Module 09: Identifying Potential Partners

9.5 What are the key issues?

Outputs...
...Summary stakeholder analysis
   ...In-depth profiles
    ...Overview of potential roles – including who would be involved in the delivery process to the poor

Interests may be covert

As mentioned before stakeholder interests may be covert and agendas partially hidden. It will be up to the municipality to take note of these issues and deal with them diplomatically.

Objective analysis

The municipality might carry out the stakeholder analysis. However, experience suggests that the objectivity of an external party familiar with the context, but without a particular agenda, would develop a more balanced assessment.

Capacity

Roles should be allocated according to capacity. The development of PPPs assumes some capacity on the part of the private sector. In general, capacity needs to be developed [see Tool 21] to strengthen:

◊ the capacity of the public sector to work in partnership and to develop a strategic approach to the development of the partnership at the outset;

◊ the private sector in terms of its understanding of issues relating to the poor;

◊ civil society to work with the private sector; and communities to understand their potential role in regulation.

Supporting organisations and donors

Ideally, sustainable local partnership works on overlapping goals and mutual interests. In some cases, an external financial and technical support is needed. Each municipality needs to decide whether there is a need for donor involvement in its PPP project.

Most often, the International Financial Institutions (IFIs) – also known as multilateral development banks (MDB) – which are multilateral lending institutions that provide resources for development, play the role of supporting organisations on PPPs.

These institutions or banks include, but are not limited to the:

Asian Development Bank (ADB) and Fund (ADF);
African Development Bank (AFDB) and Fund (AFDF);
European Bank for Reconstruction and Development (EBRD);
Inter-American Development Bank (IADB);
International Bank for Reconstruction and Development (IBRD, or the World Bank);
International Finance Corporation (IFC);
International Development Association (IDA);
Middle East Development Bank (MEDB); and
North American Development Bank (NADB).

The bulk of IFI assistance is provided to the member governments in the form of loans, but to varying degrees (as official aid diminishes and the flow of private capital to developing economies continue to grow) the IFIs also participate in financing private initiatives.

Each IFI has its own guidelines and the municipality’s familiarisation with them could be a good first step towards getting IFI support. IFI can provide the following support:

◊ developing capacity;

◊ facilitating and financing demonstration projects; and

◊ leveraging private finance.

The role of IFIs in private infrastructure investment has three broad aspects:

◊ preparation, appraisal and financial structuring of investment projects;

◊ provision of investment financing on terms not (yet) available in the market or for sectors not yet considered sufficiently mature for commercial financing; and

◊ mitigation of political and regulatory risk.

Some of the disadvantages encountered in foreign funded projects arise out of the dichotomy that exists between the “donors” and the “recipients”, and/or between the “foreign experts” (who are usually from countries of the North) and their local counterparts. This may result in projects the goals, aims, objectives and outputs of which are not relevant to – or are out-of-step or even in conflict with – the actual needs of the recipient. Hence a shift in the conception and functions of such aid is needed.

The dichotomous relations mentioned above could be replaced by partnerships, in which donors work very closely and with considerable understanding and empathy with their local counterparts on a common agenda geared towards national goals and aspirations. Needless to say, if donors have their own agenda, which the recipients are expected to accommodate, little is achieved in the long run.

Lack of common understanding may cause problems, such as with the issue of sustainability both in terms of budgetary constraints and availability of competent manpower. Difficulties governments face include meeting the conditions and demands attached to aid agreements (donors dictating terms to the government, for instance) and the failure of donors to provide the high-quality expertise and technical assistance expected. Instances of foreign experts trying to sell their aid “package” developed during some previous assignment, irrespective of its validity and relevance for another situation, are not uncommon.

End of Module 09

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