The idea of global partnership is conceived to facilitate development, alleviate poverty, and make sure globalization becomes a positive force for all. In essence, it is supposed to “[provide] collaborative solutions to the most fundamental challenges facing both
business and society” (Global Compact 2012a).Standing on its own, the public sector is perceived with the stigma of poor governance, inefficiency, low capacity, and corruption (Bayliss and Kessler 2006, 7; Dyck and Zingales 2002; Sappington and Stiglitz 1987). Meanwhile, the private sector is known for its for-profit nature and lack of social
responsibility. Partnerships are devised to overcome the shortcomings of both sectors and to combine the “best properties of both worlds: the private sector with its resources, management skills and technology; and the public sector with its regulatory actions and protection of the public interest” (UNECE 2008, iii).11
However, public-private partnerships, participated in and brokered by
international organizations alike, do not automatically align themselves with the actual needs, interests, and aspirations of the people that these partnerships are supposed to assist; nor do they produce desired outcomes in terms of achieving partnership goals by default. One should not forget that simply by putting together a public entity and a private company does not necessarily guarantee that such partnership would combine the “best properties of both worlds”; in fact, there are many reasons that one might fear the combination might bring out the worst properties of both sectors. As a former UNICEF Executive Director puts it, “it is dangerous to assume that the goals of the private sector are somehow synonymous with those of the United Nations (and other public institutions on international and national levels), because they most emphatically are not” (Bellamy
1999). Practice has shown that, without adequate safeguarding measures, especially mechanisms that are devised with inputs from the target communities and populations, both public and private ends of a variety of partnerships are infested with shortcomings that hamper the effort to achieve partnership goals, in particular the ones that are related to the betterment of the livelihood of some of the world’s poorest communities and populations.
Students interested in such a puzzle have done quite a bit of research into the weaknesses of such partnerships, in absence of strong safeguarding mechanisms. Building and maintaining partnerships entails a significant number of challenges. However, not all challenges and difficulties are adequately addressed in many public- private partnerships worldwide. The following is a summary of the most commonly noticed problems on both ends of many partnerships. The list is by no means exhaustive; it simply offers a discussion of some widespread flaws of public-private partnership worldwide, many of which can be found in the case of Ghana’s water sector reform to be analyzed in later chapters.12
2.5.1 The Private End
For members of the private sector that want to participate in partnerships with the UN or other public institutions, they can never manage to escape scrutiny from all directions, and people do observe repeated patterns of shortcomings. Many argue that private partners often participate in partnerships for advancing corporate gains rather than providing benefits to the development of the world’s poorest places, thus victimizing the peoples, communities, and even governments in those places.
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2.5.1.1 The Selection Bias
First, many development-related partnerships are found to be mainly located in economically attractive places such as Brazil, China, and South Africa; geographic selection bias is rampant. For example, a 2011 International Finance Corporation (IFC) document on water partnerships admits that most water public-private partnership activities concentrate in China and Latin America, whereas they remain “relatively less important” in the Middle East, North Africa, Sub-Saharan Africa, and South Asia (IFC 2011, 10–11). In addition, many partnerships in developing countries concentrate on economically attractive industries, such as electricity and water; at the same time,
investments in health, education, and rural development remain inadequate. The focus on the needs of the poor is lacking (Hoering 2003). It seems that the generation of benefits is given primary consideration when deciding whether to join a partnership, whereas the need for a development boost in some of the world’s poorest corners is almost completely ignored.
The private sector should not be the only one to blame for the selection bias problem, though. Georg Kell, Executive Director of the Global Compact, is quoted saying that “in many parts of the world the enabling environment for business is not well developed. It has to do with corruption and violence and the way that power is managed for the benefit of the few” (Confino 2012). In those places political and bureaucratic leaders control information and resources that allow them to pursue their own individual aims and ambitions, rather than operating in the public interest (Bayliss and Kessler 2006, 6). Institutional failures from the public end could place increased demands on potential private partners and thus decrease the chances for partnership formation (Reed
and Reed 2004; Reed 2002). Without adequate local capacity that enables private businesses and practices to take firm roots and prosper, many places of the world naturally remain unattractive to the private sector. This situation is acknowledged by many international agencies. For example, the UNDP (2012c) admits that although “[t]he private sector can make an important contribution to development…[i]n many of our programme cuntries the preconditiosn for private sector development and the emergence of inclusive markets…are not yet in place.”!
2.5.1.2 The Free-Riding Problem
Groups such as McKinsey and Company (2004) raise the concern that corporations use their participations in UN-led or -brokered parnterships to gain public relations points and enhance company image and reputation by free-riding into UN-business partnerships. A 2004 evaluation carried out by McKinsey and Company shows that only six percent of the Global Compact-participating companies reported that they were taking action that would not have happened without participating in global PPPs or that would have been difficult to implement without such participation. Thirty-three percent said that it had not prompted any change. Twenty-seven percent said that changes they had taken would have happened anyway even without the participation in the Global Compact. Thirty-four percent reported that change would have happened anyway but that the association with the Compact had significantly facilitated change. In March 2012, in an effort to deal with “free riders who joined but had no intention to stay engaged,” Georg Kell reportedly announced a plan to delist more than 750 businesses, including major corporations in Europe and America in the next six months, with hundreds more to follow. About 3,100
businesses had already been kicked out in the few years prior to the announcement (Confino 2012).
2.5.1.3 Alternative to Stronger Regulations
Concerns have been raised that in some cases corporations have used UN-initiated deals with private companies as an excuse for the imposition of more stringent international regulations. For example, as Utting and Zammit (2006) point out, when the UN Sub- Commission on the Promotion and Protection of Human Rights designed and adopted in 2003 the Norms on the Responsibilities of TNCs and Other Business Enterprises with Regards to Human Rights—a set of standards and compliance procedures, the reaction of some business interests was to argue that they were unnecessary because the Global Compact and other voluntary instruments already existed, despite the Global Compact clearly stating that it is a “complement rather than substitute for regulatory regimes” (Global Compact 2012a, 2012b).
In the same vein, many NGOs also accuse businesses of using the Compact to “oppose any binding international regulation on corporate accountability and [of] benefitting from the Compact’s public image… while continuing to perpetrate human rights and environmental abuses” (Confino 2012; Friends of the Earth International 2012). As the resentment towards such evasive behaviors grows, more and more people advocate the idea and practice of “corporate social responsibility” (CSR), which holds that corporations may have responsibilities to go beyond legally-required measures in order to ensure that the social, political, environmental and economic impact of their practices and policies conforms with justifiable norms (Reed and Reed 2004; Reed 2002; Utting 2003b). However, it is noted that the CSR agenda “can deal with some of the
worst symptoms of maldevelopment… [but fails] to deal with the key political and economic mechanisms through which transnational companies undermine the
development prospects of poor countries” (Utting 2005b, 375). Others try to push from voluntarily-based CSR to more stringent “Corporate Accountability,” which implies an obligation of corporations to be held accountable to different stakeholders and the enforcement of penalties in cases in which breaches of agreed rules and standards occur (Bendell 2004a; Newell 2002).
2.5.2 The Public End
International Organizations and other public actors on the international and national levels also face many problems that need to be systematically improved in order to be accountable to the stakeholders that are involved in partnership initiatives, especially the ones that have little influence over policy-making processes but nevertheless are
enormously affected by the outcomes of such partnerships. There is a need to develop a more critical approach, from the perspectives of public actors, towards partnership activities. Public partners, especially international agencies, should move beyond the emphasis on showcases and devote greater resources and energies to conducting assessments of the immediate or direct development impacts of partnerships, as well as their wider development implications (Utting and Zammit 2006).
2.5.2.1 Showcase Emphasis
Documents prepared by international organizations, particularly UN agencies, contain countless showcases of examples of global public-private partnerships (Nelson 2002; UNDP 2009). These case presentations claim partnership successes, although little evidence has been captured through credible evaluations with solid methodological
approaches. UNDP itself admits that “[t]here are some descriptions of individual
partnerships but when it comes to a more comprehensive description of a larger number of cases based on comparable information the information is limited” (Sørensen and Petersen 2006, 54). In addition, very limited effort has been given to enable formal processes for forming and managing partnerships in order to move past pilot examples. 2.5.2.2 Lack of Impact Assessment and “Critical Thinking”
Related to the emphasis on showcases, impact assessment has not been a priority of international agencies that promote global public-private partnerships. The UN Secretary- General’s report on Partnerships for Sustainable Development states that “many
partnerships have reported on the successes of ongoing pilot projects and research studies at the regional and country levels” (ECOSOC 2006), but detailed evaluations and impact assessment studies are still lacking (OECD 2006). Noting the importance of effective assessment, in 2006 the General Assembly asked the Secretary-General, “in consultation with Member States, to promote, within existing resources, impact assessment
mechanisms, taking into account the best tools available, in order to enable effective management, ensure accountability, and facilitate effective learning from both successes and failures” (UNGA 2005c, para. 13).
Impact assessment is crucially needed in evaluating UN-business partnerships and holding all parties accountable. According to many scholars and practitioners, critical thinking, in addition to best practice learning, should be employed in the assessment. The purpose of critical thinking is to facilitate a particular mode of analysis that reveals precisely the sorts of issues that are often ignored in best practice learning, namely the complexities of power relations and how these affect outcomes, and the ideologies,
agendas, contradictions, and trade-offs involved in partnerships (Ocampo 2006; Utting and Zammit 2006)—a crucial point that lies in the core of the theme of this dissertation. 2.5.2.3 Local capacity and Localization
Localization of global public-private partnerships dictates effective involvement of local stakeholders in the decision-making processes of individual projects, which, ironically, is a missing element in many partnerships facilitated by international agencies, despite the emphasis on such “local ownership” from higher levels (UNGA 2005c, para. 12). Involving local stakeholders is an indispensable requirement for accountable
partnerships. Researches have shown that the failure of partnership projects in some developing countries, and their negative impacts in terms of the affordability of services for low-income households, partially relate to the weak regulatory environment that often results from a lack of input from local stakeholders in many IO-brokered partnerships (Prasad 2006; Sørensen and Petersen 2006).
A crucial aspect of the regulation problem is the limited bargaining power of government institutions, local business, and local communities when they negotiate with large transnational corporations. Another aspect is that in some cases public-private partnership projects are not compatible with local governmental policies and existing infrastructure. As Minogue (2002, 36) argues, without flexible adaptation to diverging local circumstances, any sort of reform, including private sector participation, would only create empty, fake, and ineffective changes, and do little more than create new
bureaucratic layers. Hence the success or failure of many innovative reforms, including public-private partnerships, is contingent upon the influence of local structural and contextual conditions (Thompson 2003).