Why engage the private sector in PPDPs?
Sida has developed the PPDP method to mobilise the private sector, in Sweden and elsewhere, to pro-actively engage in and contribute to the development of sustainable societies in low income countries.
The overriding objective of PPDPs is the same as for all Swedish development cooperation: to create conditions for people living in poverty to improve their own lives. The method is utilised when the private sector is considered the most strategic partner to solve a specific development challenge. Through PPDPs Sida leverages the private sectors’ resources, skills and innovative solutions in order to reach development results. By joining hands the public and private sector can achieve better development results than either party could achieve alone.
In a PPDP, the public and private parties complement each other, creating important synergies. The private sector’s financial resources, knowledge, problem-solving and innovation capacity, interest in market expansion, combined with public agencies’ ability to address social and environmental development challenges at a systemic level makes the difference.
Examples of how PPDPs contribute to solving development challenges
- Strengthening poor people’s rights by securing decent working conditions, enhancing industrial relations by creating mechanisms for tripartite social dialogue and peaceful labour market conflict resolution.
- Creating models for demand driven and high quality vocational training improving young people’s employability and gainful employment opportunities.
- Strengthening and securing market-inclusion and skills for small scale entrepreneurs in investment companies supply chains and for self-employed people living in poverty.
- Mitigating environmental degradation and climate change by introducing environmental sustainable business practices though-out the value chain.
An increasing number of businesses are realising that sustainability is profitable since it can help to solve social and environmental challenges in their value chains; PPDPs are therefore initiatives in which Sida and the private sector share an interest in creating opportunities and sustainable growth. A PPDP is always based upon the core-business of whatever company Sida works with.
Who is eligible for funding?
Public Private Development Partnerships are typically co-created together with larger companies or corporate alliances. Partnerships are formed around issues where Sida’s poverty reduction objective overlaps with a company’s core business objective, and where companies are committed to improve social and environmental responsibility in their operations.
PPDPs are co-financed by Sida and the partners from the private sector and implemented through, and in collaboration with, a non-profit partner. This implementing partner is responsible for the financial management of the project and often provides technical expertise and know-how to the project. Sida never transfers any funds to the private sector partner in a PPDP. Normally the implementing partner is an NGO or a UN agency.
How does it work?
Cost- and risk-sharing are important principles for these partnerships to warrant joint ownership of projects and sustainable results. The private sector partner contributes with financial and in-kind support to match Sida’s contribution. The aim is a 50% contribution from the private sector partner.
PPDPs are designed to have a multiplier effect on the development impact of a project. The overarching goals of projects are to create systemic impact and to contribute to market reforms by enabling well-functioning, inclusive and sustainable markets, value chains or business models. Sida always assess that a project does not give a competitive advantage to a specific company but rather paves the way for systemic changes.