Author: Mr. Michael Pittelkow, Economic Development Co-operation Executive, SAP
Since 1998, the Government of Uganda, the International Fund for Agricultural Development (IFAD), Oil Palm Uganda Limited (OPUL), the Kalangala Oil Palm Growers Trust (KOPGT), and SAP have worked together on oil palm cultivation in Uganda’s Kalangala District. This initiative diversified the local economy, provided jobs and sustainable incomes to farmers, and alleviated poverty in the region. This case study exemplifies successful co-operation with the private sector in line with the Kampala Principles.
In the beginning, the Government of Uganda teamed up with IFAD to pursue a commercially viable partnership between smallholder farmers and private sector buyers. The cornerstone of the partnership became a tripartite agreement between the government, commercial palm oil producers, and farmers. The farmers were organized through a collective and had a guaranteed market for their harvest. They received fertilizer and seeds as well as training to learn how to grow palm trees, harvest fruits, and produce oil. SAP introduced a cloud-based technology component to the partnership, trained IT specialists in software and data collection, and integrated over 2,000 oil palm producers into local and regional agricultural value chains, digitally connecting farmers to buyers.
The Kampala Principles – why should you care?
Adopted in 2019, the five Kampala Principles – inclusive country ownership, results and targeted impact, inclusive partnerships, transparency and accountability, and leaving no one behind – guide private sector engagement in development co-operation. They put much-needed emphasis on involving businesses (including micro- and small companies) as true partners in development projects.
Effective private sector engagement goes beyond philanthropy and Corporate Social Responsibility (CSR). It focuses on shared value creation – economic opportunities for businesses alongside development benefits for the community within which they operate while addressing any social and environmental challenges.
The example from Uganda shows how engagement with the local private sector can respond to the needs and priorities of a country and its people, fostering ownership and sustainability, while responding to all other interests at play: OPUL’s interest in a constant and high-quality supply of palm oil, SAP’s interest in a functioning, commercially viable solution, and the specific interests of the farmers represented through KOPGT. OPUL’s and SAP’s resources and expertise leveraged innovative technologies and business-driven approaches that led to measurable, sustainable development results and impact.
This also requires an enabling legal and regulatory environment. In this case, for instance, the government ensured alignment of the project with national development priorities and a policy on public-private partnerships the government already had in place.
The Kampala Principles also emphasize the importance of strengthening local capacities. Partners are expected to provide training, skills transfer, and knowledge-sharing opportunities, especially for those at risk of being left behind. In the case of Uganda, the capacities of small-holder farmers were strengthened by private and public partners, helping them to evolve from subsistence to recognized oil palm farmers.
What is next?
Notwithstanding this and other successful cases of partnering with the private sector in development co-operation, much more needs to be done. I see at least four challenges:
1. How to measure the impact of private sector partnerships and enforce the Kampala Principles?
The Kampala Principles are voluntary guidelines and lack a binding mechanism for implementation. While stakeholders are now starting to measure progress through the new Kampala Principles Assessment, dialogue, and follow-up is needed to discuss monitoring results on private sector engagement in development co-operation. This is critical for demonstrating success and mobilizing more private finance.
2. How to work towards a greater balance of power?
Power imbalances between partner country governments, partner organizations, the private sector, citizens, and others are evident in most contexts. Often, development partners have significant influence over the design, implementation, and evaluation of projects. This bears the risk of project design not reflecting all other interests adequately, relegating private sector engagement back to a role of philanthropic engagement or CSR. Such imbalances can also undermine the sustainability of private-sector partnerships and require open and structured dialogue with all relevant parties.
3. How to make regulatory frameworks fit for purpose?
When it comes to co-operation with the private sector, regulatory frameworks, co-operation instruments, and execution guidelines especially on the development partner side do not always seem to be fit for purpose. When the Kampala Principles were developed, many stakeholders raised concerns about cumbersome and lengthy donor procedures. The regular review of such practices, related international agreements, local regulations, and instruments can help to improve behavior by governments in particular.
4. Do we truly understand each other?
The public and private sectors follow two different value and performance systems. For the public sector, it is about protecting the basis of our existence and maximizing the well-being of the citizens. For the private sector, it is about protecting the basis of our existence and about generating adequate profit. Both partners have to be aware of and respect the system of the other to identify mutual, shared interests. This is the basis for any successful partnership, with civil society having an important role to play in ensuring no harm is done.
With this, the jury is out for other partnering opportunities that are in line with the Kampala Principles. We at SAP encourage you to share existing experiences to deliver shared value in line with the Kampala Principles, for mutual learning and scaling up, for generating greater confidence in private sector engagement, and for working on the SDGs as true and trusted partners.
The Kampala Principles provide a wide range of other guidance. For tailored advice to countries and organizations engaging in private-sector partnerships in development co-operation, please consult the new Kampala Principles Toolkit [MS1] as you embark on new or deepening existing partnerships with the private sector.