Models for Trade-Related Private Sector Partnerships for Development January 2013 by Shannon Kindornay and Kate Higgins with Michael Olender i Acknowledgements This report was commissioned by the Trade Facilitation Office of Canada with support by the Canadian International Development Agency (CIDA). This report does not reflect the views or opinions of The North-South Institute, its Board of Directors, TFO Canada, CIDA, or anyone consulted in its preparation. The authors would like to thank those who took the time to speak with the researchers and/or provided useful information in the completion of the project templates. The authors would also like to thank Tara Leitan (TL Consulting), Brian Mitchell (TFO Canada), Fauzya Moore (CIDA), John Watson (consultant), and Kernaghan Webb (Ted Rogers School of Management and Institute for the Study of Corporate Social Responsibility, Ryerson University) for their useful and insightful comments on earlier drafts. Any errors and omissions are our own. ii Abbreviations AbTF Aid by Trade Foundation ACA African Cashew Alliance ACI African Cashew Initiative AGOA African Growth and Opportunities Act (US) AIDS acquired immune deficiency syndrome AVEGA Association des Veuves du Génocide d’Avril B2B Business to Business program (Denmark) B&T Bettys & Taylors of Harrogate BCI Better Cotton Initiative BCFTP Better Cotton Fast Track Program BCS Better Cotton Standard BMZ German Federal Ministry for Economic Cooperation and Development CIDA Canadian International Development Agency CmiA Cotton Made in Africa COCOBOD Ghana Cocoa Marketing Board CP Cocoa Partnership DAC Development Assistance Committee DANIDA Danish Internationals Development Agency DKK Danish Krone EFAL Ethical Fashion Africa Ltd. EU European Union FRICH Food Retail Industry Challenge Fund (UK) FTF From the Field Trading Company GDA Global Development Alliance program (US) GDP Gross Domestic Product GIZ German Agency for International Cooperation GS Green Shoots Productions HIV human immunodeficiency virus HRNS Hanns R. Neumann Stifung Foundation IAP Innovations Against Poverty (Sweden) IDB Inter-American Development Bank IDH Sustainable Trade Initiative IFM Integrated Farm Management ITC International Trade Center JA Junior Achievement LEAF Linking the Environment and Farming MCC Mennonite Central Committee NGO non-governmental organization OECD Organisation for Economic Co-operation and Development PPP private-public partnership PSI Private Sector Investment programme (The Netherlands) PSOM Programme Cooperation Emerging Markets (The Netherlands) RTRS Round Table on Responsible Soy SAFOB Sulawesi Alliance of Farmers, Olam and Blommer iii SAN Sustainable Agriculture Network Standard SME small and medium-sized enterprise SOCODEVI société de cooperation pour le développement international / Canadian Cooperation Society for International Development SPREAD Sustaining Partnerships to Enhance Rural Enterprise and Agribusiness Development Sida Swedish International Development Cooperation Agency TCTP Tri-Nation Commission of the Trifinio Plan TFO Canada Trade Facilitation Office of Canada TFR The Fruit Republic Ltd TTV Ten Thousand Villages UK United Kingdom UNIFEM United Nations Development Fund for Women US United States USAID US Agency for International Development VIAD Volta Integrated Agricultural Development Ltd WCF World Cocoa Foundation WCF-CLP World Cocoa Foundation Cocoa Livelihoods Program iv Contents Acknowledgements ....................................................................................................................................... ii Abbreviations ............................................................................................................................................... iii Contents ........................................................................................................................................................ v Executive Summary ..................................................................................................................................... vii Research objective and approach ........................................................................................................... vii 1. Introduction .......................................................................................................................................... 1 2. The Research Project: Objectives, Methodology and Limitations ........................................................ 2 Objectives ................................................................................................................................................. 3 Methodology ............................................................................................................................................. 3 Limitations ................................................................................................................................................ 7 3. Trade-Related Private Sector Partnerships: Models and Projects for Development ............................... 8 Donor-led model ..................................................................................................................................... 10 Coalition Model ....................................................................................................................................... 11 Company-led Model................................................................................................................................ 12 Business-NGO Alliance Model................................................................................................................. 12 NGO-led Model ....................................................................................................................................... 14 Projects ................................................................................................................................................... 15 4. Comparing Models .............................................................................................................................. 21 Funding Strategies: Leveraging the Private Sector ................................................................................. 21 Key Activities ........................................................................................................................................... 25 Role of Private Sector Partners ............................................................................................................... 25 Role of Donors ........................................................................................................................................ 26 Development and Commercial Results ................................................................................................... 27 Aid Exit Strategies ................................................................................................................................... 40 Replicability and Scale-Up Potential ....................................................................................................... 41 5. Lessons Learned and Key Challenges .................................................................................................. 43 Managing Risk While Supporting Innovation .......................................................................................... 43 Private Sector Partners ........................................................................................................................... 45 The Value of Multi-Stakeholder Partnerships ......................................................................................... 46 Crowding-Out Private Investment .......................................................................................................... 48 v Holistic Approaches ................................................................................................................................ 48 Farmer Aggregation ................................................................................................................................ 48 Gender .................................................................................................................................................... 49 Importance of the ‘Story’ ........................................................................................................................ 50 Importance of Relationships: The ‘Human Factor’ ................................................................................. 50 6. Cross-Cutting Themes ......................................................................................................................... 51 Understanding Sustainability .................................................................................................................. 51 Market-Based Approaches ...................................................................................................................... 52 Certification............................................................................................................................................. 54 Understanding the Business Case for Engaging in Partnerships for Development ................................ 55 Collaboration and Duplication ................................................................................................................ 56 Global Initiatives ....................................................................................................................................