Public-Private Cooperation

Joining Hands with the International Private Sector in VC Development

Thomas Finkel
Small and Medium Enterprises Development Programme, Vietnam

Rome, 23-25 April 2007

 Public-private cooperation – Instruments and strategies

Large
PPP Integration scale joint Privat
Strategic
Facility into TA TA sector as
projects Alliances
projects client

Small PPP Classical TA Longer term Projects

scale components projects finaced by
projects embedded implemen- Multiple
the private
within ted as big partners
Innovative sector,
ideas from classical TA public- subranational imple-
the private projects to private mented by
better reach cooperation Causing
sector GTZ
project projects structural
Building objectives change
trust

833 projects 913 projects Only a few large High priority, Only very few
126 million public, 203 1.5 billio public, 261 scale, jointly funded increasing number contracts, low
million private funding million private funding TA projects of alliances launched priority

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 VC: The goal is to add value to the local products

By...
• improving product quality
• improving post harvest
technology
• Improving supply chain efficiency
• fulfilling international standards
such as ISO 9000 and 14000,
HACCP, EurepGap, SA 8000, etc. …and...
• Adding processing steps
• Innovating new products
• Applying modern package designs
• Branding the products

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 Three private company partner categories (I):

Companies that are involved mainly in trade and retail and

who source products in our partner countries

they need to assure quality standards to be fulfilled by

their suppliers
Environmental and social aspects are becoming more
relevant in their supply chain (also due to pressure from
NGO, the media and consumers)
They need to help suppliers upgrade when it comes to
processing, packaging, etc.

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Example category I: Social standards in the garment industry

Together with the German Retailer Association (AVE) we

carried out a program to improve working conditions in their
supplying companies as well as to improve the framework
conditions for social standards in the countries by fostering
public private dialogue and cooperation

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 Three private company partner categories (II):

Companies that are involved in technology transfer

They are looking for new markets to sell their technology,

machinery and equipment
They need to build up partnerships with local training
facilities, technology and service providers
They need to raise awareness of their products
They need to train local work force to be able to use their
technology and equipment

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Example category II: Upgrading of local training facilities

Together with many different

technology providers we install
modern training laboratories,
modernize curricula and train
the teachers of the institutions
so that courses can be offered
to the target groups according to
modern industry standards

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 Three private company partner categories (III):

Companies that are producing or offering services locally

They need qualified personnel for their business

operations
They need a business friendly legal and regulatory
environment
They need supportive institutions like business
associations
They need service providers that provide state of the art
services
They need a strong local supplier base

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Example category III: Policy advice to the government

Together with Eurocham

and its member
companies in Vietnam we
advise the government
and its institutions in the
drafting of new laws and
regulations

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 2 exemplary modes of engaging the private sector

Following the money: Forging alliances to

leveraging private close governance gaps
investment for
development purposes

► Pragmatic: today private ► Strategic alliances: multi-

investment often dwarfs ODA stakeholder composition,
greater financial volume
► Trigger: private investment
► Trigger: common need for
► Case in point: Vietnam -
coordination (supranational
cooperation with Metro Cash
issues)
& Carry
► Case in point: Common
Code of the Coffee
Community (4C)

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 Case in point 1: Metro Cash & Carry in Vietnam

ƒ In cooperation with the GTZ SME Development Program

ƒ Joint value chain development for selected fruits and vegetables:

– Improving service provision to farmers, collectors, processors and traders
– Setting up local certification bodies for EurepGAP certification

ƒ Advise to the Ministry of Trade:

– Developing modern legislative and regulatory framework conditions for the local
distribution sector in line with WTO accession criteria
– Know-how transfer and training of staff of the Ministry of Trade and provincial trade
departments
– Developing a strategy to support the local distribution sector based on Public
Private Dialogue

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 Metro Cash & Carry in Vietnam - impact

ƒ The leverage effect by working with Metro Cash & Carry makes it
easier to achieve impact at the target group level in the different
value chains
ƒ The modernization of the whole distribution sector makes faster
progress due to the introduction of modern ways of doing business
ƒ An increased demand for compliance with international standards
helps build up local BDS services and strengthen horizontal
cooperation in the value chains
ƒ The legislative and regulatory framework was improved thanks to
the sector specific know-how of Metro Cash & Carry
ƒ Through Public Private Dialogue, the recommendations of other
stakeholders such as local distributors and NGO is reflected in the
new legislation and regulations as well

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 Case in point 2: Common Code for the Coffee Community

ƒ Starting point was the common strategic interest outside the

private sector core business
ƒ The coffee crisis and pressure from NGO helped to get things
started
ƒ The initiative has developed a sustainability concept for the
international coffee industry and a code of conduct specifying
social and environmental norms for worldwide sustainable coffee
production, industry and trade
ƒ The multi stakeholder approach includes industry and trade,
producers, governments and NGO

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 Common Code for the Coffee Community - impact

ƒ Trust has been built up between stakeholders that had not been
cooperating closely before, or that even had very conflicting
interests
ƒ Platforms, tools, regulations and institutions have been developed
and put in place to roll out the sustainable practices throughout
the global mainstream coffee market
ƒ Pilot projects are being conducted throughout the coffee
producing countries, further developing tools and best practices
ƒ Sector reforms to role out sustainable coffee practices have been
initiated with national governments, line ministries, associations
and other relevant institutions
ƒ The potential for large scale impact on 25 Mio coffee farmers is
tremendous, since the partnership involves private businesses
that are buying about 75 % of the global coffee

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 Lessons learnt (I)

ƒ Growing interest of the private sector in improving structural

conditions presents new opportunities for donors to cooperate
with business
ƒ Combining know-how, resources and networks of both private
companies and donors can help reach each others goals more
efficiently, effectively and in a sustainable manner
ƒ Potential for supplementing existing donor instruments (e.g. policy
advise, capacity building) with the know-how, network and
leverage of private partners improves programs’ impacts
ƒ Identifying partners to engage in projects that improve institutional
capacities and policy at the meso and macro level is more difficult
then finding them for micro interventions surrounding their
business, but it surely pays off due to higher development
impacts

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 Lessons learnt (II)

ƒ Partnering with the international private sector is gaining increasing

importance for development cooperation
ƒ isolated cooperation activities may have been successful at the micro
level, but had limited development impact
ƒ That is why over time, GTZ has increasingly integrated cooperation
activities with the private sector into its overall programs, with a view
to using private sector know-how and leverage as a means for
strengthening impacts
ƒ Thus, the cooperation with the private sector has increasingly
become oriented towards more long-term and strategic cooperation
and towards inducing structural changes and policy reforms

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 Thank you for your attention!

Contact and information:

thomas.finkel@gtz.de

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