Donor and Private Sector Partnerships Boost Agricultural Value Chains
What makes successful partnerships with agribusinesses? How can we best ensure that value and equity for farmer producers and small-scale service providers is an outcome in larger partnerships? How can we build in these features during negotiation, implementation, and sustainability phases? Recently, the Investment Support Program undertook a study to tackle these questions and many more. In addition to releasing the study: PRIVATE SECTOR PARTNERSHIPS IN AGRICULTURE VALUE CHAINS the blog below sums up key success factors that drive private sector partnerships in agribusiness.
There is an increased understanding that development challenges call for concerted efforts between governments, development actors (donors, NGOs, CSOs) and private sector partners. The United Nations Sustainable Development Goals (SDGs), adopted in September 2015, emphasize the private sector's important role and call on all businesses to apply their creativity and innovation to solve sustainable development challenges. Unilever, for example, has been an active proponent of public private partnerships and has consistently championed the SDGs. “We know that the SDGs cannot be achieved without business,” Unilever CEO Paul Polman has stated. “At the same time, businesses cannot thrive or survive long-term without the SDGs.” As part of its commitment, Unilever launched a “Sustainable Living Plan” that includes the goal of sustainably sourcing 100 percent of its agriculture raw materials by 2020.
Partnerships between USAID and private sector partners are becoming more frequent and important, driven by a changing business environment and market dynamics. Private companies are proactively choosing to run their businesses in ways that can help ensure lasting sustainability. These firms collaborate and co-invest with USAID in activities that are designed to simultaneously achieve development objectives and address key business interests. For example, the Brasserie Nationale d'Haïti, S.A. (BRANA), a Heineken subsidiary, is the foremost brewery and bottler in Haiti. BRANA traditionally has relied on imported commodities for its beverages. In 2013, BRANA and USAID launched a partnership to strengthen the local sorghum value chain, which for decades had been challenged by low-quality seeds, antiquated processing and storage facilities, and unreliable off-takers. This Haitian-grown sorghum is now used in one of BRANA’s key beverages.
If partnerships are so important for tackling the SDGs, how do we ensure that effective, healthy and productive relationships are fostered between development partners and private sector companies? Healthy relationships are a unique and essential element of successful private sector partnerships. Relationships are related to but distinct from the formal agreements, activities and outcomes that underlie a partnership. A recent study of 38 of USAID’s public-private partnerships in agricultural value chains provides interesting lessons for development partners looking to establish effective relationships across the partnership lifeline from prospecting to design, implementation and sustaining results.
- Prospecting: Proactive prospecting allows you to identify opportunities for long-lasting partnerships that align with your own in-country objectives or regional strategy. Prospecting is the time both to demonstrate your interest to a potential partner and to set the tone for the overall relationship by instilling healthy relationship characteristics in each interaction. To ensure this, form clear objectives of the impact you are trying to achieve, diagnose the problems to be solved in line with your objectives, and seek to understand the private sector’s incentives and areas of alignment. The best way to build trust in these early stages is through honest, genuine interest and communication. You need to be able to speak intelligently about what your potential partner cares about and the challenges they face. Undertake a site or field visit to understand a day in the life of your counterparts and what their priorities are. Learn how their business works, as a firm grasp on their business will help you better understand their perspective on the partnership.
- Design: The design process is critical for gaining mutual understanding and defining the nature of the relationship. It’s when you analyze in detail what your partner is hoping to achieve from the partnership, articulate desired results and the means to accomplish them, identify how to share risks and responsibilities, and ascertain how you will work together to mobilize, leverage and most effectively apply one another’s respective assets, expertise and resources. To ensure success both parties should invest in a comprehensive co-creation process that integrates the voice of the beneficiaries, clearly defines roles, activities and decision-making mechanisms, determines the role of the implementing partner, and identifies how to monitor and measure desired results.
- Implementation: The manner in which the partnership is designed and then implemented will impact relationship health and overall results. Effective implementation will determine the success of the partnership in terms of reaching both its commercial and development objectives. Softer skills (including flexibility, transparency, trust and humility), frequent and direct communication, and a deep understanding and appreciation of the nature of the private sector business anchor how you should approach implementation overall. Understand what types of information you partner wants to be informed about and how. Have open, candid conversations with your partner about their business operations. Showing a deep interest will not only keep you well informed but is also a strong sign of commitment.
Every partnership will undergo major changes over its lifetime, ranging from unexpected staff turnover to organizational changes that affect one or more core partners. When partnerships are built with a strong reliance on the relationships between key individuals, such changes present a particular risk for continuity. Early investments in multiple points of contact, with continued proactive engagement over the partnership lifetime, can set the stage for efficient and low-stress management of partnership changes. In agriculture value chain partnerships particularly, unexpected issues tend to surface as a result of the contexts in which the partners operate. These include the impact of market forces, policy change, and environmental shocks such as drought or disease. Building in processes to allow for strategy pivots, careful management of information, and proactive norm setting can help mitigate the effect on partnership activities of changes in the project environment.
- Sustaining results: Prior to the completion of the program, you should already be thinking about future strategic initiatives and further collaboration opportunities with your partner. At each stage of the partnership, you should discuss what long-term success looks like, identify milestones that will indicate progress, and discuss goals for the program / platform once the formal partnership is concluded. In so doing, both partners will be able to plan for a next phase and talk openly about plans for continued collaboration.
A successful partnership can have many outputs and outcomes — both those intended at the outset and those that are unexpected. It is important to reflect on successes and shortcomings and consider how to apply lessons learned to future partnerships. Consider if and how the approach can be scaled or replicated in a manner that would offer a broader set of impacts at the national, regional or global level. Lastly, it is important to consider how to communicate the results achieved through the partnership to a broader audience. Effectively reporting and communicating findings are essential for learning and adoption to occur.
The Investment Support Program (ISP), managed by the Bureau for Food Security, provides a suite of advisory services related to promoting and facilitating investment in agriculture and other key sectors, provided by Dalberg Global Development Advisors. At the core of ISP is a market-driven approach to identify investment opportunities, mobilize private capital and deepen financial sector engagement — all with the aim of catalyzing development impact. ISP can also be used to develop host government capacity to engage the private sector, build Agency finance and investment expertise, and foster developmental learning and dialogue.
For more information on USAID's Investment Support Program contact Aviva Kutnick [email protected].