The aid buzzword that masks power imbalances

Ethiopia, 7 November 2017: Dressed in pink, then Crown Princess Mette-Marit shakes hands with President Mulatu Teshome outside the palace in the capital, Addis Ababa. She and then Crown Prince Haakon are on a state visit with a large business delegation, including Yara, which is set to sign a major agreement to develop a mine in the country's north-eastern Afar region. The aim is to extract potassium sulphate.

"Creating jobs for young people in Ethiopia together. Strategic partnership with Yara," writes Kari H. Partapuoli of the Development Fund of Norway on Twitter.

As part of the mining project, Yara has asked the Development Fund to help renovate a disused local vocational school near the proposed mine. The idea is to give local young people vocational training so they can help build and run the mine.

Norad, the Norwegian Agency for Development Cooperation, and the Norwegian Embassy in Ethiopia are enthusiastic about the collaboration, a textbook example of what the aid world calls public-private partnerships (PPPs).

The project is a triple win: it will help meet Yara's need for labour, give local young people education and job opportunities, and allow Norad to deliver on its ambition of increasing private-sector involvement in publicly funded aid projects through its strategic partnership programme.

Yara is solely responsible for the mining project, while the Development Fund, in partnership with Yara, is responsible for the associated school project, which Norad funds.

Five years later, the mining project is shut down. By then, the strategic partnership behind the school project has already collapsed.

A string of concerns

"It collapsed because Yara gradually distanced itself from the partnership and the school project over a number of concerns linked to the work on the school. This created uncertainty at project level, and fears spread of being associated with something negative that could affect the investments in the mining project," says NUPI researcher Jon Harald Sande Lie.

He is one of the editors of the new book The Politics of Public–Private Partnerships and International Development – Insights from Ethiopia (Routledge), together with NUPI colleague Paul Beaumont and Marit Tolo Østebø (University of Florida).

In it, the authors use Ethiopia as a case study of public-private partnerships.

While much research in the aid field tries to establish how well such partnerships work, the book looks at PPP as a buzzword. There is no agreed definition of the term.

Lie and his colleagues make no attempt to settle the definitional problem once and for all.

Instead, they argue that the concept should be examined in terms of what it actually does, how it is used and which processes it sets in motion.

Pointing to a wider "culture problem"

Back to Ethiopia: Yara kept its own mining project going, but gradually withdrew from the collaboration on the school, leaving the Development Fund increasingly on its own to carry it out with local partners.

"The example therefore points to a broader 'culture problem' with the PPP agenda in international aid, in that it brings together actors with different and at times competing logics," says Lie, elaborating:

"Whereas private actors are first and foremost accountable to owners and investors, aid actors have a different, dual accountability: 'upwards' to those funding the project, and 'downwards' to recipients. When Yara pulled out and the project continued, the PPP project in effect became a publicly funded 'proxy' for private interests."

Yara eventually shelved its own mining plans as well, but mainly because of political unrest in Ethiopia, which later escalated into civil war. These uncertainties made the situation especially difficult and left investors unwilling to continue, Lie explains.

Different logics create friction

A key goal of PPPs is to mobilise private capital for aid and development. The aim is to narrow the development financing gap: the difference between the money needed to reach the UN Sustainable Development Goals and the funds actually available.

As the book points out, public aid money can easily end up as state subsidies for private companies. Measures intended to encourage collaboration, such as guarantee schemes for private actors, leave the public sector carrying the risk while the profits go to private actors.

"The main problem is that there is a big gap between what people think PPPs are supposed to achieve (financing development) and what they actually finance, as well as the mechanisms they create locally," says Lie.

A problematic buzzword

In the book's introductory chapter, the editors unpack the terms behind the three Ps and describe the concept as a buzzword.

The authors point out that PPP is particularly interesting because it merges two concepts that obscure a great deal: the word "partnership", an established buzzword in aid since the 1990s, and the classic "public–private" divide.

The "partnership" concept is especially problematic, Lie argues:

"Talking about partnership in an aid context is problematic across the board, because the concept masks power imbalances between donor and recipient. The partnership concept gives the impression that the actors are equals, but practice shows that the relationship between donor and recipients is very unbalanced. There is an intention to try to even out asymmetries in aid. But it doesn't work. The donor largely defines the 'partnership'," says Lie.

He stresses, however, that the donor does not define everything.

"A donor always needs a recipient. If the recipient doesn't say yes to the donation, you become irrelevant. An aid recipient gives something back to the donor, namely symbolic capital."

Friction in practice

PPPs also bring together actors that do not necessarily share the same organisational mandate and institutional logic, the NUPI researcher points out.

"Both the public and the private logic in aid partnerships are celebrated in their own ways, but perhaps they don't go together that well. Private actors are mainly accountable to owners and shareholders, while aid organisations are accountable to donors, but also to project recipients," says Lie.

When these two "logics" meet in a specific project, the result is often friction and problems, he explains:

"And we are very aware that these two logics don't go well together. People I've interviewed at the World Bank typically talk about a culture problem in the understanding of how things should be done. The culture problem arises in the relationship between public and private actors. Even so, aid policy brings them together, because there is an idea and a desire to show that it works."

A virus as metaphor

Marit Tolo Østebø (University of Florida) is co-editor of the book and has written one of its chapters. In it, she shows that public and private actors are more than "partners" divided by large cultural and organisational differences: they depend on each other. She uses a virus as a metaphor:

"Just as a virus cannot exist without a cell, what we call 'the public' and 'the private' do not exist independently of each other either. We are used to thinking that these categories define separate actors who meet and cooperate (or collide), as if the state is one thing and private companies, NGOs or donors are something else entirely," says Østebø.

She describes public-private partnerships as a form of "symbiosis".

"Just as in biology, such relationships can vary enormously: sometimes harmful or parasitic, sometimes neutral, and sometimes mutually beneficial for both parties. So there is no fixed answer as to whether PPPs are 'good' or 'bad'; it depends on what kind of relationship actually emerges in practice. What this metaphor can teach us is that you cannot assess a public-private partnership on the basis of a simplified public/private model. Instead, you have to examine how different actors, institutions and interests are actually intertwined in specific situations, and in what ways they operate as 'private' and 'public'."

Asked what Norwegian aid actors most need to take on board when planning future projects, Østebø replies:

"The importance of understanding historical, political and cultural context, and that policy models such as PPPs are simplified, idealistic solutions that cannot be uncritically transferred from one context to another. They often conceal more than they promise."