Advanced ToT Pro-poor Policy Formulation and Implementation at Country Level May 31st, 2016: Hanoi Vietnam. © FAO: http://www.fao.org

1. www.fao.org/ag/ags
Advanced ToT Pro-poor Policy Formulation and
Implementation at Country Level
May 31st, 2016: Hanoi Vietnam
PUBLIC PRIVATE PARTNERSHIPS –
For sustainable agricultural development

2. Session 1: Introduction
& PPP Policy Environment

3. Session 1 Contents
1. PPP concept, rationale and definitions (recap Sept 2015)
2. Common roles of public and private actors
3. PPP Policy & Legal Issues

4. www.fao.org/ag/ags
Public Private Partnerships
Why the hype?? PPP buzz word??

5. 1. Scale of investment
means public sector
cannot do it alone
2. High risk of doing
business in agriculture
can deter private sector
participation
3. Partnerships can drive
innovation, market
access & inclusion of
smallholders
PPPs help to resolve:
Market &/or policy failure
to deliver public good
Why partner?
Rationale for Agri-PPPs

6. Agri-PPPs Objectives
Realize national
sector and socio-
economic
development plans
• Generate rural employment
and income
• Ensure food security
• Increase agricultural
competitiveness
• Foster structural change

7. Agri-PPP themes
FAO Study
1. Value chain development
2. Innovation & technology
transfer
3. Business development/advisory
services
4. Market infrastructure &
logistics
Others
• Irrigation
• Food safety/biosecurity
(SPS)
• Co-management of natural
resources (fisheries,
forestry)

8. Definitions

9. No single definition - broad
“Business and/or non-
profit civil society
organizations working
in partnership with
government agencies
including official
development
institutions”
(WEF, 2005)
1. Reciprocal obligations and
mutual accountability
2. Voluntary or contractual
relationships
3. Sharing of investment and
reputational risks
4. Joint responsibility for
design and execution

10. No single definition – public good
“PPPs represent a
framework
that while engaging the private
sector, acknowledge and
structure the role for government
in ensuring that
social obligations are
met and successful
sector reforms and
public sector
investment achieved”
(ADB PPP Handbook, p7)
1. Allocate tasks, obligations and
risks in optimal way
2. Recognize unique advantages
of each partner
3. Aim to minimize costs while
improving performance

11. PPP or Public Private Collaboration?
PPC:
• Less formal (i.e. contractual) and
informal agreements
• Division of responsibility can vary
• Risk & decision-making may not
be shared equally
Includes “softer” collaboration
• Multi-stakeholder
collaborations
• SMEs, farmer cooperatives,
community groups, NGOs
• Joint initiatives with
government agencies
• Co-management
• Co-regulation

12. PPP involves…
1. Formal agreement
2. Both parties contribute
financial resources
3. Costs & revenues calculated
4. Social, economic and
environmental benefits
5. Clearly defined roles &
responsibilities
6. Joint accountability for
deliverables
7. Sharing of risk and
benefits
Anything else?
• Threshold levels for
investment to qualify as PPP?
• Specific types of projects that
qualify?
• Infrastructure only?

13. FAO Study Agri-PPP Definition
“Formalized partnerships
between public institutions and
private partners designed to
address sustainable agricultural
development objectives…
• where the public benefits
anticipated from the
partnership are clearly
defined,
• investment contributions
and risk are shared,
• active roles exist for all
partners at various stages
throughout the PPP project
lifecycle”

14. Does the definition matter?
Depends…
What types of partnerships require a more formal
agreement and defined legal and policy framework for
implementation to occur?

15. PPPs & Policy
The concept refers to formal collaborations between the
public and the private sector where the public sector
involvement is aimed at providing public goods and
addressing development objectives.
 When is this approach appropriate?
▫ When the public sector lacks the financial resources or
know-how to stimulate agribusiness development
▫ Where there is high risk/low return for private investment
▫ High potential for positive socio-economic spillover effects
from investment benefitting the rural poor

16. 2. Who are the Partners? (FAO, 2016)
Public
• Central and
decentralized government
• State banks and rural finance
corporations
• State-owned enterprises
• Research institutions,
universities, marketing boards
• Donors
Private
• Global and domestic food
companies
• Input supply and agro-processing
companies
• Financial institutions
• SMEs and producer associations*
• Civil society (NGOs)
• 3rd party contractors

17. What do they do?
Public
• Define ‘public good’
• Design program objectives
• Conduct/commission
feasibility studies
• Screen potential partners
• Monitor and evaluate
implementation
• Create enabling
environment
• Provide finance and
technical assistance

18. What do they do?
Private
• Comply with programme
design
• Lead implementation
• Secure markets and financing
• Introduce technology
innovations
• Provide technical assistance
• Deliver results
NGO/Intermediary
• Ensure inclusion
• Organize producers and
provide technical support
Producers
• Dual role as beneficiaries
and/or private partners

19. 3.Institutional Environment:
PPP Policy and Legal Issues

20. Policy & Strategy Context (1)
• Application of PPP concept to agriculture new in
many countries
▫ Reflected in recent policies and laws
• PPP as traditional mechanism for large-scale
infrastructure projects
• Private sector engagement increasingly
referenced in agricultural policies and strategies
▫ PPP as one mechanism to encourage this

21. Policy & Strategy Context (2)
Types of documents referencing agri-PPPs
• National agricultural strategies
• Long-term vision documents
▫ Kenya Vision 2030, Pakistan 2030
• National development plans
▫ Philippines Medium Term Development Plan 2011-16
• R&D/S&T Innovation policies
▫ Thailand PPPs – National Science , Technology and Innovation Policy
• Industrial policy
▫ Uganda & Nepal PPPs to support agro-industrial growth
• Global Partnership Platforms
▫ WEF “New Vision for Agriculture ”, G8 “New alliance for food security”

22. Legal and Regulatory Framework (1)
• Many PPP Laws focus exclusively on large-scale infrastructure
▫ Chile, Colombia, Guatemala
• 2nd generation PPP Laws expand scope to include broader
sectors (education, health, agri-infrastructure)
▫ Kyrgyzstan Law on PPP 2012
▫ Kenya national PPP Bill 2012
• National PPP Policies – provide guidelines for PPP formulation
in all sectors
▫ Ghana PPP Policy 2011
▫ Pakistan PPP Policy 2010
▫ Uganda PPP Policy 2010
▫ Tanzania PPP Policy 2009

23. Legal and Regulatory Framework (2)
• Other related non-specific PPP legislation with implications for
agri-PPPs:
▫ Public procurement & outsourcing
▫ Decentralizing authority to local government
▫ Contract law (contract farming)
▫ Land rights and land tenure
▫ Intellectual property law (S&T PPPs)
▫ Food safety laws
▫ Business/corporations law and investment laws – who can partner?
▫ Tax/subsidies/budget law – incentives and concessions
▫ Risk mitigation and arbitration laws
• Aim should be to reduce bureaucracy, increase
transparency and streamline procedures to encourage
private sector participation

24. Relevance to Pro-Poor Policy Wshop
• At national and decentralized level:
▫ What policies and strategies are needed to support PPP
design, implementation and monitoring
▫ What institutions and public sector skills are required to
move from policy/theory towards implementation?
• At project level:
▫ What risk management mechanisms can be built into
the design of PPP projects to protect smallholders?
▫ What demands should be made on the private partner
to ensure inclusion?
▫ What role can local government play?

25. Session 2:Operationalizing Agri-PPPs

26. Institutional Set-up Options

27. PPP Institutional Arrangements
Country Examples of PPP institutional models
Chile and
Thailand
Contracting authority (i.e. public authority – national or local
authority, or government body that signs contracts)
Pakistan Contracting authority + PPP unit at the provincial level
Kenya Contracting authority + single lead PPP agency
+ PPP committee
Ghana Contracting authority + cluster of PPP agencies
+ PPP committee
Peru Contracting authority + single lead PPP agency (existing,
expanded mandate) + approving body
Philippines Contracting authority+ single lead PPP agency + cluster of
central and local review and approving bodies
Uganda Contracting authority + single lead PPP agency
+ Cabinet/Ministry of Finance approval

28. PPP Institutional Options
• Select option in line with national PPP Policy/Law
• Can be centralized or decentralized or combination of both
▫ Pakistan – MoF, decentralized PPP unit in province
• Linked to sector policy objectives:
▫ Thailand contracting authority under MoST
▫ Chile under Ministry of Economy
• PPP Agency/Unit as “one-stop-shop”/centre of excellence
▫ Policies, skills and know-how to foster PPPs
▫ Provides support, advice and oversight to contracting authorities
• Shared responsibilities among ministries & agencies
▫ Indonesia Minister for Economic Affairs, State Minister for
National Development Planning, Minister of Agriculture

29. PPP Programmes – Latin America
Country PPP Programme Programme location
Colombia World Bank supported
Agribusiness PPP Programme
Ministry of Agriculture and
Rural Development
Ecuador EmprendEcuador –
competitiveness of SMEs
Coordinating Ministry for
Production, Employment and
Competitiveness
PRONERI – Inclusive rural
business programme
Ministry of Agriculture,
Livestock, Aquaculture and
Fisheries
Fondepyme – SME promotion Ministry of Industry and
Productivity
Peru PROSAAMER – rural market
support services programme
Agrorural
FondoEmpleo – employment
and income generation
Ministry of Labour and
Employment Promotion

30. PPP Programmes – Latin America
• Programmes package existing agribusiness public support
services, incentives and instruments
• Channel services towards farmer organizations and small and
medium firms
• Public services for extension and research
• Innovation & training funds
• Leverage private sector financial contributions & know-how –
matching grants
• Objectives:
• Increase competitiveness of SMEs
• Inclusive rural business programmes
• Governance of programmes still requires central approval, yet
approval granted in bulk in accordance with programme
conditions, not individual PPP projects

31. PPP Development &
Delivery Procedures

32. Management tools in Agri-PPP agreements
Formal PPP agreements
• Contracts & MoUs
• What type of contracts?
• Fixed design, well-defined
procedures & criteria
• Demanding bidding and
vetting process
• Feasibility analysis
(economic, enviro., VCA)
• Business plans
• Contract farming
• M&E systems

33. Proposed Design & Implementation Process - Vietnam
Project
Proposal
• Who? Public authority & investors (unsolicited?)
• Appraisal board in MARD
Project
Listing
• Who? PPP management unit MARD
Feasibility
study
• Public authority/investors
• Appraisal board in MARD
Investor
selection
• Bid evaluation
• Public authorities negotiate and sign, appraisal board approve
Investment
certificate
• Ministry of Planning and Investment (Central)
• Provincial People’s committee (Local)

34. Outstanding Questions
• Does the process fit with the scale of investment?
• Has the public good element been defined and
targets quantified?
• Value for money assessment included in bidding
process?
• M&E framework established that works for both
partners? Corrective action possible?
• Pro-poor/smallholder inclusion criteria? E.g.
Indonesia oil palm regulations, contract farming for
large-scale investments
• Dispute resolution mechanisms?

35. Legal forms of Partnership
Agreements

36. Partnership Agreements
• Degree of formality: MOUs, formal contracts,
equity arrangements, new companies
▫ Ad-hoc/donor supported - MOUs
▫ National PPP Programmes – formal contracts
▫ PPP companies – China, Pakistan, Philippines
▫ MI PPPs – typical PPP contract forms – BTO,
BOO, Management contracts
• Trend towards standardized agreements
▫ Pros - easier to monitor, reduces ambiguity
▫ Cons – reduces flexibility

37. Partnership Agreements
• Degree of formality linked to soliciting process
▫ Solicited according to public priorities – formal
contracts
▫ Unsolicited – submitted by private partner, ad-
hoc arrangements more likely (MoUs)
• Single versus multiple bilateral contracts with
parties
• Aim to distribute risk fairly

38. PPP Financial Instruments
• Matching grants
• Investment guarantee funds
▫ Cover against force majeure and failure of public sector to fulfill
obligations
• Project Development facilities
▫ Fund costs of proposal development such as feasibility studies
• Viability Gap Funding/VG Schemes
▫ Finance investment gaps in PPPs that are economically justified,
yet fall short of financial viability
• Catalytic Funds
▫ Provide stimulus funding to private companies & CBOs
participating in agribusiness PPPs

39. Session 3:Group Work
Readiness of national legal and
policy framework for Agri-PPPs

40. Session 4:
Policy recommendations
& skills required

41. Important questions
• What needs to be done to improve the existing
frameworks?
• How can we ensure agri-PPPs are designed in a way
that is inclusive of smallholders and have an impact
on the rural poor?
• What further skills are needed by the public sector
to support implementation?
▫ E.g. do skills exist for conducting or interpreting
feasibility studies?
▫ Designing M&E frameworks suitable measuring joint
outcomes for public and private sector?

42. Where to next??
Sept 2015
Intro to PPPs
for risk
management
May 2016
Consolidating
knowledge &
analytical
skills for
policy
????
Further
analysis?
Time for
action??

43. Thank you for your attention!
Marlo.rankin@fao.org

44. Important Agri-PPP Resources
FAO 2016 study on Agri-PPPs: An International Review
http://www.fao.org/documents/card/en/c/20e3ff08-df6f-4e48-
abd3-037eccdde9df/
Other useful recent resources:
PBL, 2015 Public-Private-Partnerships in Development
Cooperation – potential and pitfalls for inclusive green growth
http://www.pbl.nl/sites/default/files/cms/publicaties/PBL_201
5-public-private-partnerships-in-development-cooperation-
1810.pdf
IFAD, 2016 How to do Public-Private-Producer-Partnerships in
Agricultural Value Chains
https://www.ifad.org/documents/10180/998af683-200b-4f34-
a5cd-fd7ffb999133