PPPs as a Mechanism for Social Enterprises to Impact at Scale


public-private-partnerships-picture

Photo credit: UN

By Vinay Nagaraju, MC/MPA and Mason Fellow 2017

Public-Private Partnerships (PPPs) and social enterprises seem to exist in disparate worlds, but there is more opportunity for synergy than available at first glance. Over the past three decades there has been a growing trend in the public sector to engage private providers to radically improve infrastructure and the quality of services that are due to its citizens. In many parts of the developing world, where through historic circumstances, the capacity of governments is acutely limited, public-private partnerships (PPPs) provide a useful mechanism to bring essential, affordable services and thus address some of the pressing challenges of development.

On the one hand, in bringing innovative approaches to delivery and enhancing outcomes for beneficiaries, social enterprises are facing challenges to establish collaborative governance and impact at scale. For NGOs and social enterprises that aim to address some of the most intractable problems, it is imperative that they work with governments over other kinds of partners.

On the other hand, governments constantly grapple with areas of market failure and invent ideas to remedy these areas through effective policies. By working with social enterprises, governments can strengthen systems that enable them to perform their key functions effectively. This allows for a more efficient and co-ordinated use of resources, rather than perpetuating the plethora of ‘vertical programmes’ often implemented by international Non-Governmental Organisations (NGOs) and development agencies.

For example, in an effort to strengthen health systems, a government that decides to outsource logistics is in no way abdicating its primary responsibilities of delivering healthcare. This is what reduces duplication, confusion and lack of expertise. An effective consortium can create an impact and add value that is far greater than the sum of its parts.

Many believe that PPPs offer an opportunity to leverage resources, as well as bring focus and core competence in the engagement. They attract new forms of financing to fund public services in resource-poor environments and create employment, while providing better value for money and an undiluted focus on solutions – if designed well.

In the traditional view of a PPP, the private player is usually a profit-making business, with social enterprises only ever playing the role of a sub-contractor. However, there is evidence that social enterprises have the capacity to take on that private player’s role in the partnership. What is more, organisations with sound business models, financial discipline, and management resources, running as efficiently as a business but without the need to make a financial profit, have a competitive advantage over other ‘for-profit’ players.

The success of social enterprises can enhance the credibility of public-private partnerships for international development. While traditional charity models have their place, PPPs are fast superseding the models of development marking a gradual shift away from donor model. In areas of market failure where the absence of economic incentives poses a significant barrier to scale, this is a healthy trend.

It may be too early to say if this shift to PPPs in the sector is a permanent feature, but it definitely holds promise for an accelerated approach to address the seemingly intractable but challenging problems plaguing today’s world – that of global health, education, poverty and more.