues of sovereignty, the role of the State and other key political concerns and attitudes still need to be addressed if successful partnerships are to be built in the Caribbean. Political leaders also need to have a more strategic understanding of the costs and benefits of P3s and so adequate information needs to be provided/obtained. <br /> Additionally, there are other constraints at the levels of legal and regulatory frameworks and at the level of technical and managerial expertise required which currently affect Caribbean Governments’ capacity to implement P3s. <br /> The Caribbean Development Bank, in its Private Sector Strategy, refers to some of the issues which affect the regional private sector, and which can also be seen as constraints to P3s for development, including, among others; <br /> Weak enabling environment- critical policy, legal and institutional reforms are still required to create a favourable business environment <br /> Small market size at national and regional levels and difficulty achieving economies of scale <br /> Limited access to financial services and capital markets as the region’s financial systems are largely bank-based <br /> Inadequate inter-firm linkages which could facilitate access to global markets, knowledge transfer and other resources otherwise unavailable to individual firms <br /> Lack of management skills <br /> Insufficient investment in innovation and technological development…to name a few <br />
  • Noting, the time constraint that I also have for this presentation, there are a few key examples of P3s in the Caribbean I would like to mention. <br /> The first I will borrow from a case study done by Andy Rusland, Chief Financial Officer of HJ De Vries Group of Companies in Suriname, published online through the IP3 website. <br /> The construction and restoration of main Port of Paramaribo Suriname is a P3 venture comprising the Government of Suriname, the European Union ( financing) and the Private Sector in the country. Rusland shares that tenders were issued and eventually 3 private companies contracted by the Government to operate parts of the Port. These companies, pay a sum for the concession and are able to use allocated space for their shipping and other businesses for a 15 year period, while the Government, through the Port Authority remains responsible for maintenance, utilities etc. <br /> The second is the Pan Caribbean AIDS Partnership (PANCAP)- Global Fund Round 9 project entitled “Fighting HIV in the Caribbean: a Strategic Regional Approach.” The specific financing agreement with the Global Fund to fight AIDS, Tuberculosis and Malaria was signed on behalf of the Caribbean Community (CARICOM) on 5 October 2010. The project was developed on the basis of consultations/ inputs from a variety of stakeholders, including national agencies (28), Caribbean civil society agencies (6), regional health organizations (7), international development agencies (7), United Nations agencies (7), and international health and private sector collaborators (7). The project aims to reduce the number of new infections; to lower mortality due to HIV; and to lessen the social and economic impact of HIV/AIDS on households, each by 25%. <br /> A third example is Caribbean Aid for Trade and Regional Integration Trust Fund (CARTFund). CARTFund is a Trust Fund, financed by the United Kingdom Government’s Department for International Development (DFID) and administered by the Caribbean Development Bank (CDB). Its overall aim is to assist CARIFORUM countries in boosting growth and reducing poverty through trade and regional integration. A key aspect of the RDS is to support the implementation of the CARICOM Single Market and Economy (CSME), and to help Caribbean signatory states to benefit from the new CARIFORUM-EC Economic Partnership Agreement (EPA.) signed on October 15, 2008. CARTFUND became operational in 2009 with a resource complement of five million pounds (GBP 5,000,000). Applications for resources from the Fund have since been submitted by (a) individual government ministries and agencies, which constituted the largest category; (b) various regional institutions and (c) certain private sector umbrella agencies, mainly national but also regional. <br /> Each of these examples reflect elements of the models mentioned in the opening segment of the presentation, and are representative of P3 approaches that can be used to address both business and development challenges facing the region. <br />
  • As we come to the end of this presentation, I wanted to submit for your consideration, and for our future discussion in the second part of the investigation, the following questions: <br /> As project managers involved in development projects at the national, regional or international levels, what are some of the key requirements for effective and successful management of P3s for development? What are some of the critical issues that may arise during the various processes for management of a P3 project? And, especially, what do we need to consider in setting up dedicated PPP units in Caribbean countries or at the regional level? <br />

Public Private Partnerships and Development in the Caribbean Pt. 1 Public Private Partnerships and Development in the Caribbean Pt. 1 Presentation Transcript

  • 1 “Public-Private Partnerships and the Future of Development Projects in the Caribbean” Presenter: RESEL MELVILLE (PMP, D.E.A, B.A (Hons)) Date: 9 May 2013- repeat
  • 2 DISCLAIMER • THE VIEWS AND OPINIONS EXPRESSED IN THIS DOCUMENT ARE SOLELY THOSE OF THE AUTHOR AND DO NOT REPRESENT ANY POLICY INITIATIVES OF THE CARICOM SECRETARIAT.
  • 3 OUTLINE OF PRESENTATION i. Key Definitions: * What is a PPP/ P3? * Who are the players/ parties involved? * Types of PPPs ii. Recent history of PPPs- 1990’s to 2000’s iii. Present day: global context *Busan Global Alliance *EU Agenda for Change *WTO Aid for Trade Initiative iv. Present day- regional context * CARICOM Single Market and Economy * CARIFORUM-EU Economic Partnership Agreement v. P3s for Development- pros and cons vi. Examples of recent/major Public Private Partnerships in Key Development Sectors in the Caribbean vii. Part 2: a preview…. “Public-Private Partnerships and the Future of Development Projects in the Caribbean”
  • 4 What is Public-Private “ the essence of partnership is a relationship based on agreement, reflecting mutual responsibilities in furtherance of shared interests (K.Buse/ G.Walt.- Bulletin of the World Health Organisation Vol. 78. no. 4, 2000) “a voluntary alliance between various equal actors from different sectors whereby they agree to work together to reach a common goal or fulfill a specific need, that involves shared risks, responsibilities, means and competencies.” (USAID/CED, Public Private Partnerships for Development- A Handbook for Business, July 2006) “a contractual agreement between public sector and private sector (for-profit) where resources and risks are shared to meet a specific public need.” (UNDP SSC http://ncppp.org/undp/guidelines.html) Presentation Title
  • 5 Basic Characteristics of a P3 -Voluntary or contractual relationship -Reciprocal obligations -Mutual accountability -Sharing of investment or risk - Joint responsibilities in design and execution •World Economic Forum, “Building on the Monterrey Consensus- the Growing Role of Public-Private Partnerships in Mobilizing Resources for Development,” 2005 Presentation Title
  • 6 Who are the players/ parties involved THE PUBLIC SECTOR THE PRIVATE SECTOR • That part of an economy run by private individuals or groups, usually as a means of enterprise for profit; not controlled by the State. Presentation Title • The public sector is that part of an economy controlled by Government ( national, state, provincial or local); it aims to provide public services; and encompasses state-owned enterprises and nationalized industries
  • 7 TYPES OF PUBLIC-PRIVATE PARTNERSHIPS Presentation Title
  • 8 Examples of the CONCESSION MODEL • DBFO - Design, Build, Finance and Operate - principles of the private finance initiative apply, the same supplier undertakes the design and construction of an asset and thereafter maintains it for an extended period, often 25 or 30 years • DB- Design and Build- A single supplier is responsible for designing and constructing a built asset. • FM-Facilities Management- Management of services re: operation of a building. Includes maintenance, security, catering and external and internal cleaning etc. • O&M -Operation and Maintenance- Involve the private sector operating a publicly-owned facility under contract with the Government. • LDO-Lease Develop Operate- Involves a private developer being given a long- term lease to operate and expand an existing facility. • BOOT- Build Own Operate Transfer- Involve a private developer financing, building, owning and operating a facility for a specified period. At the expiration of the specified period, the facility is returned to the Government • BOO- Build Own Operate- operates similarly to a BOOT project, except that the private sector owns the facility in perpetuity.. Presentation Title
  • 9 Other Forms of PPPs • The Elite Committee (consultation/ concertation/ collaboration on policy setting) • The NGO Model (Operational function) • The Quasi-public Authority (Source: C. Weaver Mitchell/ B. Manning, “Public Private Partnerships in Third World Development,” 1990) • a.k.a board or conference; negotiation among partners as equals; decisions taken by consensus; Members exercise influence in their respective sectors/ organisations to achieve the partnership goals. • delegation to a non-governmental organisation; public-sector transfers material or financial resources to private sector partner to implement ‘public programme’/research etc. • hybrid organisation with public and private characteristics, created by the public sector ; provides goods or services; enables the private sector to enter a particular market under favourable conditions Presentation Title
  • 10 Recent History of PPPs Presentation Title “We are moving from a world in which the State has sole responsibility for public goods and where business maximizes profits independently of the interests of society at large, to a world where success depends on the close synergy of interests among business, civil society and the State.” (World Bank- Business Partners for Development- www.bpd.org)
  • 11 • 1991- Amnesty International UK Business Group established. ( role of business in preserving Human Rights • 1992- UK Private Finance Initiative (PFI) launched • 1993- Canadian Council for Public- Private Partnerships established (a member-sponsored organization with representatives from both the public and the private sectors). • 1998- World Bank launch “Business partners for Development, 5-year informal network of business, government and civil society- to study, support and promote partnerships. • 1999- 3rd WTO Ministerial/ Seattle Riots- Business called on to show that globalization inclusive and benefits all. • 1990s- ideological shift in market theory from “freeing” to “modifying” to address resulting inefficiencies and inequalities • Political neo-corporatism in UK- supports private sector role in public policy-making Presentation Title PPP Timeline- 1990s- 2000’s
  • 12 PPP Timeline- 1990s- 2000’s • 2000- UN Global Compact, led by SG Kofi Annan, to promote global corporate citizenship (CSR) • 2001- WTO Doha Declaration, focus of trade negotiations on promoting development. • 2002- Monterrey Conference on Financing for Development, speaks to “new partnership between developed and developing countries” and encourages PPPs for effective delivery of basic services • 2004- Global Compact Leaders Meeting- largest-ever gathering of leaders from business, government and civil society, discusses cross- sector collaboration • 2000- Bill and Melinda Gates Foundation formed; today it works with thousands of partners, across various sectors in Africa, India, Europe, South America, and in the United States
  • 13 Globalization “the worldwide movement toward economic, financial, trade and communications integration...it implies the opening of nationalistic perspectives to a broader outlook of an interconnected and interdependent world, with free transfer of capital, goods and services across national frontiers” (www.businessdictionary.com) Presentation Title
  • 14 Present Day- The Global Context Millenium Development Goals In September 2000, World Leaders, congregated at the United Nations Headquarters in New York and adopted the United Nations Millennium Declaration committing to “a new global partnership to reduce extreme poverty” by 2015 focusing on particular targets, which have come to be known as the “Millennium Development Goals.” These form the ‘blueprint” for human development. Presentation Title
  • 15 The Busan Partnership for Effective Development Cooperation, 2011 (www.busanhlf4.org) PRECURSORS: •The Paris Declaration on Aid Effectiveness - 2005 •The Accra Agenda For Action- 2008 ENDORSED BY: - USA, Canada, Germany, the United Kingdom, Australia; the European Commission, Brazil, China, Mexico, Japan, Haiti, Jamaica; the IMF, IADB, Commonwealth Secretariat; the Bill and Melinda Gates Foundation, Global Fund to Fight Aid, Tuberculosis and Malaria, the Caribbean Community (CARICOM), the Caribbean Development Bank etc. SHARED PRINCIPLES: - ownership of development priorities by developing countries -focus on results - inclusive development partnerships -transparency and accountability to all stakeholders. COMMON GOALS: -poverty eradication -social protection - economic growth - sustainable development Presentation Title
  • 16 The Busan Partnership for Effective Development Cooperation “We recognize the central role of the private sector in advancing innovation, creating wealth, income and jobs, mobilizing domestic resources and in turn contributing to poverty reduction” Private Sector and Development a) Engage with representative business associations, trade unions and others to improve the legal, regulatory and administrative environment for the development of private investment… b) Enable the participation of the private sector in the design and implementation of development policies and strategies to foster sustain c) Further develop innovative financial mechanisms to mobilise private finance for shared development goals. … d) Promote Aid for Trade as an engine of sustainable development focusing on outcomes and impact … e) Invite representatives of the public and private sectors and related organizations to play an active role in exploring how to advance both development and business outcomes so that they are mutually reinforcing. Presentation Title
  • 17 AID FOR TRADE (AfT) • Initiative launched 2005 by WTO ( Hong Kong Ministerial) • Objective: To help developing countries build trade capacity and infrastructure they need to benefit from trade opening • Targets trade-related programmes and projects including ( but not limited to ); - Trade Policy and Regulation - Economic Infrastructure (transport, storage, telecommunications, energy etc.) - Building productive capacity (diversification for export) -Trade-related structural adjustment (to deal with erosion of preferences and declining terms of trade) AfT Work Programme 2012-2013 -Resource Mobilization -Mainstreaming trade into development plans and programmes -Regional trade integration - Private sector development -Monitoring and evaluation of AfT “Partners prioritize trade and articulate needs and then discuss with donors how to finance projects and programmes to achieve their development objectives…” OECD Fact Sheet on AfT, 2012 Presentation Title
  • 18 Presentation Title
  • 19 AN AGENDA FOR CHANGE- EUROPEAN UNION DEVELOPMENT COOPERATION POLICY Communication dated October 2011 from the European Commission, “Increasing the Impact of EU Development Policy: An Agenda for Change Intended to inform programming of the next cycle of EU Development Cooperation from 2014 – 2020 Primary objective of EU development policy: supporting developing Countries efforts to eradicate poverty (Lisbon Treaty) • Areas of focus: – Human rights, democracy, good governance – Inclusive and sustainable growth for human development “To ensure best value for money, this should be accompanied by: - differentiated development partnerships - coordinated EU action - improved coherence among EU policies Presentation Title
  • 20 The EU Agenda for Change A Differentiated Approach -No grant aid in geographic cooperation with ‘advanced developing countries” -Allocation of development assistance based on country needs, capacities, country commitments/ performance, potential EU impact -Comprehensive policy and political dialogue; pursuit of different development relationships based on loans, technical cooperation, support for trilateral cooperation. Presentation Title
  • 21 EU Agenda for Change Inclusive and Sustainable Growth for Human Development -Promotion of decent work, job creation, guarantee of labour rights and social protection -Promotion of a ‘green economy’ -Promotion of Public-private partnerships and Corporate social responsibility - Support development of competitive local private sectors - Promote domestic and foreign investment and infrastructure improvement - Leverage private sector activities/ resources for delivering public goods - Deploy new financial instruments- blending grants and loans and other risk-sharing mechanisms… - Support Regional Integration and Development Presentation Title
  • 22 The CARIFORUM-EU Economic Partnership Agreement (EPA) Presentation Title Source: Overview of the CARIFORUM-EC Economic Partnership Agreement (EPA), Carib Export Tradewinds Vol.1, 2009
  • 23 CARIFORUM-EU EPA Objectives: • To expand and improve CARIFORUM’s industries and economic growth by enabling CARIFORUM States to develop exports in services and a wider range of goods; • Increase employment and business opportunities; • Improve CARIFORUM’s access to European technology and technical ‘know how’; • Increase competition within CARIFORUM and thereby improve efficiency in production processes. Presentation Title
  • 24 CARICOM Single Market and Economy (CSME) 2001- Revised Treaty of Chaguaramas establishing the Caribbean Community including the CARICOM Single Market and Economy The CARICOM Single Market: • FREE intra-CARICOM movement of Goods • FREE intra-CARICOM trade in Services • FREE intra-CARICOM movement of Skills • FREE intra-CARICOM movement of Capital • RIGHT to Establishment • CARICOM MEMBER STATES • Antigua and Barbuda • The Bahamas • Barbados • Belize • Dominica • Grenada • Guyana • Haiti • Jamaica • Montserrat • Saint Lucia • St. Kitts and Nevis • St. Vincent and the Grenadines • Suriname • Trinidad and Tobago Note: The Bahamas and Haiti (and Montserrat) currently not participating in the CSME. Presentation Title
  • 25 Benefits of Public-Private Partnerships for the Public Sector in the Caribbean • Leverage significant amounts of financing from the private sector and other sources to advance work in relation to development mandates. • Mobilize other (non-financial) resources, human capacity/ technical expertise, technology and other material inputs, to address the “implementation deficit”- allowing for more timely, efficient and effective implementation of development projects ( value for money) • Ensure the sustainability of development in the Caribbean, through wider stakeholder involvement and ‘ownership’ ( private sector, civil society etc.) in development initiatives.
  • 26 Benefits of Public-Private Partnerships for the Private Sector in the Caribbean • Secure, long term investments. (Concessions) • Increased influence in decision-making/ rule setting that affect environments they operate in • Brand and image promotion, enhanced reputation and visibility • Regional and global market penetration; new market opportunities • Common Shared Value- involves creating economic value in a way that also creates value for society by addressing its needs and challenges. (M. Porter/ M.Kramer Harvard Business Review-http://hbr.org/2011/01/the-big-idea- creating-shared-value Presentation Title
  • 27 Constraints to P3s in the Caribbean • Political Will ( or lack thereof) • Trust • Representative Legitimacy • Lack of or inadequate legal and administrative frameworks for Governance and accountability • Competencies • Limited access to financial and other resources • Small market size and difficulties achieving economies of scale • Inadequate inter-firm linkages • Insufficient investment in innovation and technological development • Lack of management skills Presentation Title
  • 28 Examples of Public-private partnerships in Key Development Sectors in the Caribbean • Renovation and construction, Port of Paramaribo, Suriname – Government of Suriname, European Union, Integra Marine Freight Services, Continental Shipping Agency, VSH Shipping • PANCAP-Global Fund Round 9- “Fighting HIV in the Caribbean: A strategic approach”-Center of Orientacion and Integrated Investigacion (COIN) • Organisation of Eastern Caribbean States (OECS), University of the West Indies (UWI) • Caribbean Medical Laboratory Foundation (CMLF), Caribbean Health Research Council (CHRC), PANCAP Coordinating Unit (PCU), Education Development Council (EDC) International Labour Organisation (ILO), Caribbean Broadcast Media Partnership on HIV/AIDS (CBMP), Caribbean Network of People Living with HIV (CRN+), Caribbean Conference of Churches (CCC) (Phase 2). • Caribbean Aid For Trade and Regional Integration Trust Fund (CARTFund)- CARICOM, DFID, CDB
  • 29 Project Management Concerns ( a preview to part 2…) Presentation Title ? key requirements for effective and successful management of P3s for development? ? critical issues that may arise during the various processes for management of a P3 project? ? dedicated PPP units in Caribbean
  • 30 THANK YOU!!! Presentation Title