January 28, 2006

DAVOS, SWITZERLAND

Veon

The WEF has truly become the center of what is happening in the world, I think. Based on what the WEF is doing based on partnering, what dollar amount do you manage of public-private partnership-PPP. Is that a fair question to raise?

Samans

Not exactly on point in the following respect. We act as a catalytic platform for bringing partners together, structuring partnerships, but we don’t manage the on-the-ground partnerships themselves that is for the parties to partnership themselves; the companies, the governments, etc. In the early stage, we have played quite an important role in steering it and ensuring the governance is balanced but we don’t have the ultimate responsibility for the operations on the ground.

Veon

I asked that question, meaning you have some kind of portfolio—(Sammans: Yes). I have followed PPP since 1996 at Habitat II when it first appeared and have done a few interviews here and there. Are all PPP structured the same way? Do they change from objective or business arrangement to business arrangement?

Samans

They are quite different from each other. I like to think of them like children in that they all have their own particular personalities, circumstances that help shape their character and you have to apply attention to nurturing partnerships, making sure what motivates them. So I think at root really, by and large they are quite different from each other.

Veon:

Why public-private partnerships? Why not just the traditional lines of government, business and civil society?

Samans

Three reasons. First, is scale of the development challenges are so large relative to the amount of government money that is available to address them, that really we in the international community have no choice than to think more intelligently about how to use the public money to catalyze the much larger pools of private investment that are out there to be captured or to catalyze the melding of private sector assets, expertise or skills into these projects.

Second, efficiency. Often when you get the private sector involved in a PPP with a government or other type of official institution you add a measure of efficiency because the systems that private sector has evolved over the years to be able to compete effectively against their peers.

The third reason is innovation. Often PPP are really the best laboratory for experimenting with new approaches and new ideas in a way that you often could not get agreement to do from a donor ministry or purely within some sort of government ministry.

Veon

Is the third reason the key reason behind everything? Creativity, innovation, complexity,

Samans

It is not the only. I think it is an important one but it is by no means the only one. I think scale and efficiency are equally important.

Veon

When we take a look at PPP, are all of them for profit because it is a business arrangement—I did an initial interview at the World Bank years ago and I had the impression that every PPP was for profit, if not for profit, then what?

Samans

The sweet spot, so to speak in PPP tends to be those that are not profit-making and not to be those that are purely philanthropic but rather in between, a hybrid between the two. What we find most effective and of interest to companies when you come up with a model that blends some of the company’s core assets or skills by virtue of their line of business with public resources in a way that provides an economic return but not necessarily at a market rate of investment return like a typical profit-making function. What I mean by economic return is often better labor productivity like the workers are healthier or smarter or they retain them longer because they are more loyal or because they have a better reputation and therefore, attraction of the company’s products in the marketplace or maybe because the PPP improves the potential for consumer demand because it helps the health levels of the community, etc. These don’t have a normal profit rate affiliated with them therefore, they are not a profit-making enterprise but none the less there is a business case as there is an economic return to the company.

Veon

If I understand correctly, there may be those PPP that are for profit but when it comes to helping countries from a social standpoint, it is more non-profit and profit. Why did the WEF get involved?

Samans

I think at root it is because in the discussions that have taken place in our annual and regional meetings over the years, discussions about important global problems or regional problems end up with the participants saying, “Well, this has been extremely good dialogue and its highlighted the need for deeper cooperation, what can we do together?” and “Could the forum serve as a platform not for just partnership and dialogue but also for partnership and action?” It is almost naturally that we began to think more seriously about how we could use this very unique crossroads to show leadership to different stakeholders in the international system to work together more.

Veon

I have seen that—a blossoming. What happens when a partnership goes sour?

Samans

A partnership goes sour because the parties did not understand each others primary motivation and in that case, like a failed enterprise, they feel badly about it and that their resources were not well spent and they move on. But I think this underscores the need for a few things. First a good understanding and sharing for what everybody’s motivation for getting into the project, Secondly a very clear governance structure—how managed and who is going to be accountable, and thirdly good reporting about how it is going. If one partner feels that they are in the dark, that is not a good recipe for success.

Veon

What groups are you working with to facilitate PPP?

Samans

We are working with a very large and diverse array of groups. Depending on the issue, we have governments involved, international organizations, philanthropic foundations, a wide range of corporations. It tends to be different configurations, depending on the issue or project.

Veon

Which country or social issue have you seen the benefit for or need for more PPP’s.

Samans

It is tough to prioritize in that respect. The scale of the needs are so great. I think for us, we can make the most difference in helping to catalyze partnerships related to economic development in poor countries or in humanitarian assistance. Having said that, we have very, very important exercise here in anti-corruption because bribery really chills economic growth around the world. We think the business community can lead the progress in this respect, but it is helpful to cooperate with public institutions. But then there are failures in governance, even at the global level. A lot of the global institutions we have are not working properly because the world has changed in the 60 years they were basically created. So there, PPP not necessarily in action on the ground but in thinking about new solutions. We are operating across each of these levels in a selective way. There is only so much we can do at any one time.

Veon

Future. Where do you see the future with regard to PPP or type of PPP or need for PPP?

Samans

I would say that this is a field which on the one hand is primarily at the pilot and innovation stage. Most of the PPPs are more tactical and ad hoc than they are representing something as a more structural, fundamental element of development work or humanitarian relief work, as the case may be. I see the future as being something where we go from this early pilot stage to understanding how these things can become more of a fundamental element of what the development institutions think about their job in the world. So instead of seeing development as government-to-government transfer

of official money, they view development as how do we use this unlimited pool of taxpayer money to catalyze in a smart way, a lot more private sector resources. That is where I see the PPP field going.

Veon

There was a time when government and business were separate. What institutes the need for them to come together?

Samans

I think because you do have governance gaps, and I think in the international sphere, these gaps have become more of a factor. As financial and commercial activity (trade) —has gone global, because the institutions we are use to in the United States—labor, legal protections, bankruptcy, corporate governance institutions, environmental protections and consumer safety—we are use to having regulatory organizations that have clear laws and have staffs that enforce the laws, these things don’t exist to anywhere near the same level of capacity and professionalism in developing countries so questions arise as to what the company should do and increasingly people are saying that the company should figure it out and do it themselves. The better approach is to have some PPP cooperation over a period of years to help strengthen and fill these governance gaps and strengthen these kinds of institutions through action on the ground or improve policy.