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Enhancing public-private partnerships: The crucial role of philanthropy

Enhancing public-private partnerships: The crucial role of philanthropy

Public-private partnerships (PPPs) have emerged as a powerful tool for tackling complex challenges in Nigeria. By combining the resources, expertise, and innovation of the public sector with the efficiency and market discipline of the private sector, PPPs hold immense potential to improve infrastructure, healthcare, and education. However, recent developments show that their effectiveness hinges on a crucial third player: philanthropy.

The current landscape of PPPs in Nigeria

Nigeria has witnessed a rise in PPPs in recent years, driven by the need for infrastructure development and improved social services. According to the Infrastructure Concession Regulatory Commission (ICRC), there are currently 93 public partnerships ongoing across the 36 states.

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These partnerships have yielded tangible results, such as the Lekki Concession Company (LCC), which manages the Lekki Motorway, a vital artery connecting Lagos and its environs. The Kaduna Inland Dry Port project involved the development of a dry port facility in Kaduna State under a Design-Build-Finance-Operate (DBFO) model. Kaduna Dry Port Plc financed, designed, built, and will operate the facility for a concession period, and Murtala Muhammed Airport Terminal 2 (MMA2), a project involved the construction of a new domestic terminal for the Lagos airport through a Build-Operate-Transfer (BOT) concession. Bi-Courtney Aviation Services Limited financed, built, and operated the terminal for a concession period before transferring ownership to the Federal Airports Authority of Nigeria (FAAN).

To this end, PPP is a powerful tool for development efforts, as evident from the myriad benefits it offers: resource mobilisation, efficiency in project delivery, and fostering innovation, among others.

Despite the benefits, PPPs face challenges such as ensuring transparency and accountability to prevent corruption and public mistrust, establishing fair risk-sharing mechanisms to protect both public and private partners, and designing for long-term sustainability by considering social and environmental impacts beyond short-term gains.

Philanthropy as a game changer

It is a concern that Nigeria has been grappling with myriads of economic challenges, including a skyrocketing inflation rate, a depreciating currency, and dilapidated infrastructure. The overreliance on the oil sector as the major source of revenue has made the economy vulnerable to global oil price spikes. Additionally, the rising spate of insecurity and terrorism and the spectre of the COVID-19 pandemic have further exacerbated these issues, resulting in heightened poverty and social inequality. Several PPP initiatives have been utilised by governments at various levels, especially in infrastructural provisions. However, there continues to be a gnawing developmental gap in the nation. Philanthropy can play a crucial role in bridging the gap between public and private interests, bolstering the effectiveness of PPPs.

One of the philanthropic solutions can come in the form of catalytic funding. PPPs often require a substantial upfront investment, and there may be funding gaps that the public and private sectors alone cannot fill. In this way, philanthropic organisations can provide initial seed funding for feasibility studies, innovation pilots, risk mitigation strategies, and de-risking projects for private sector investment. They can also provide bridge financing to kick-start a project while also leveraging additional investment from donors, international organisations, and angel investors.

 “To this end, PPP is a powerful tool for development efforts, as evident from the myriad benefits it offers: resource mobilisation, efficiency in project delivery, and fostering innovation, among others.”

Two, philanthropy can ensure PPP addresses social needs and promotes equitable outcomes. In many cases, PPP might prioritise profit over public interest, leading to inequitable access to services. By supporting community engagement and capacity-building programmes, philanthropy can guarantee the inclusivity of project benefits by ensuring that it reaches the underserved and marginalised communities.

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Third, PPP can often suffer from a lack of transparency and accountability, leading to mismanagement and corruption. However, the infusion of philanthropy can help fund independent oversight bodies and mechanisms to ensure openness and integrity in PPP projects.

Integrating philanthropy into PPPs offers numerous advantages. It enhances social impact by ensuring that projects address community needs and promote inclusive development. Philanthropic involvement also fosters greater transparency and accountability, which can help mitigate the issues of corruption and public mistrust often associated with PPPs. Additionally, philanthropic funding supports capacity building and project monitoring, contributing to the long-term sustainability of initiatives by maintaining a focus on social and environmental impacts beyond short-term financial gains.

While integrating philanthropy into PPPs offers benefits, several potential challenges must be considered. The sustainability of philanthropic funding can be precarious if it is not long-term and strategically allocated. Ensuring mission alignment between philanthropic goals and public-private interests is crucial to avoid mission drift and maintain focus. Additionally, capacity building for local NGOs and community-based organisations is essential to ensuring effective collaboration with the public and private sectors, enabling these entities to contribute meaningfully to the partnership’s success.

To mitigate the challenges of integrating philanthropy into public-private partnerships (PPPs), several strategies can be employed: developing long-term funding models through diversified sources like blended finance and impact investing; establishing transparent communication and shared goals among all stakeholders; and investing in capacity-building by training and empowering local organisations. While PPPs hold immense potential, their success depends on collaboration, with philanthropy enhancing social impact, increasing transparency, and ensuring long-term sustainability.

Case studies: Philanthropy in action

The philanthropic ecosystem in Nigeria, as in many developing nations, is a complex and multifaceted landscape that reflects the unique socio-economic and cultural context. It is characterised by a mix of traditional community-based giving, faith-based philanthropy, corporate social responsibility (CSR), and, more recently, structured philanthropic foundations. Case studies abound on how philanthropic efforts have been deployed to play a critical role in enhancing the effectiveness of PPP in various sectors such as education, energy, public health, and economic development in Nigeria.

Education

The Mastercard Foundation-GEMS (Girls’ Education in Mathematics and Science) Initiative: This PPP combines government support, private sector expertise (GEMS), and philanthropic funding from the Mastercard Foundation to improve access to quality STEM education for girls in Nigeria. Philanthropy provides flexible funding for teacher training, curriculum development, and scholarships, ensuring the programme reaches underserved communities. Others include the MTN Foundation’s “SchoolsConnect” initiative, the Lagos State Employment Trust Fund (LSETF), job creation, etc.

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Healthcare

The Global Fund to Fight AIDS, Tuberculosis, and Malaria: This public-private partnership, heavily reliant on philanthropic contributions, has been instrumental in tackling major health challenges in Nigeria. The Fund provides grants to support government-led programmes in disease prevention, treatment, and research. Philanthropy helps bridge the resource gap and ensures access to essential healthcare services for marginalised populations.

Infrastructure

The Dangote Foundation’s Rural Development Initiative: This initiative partners with local governments and communities to build and maintain rural roads. Philanthropic funding covers preliminary project assessments and community engagement, while the government provides technical expertise and facilitates land acquisition. This ensures infrastructure development aligns with community needs and fosters long-term sustainability.

We submit that PPP can play a transformative role in addressing some of the bottlenecks encountered by PPP through adequate provision of financial support, risk mitigation, capacity-building, ensuring transparency, promoting sustainability, and fostering social equity. By also encouraging innovation, philanthropic organisations can enhance the effectiveness and impact of public-private partnerships. This collaboration can lead to more successful and sustainable development outcomes, particularly in a nation like Nigeria with more pressing needs and limited resources. As the nation continues its path towards balanced development, the integration of philanthropy into subsisting PPP efforts in critical sectors will be crucial in driving impactful and lasting change.

 

Obidike Okafor is a senior business research and data analyst for BusinessDay Intelligence. He has many years of experience in journalism and research.

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