PUBLIC PRIVATE PARTNERSHIP
Public-private partnerships (PPPs) can be a powerful tool for finding solutions to
complex social challenges. PPP can essentially be defined as the partnership between
public institutions and private sector corporations. Typically, these partnerships
are seen as a way to share risks and collaborate expertise, best practices, and resources
to deliver services in a more cost-effective and efficient manner by getting more
“value for money”. PPPs can also provide new resources, build capacity, and improve
existing systems to help governments meet development goals.
However, along with the benefits that PPPs can bring are inherent risks that can lead
to derailment of program goals and even eroding larger developmental achievements
of countries. While research on PPPs is still scarce, a few studies by World Bank,
OECD, and others have illuminated some important aspects of PPPs to help future partnerships
be more effective at reducing risks.
Risks of PPP
Over the years, PPPs have begun to expand its reach across various domains and regions.
Today, PPPs can vary in structure, form, scope, and location. However, despite these
differences, the risks faced by PPPs share some common themes. Risks such as poor
governance, misaligned priorities, underrepresentation of public sector in decision-making,
poor communication streams, lack of coordination and cooperation between partners,
insufficient and unsustainable financing, and lack of support from leaders can lead
to derailment of PPPs.
Reducing Risks of PPP
While these risks exist in many partnerships, governments and PPP leaders can institute
various measures designed to minimize them as much as possible. Table 1 (page 12)
highlights some of the key elements for reducing risks in PPPs. Based on literature
research of best practices and case studies, Table 1 provides guidance for minimizing
risks from the initial stages of PPPs to the end. For example, when partnerships are
established it is important to make sure partners share similar goals and that they
bring value to the project. Additionally, during the implementation phase, PPPs can
reduce risks by instituting monitoring and evaluation mechanisms. Finally, risks can
be reduced at the end of PPPs by ensuring sustainability through training, knowledge
transfer, and creating a clear exit strategy for partners.
Four case studies on PPPs from Bangladesh, Nepal, Tanzania, and Uganda were analyzed
based on elements from Table 1 to determine whether these PPPs were successful at
reducing risks and to identify which elements were crucial to risk reduction. Each
case study was analyzed based on the roles of stakeholders, the funding models, the
risks faced by the partnership, and what factors in the partnership reduced these
Analyses from the four case studies have highlighted some important lessons for reducing
risks in future PPPs. It appears that while all the elements in Table 1 are important
for reducing risks in PPPs, there were a number that were largely salient in the case
studies analyzed here. Particularly noteworthy was the role and involvement of the
government in PPPs, the importance of robust communication streams, the necessity
of creating a sense of ownership and trust between partners in the project, and ensuring
sustainable funding systems to reduce risks and guarantee success of PPP programs.
For example, in some of the cases, having a strong government presence in the program
reassured other partners that they could rely on the government to provide resources
and funding for program implementation. Sufficient policies, regulations, frameworks,
fiscal and non-fiscal support, communication, and government engagement were necessary
to hold partners accountable and minimize risks.
Furthermore, in all of the cases, robust communication channels were vital for risk
reduction. In both the Bangladesh and Nepal cases there were strong mechanisms for
open communication channels, which helped reduce risks by keeping partners engaged
and invested in the PPP project. In addition, insufficient funding also created a
great risk for PPP programs. For example, in Uganda the lack of sufficient funding
from the government limited the scope and capacity of the program. Therefore, governments
and donors need to ensure sufficient funding and resources are available to implement
the program successfully.
PPPs vary greatly across scope, structure, implementation, and goals, which makes
it rather difficult to predict future risks or work to eliminate risks in PPPs altogether.
However, research has shown that PPP leaders can take a number of preventive steps
to minimizing risks before they create challenges in the future. Some of these steps
have been highlighted in Table 1 of this report. Furthermore, the examination of case
studies using Table 1 as a guide surfaced four common elements that were key to reducing
risks in PPPs: the role and involvement of the government, robust communication streams,
building a sense of ownership and trust between partners in the project, and sustainable
funding systems appeared critical to minimizing risks in each case. Therefore, partnerships
will have a greater chance of sustainability and program success if they focus on
improving these areas of the PPP.