Financial institutions and banks are often unwilling to invest in business cases in developing countries due to a lack of returns, perceived high risks or an inability of companies or producer groups to show proof of prior results.
In a series of three vision papers, SNV and TheRockGroup will share insights and recommendations from the Partnering for Value project, funded by IFAD, which will enable development organisations and donors to build successful Producer-Private-Public Partnership (4P) business cases that are ready to attract investment and that can be used as a tool for development.
To be able to use 4P arrangements as a tool for development, they should be profitable and sustainable. The agreement between the partners can be used to create a basis of trust in which profits are shared and to develop a business case to attract investments to grow the partnership.
As part of the project, SNV collaborated with TheRockGroup to analyse the possibility for investment and funding for the 4P arrangements which were active as part of the project. We found that most partnerships were not investment ready. We will share the insights from our investigation in a series of three papers that will help development organisations and donors set up successful and profitable 4P arrangements. The vision papers will be published accordingly:
- Mid-November: Developing finance ready business cases;
- Mid-December: Bridging the inclusive finance gap;
- Mid-January: Securing a return on investment with capacity building support
In the first paper, we will emphasise the importance of a pre-investment phase: we will outline the steps that can be taken by the partners in the arrangement, to enable them to attract investments, such as developing proper accounting systems. The second paper will detail the specific barriers and risks we encountered that make financial institutions, domestic and international refrain from investing in partners in a 4P arrangement. We will make recommendations for actions that development organisations and donors can take to remove or lower these barriers. In the third paper we will take a closer look at the period after an investment agreement has been signed: which steps should be taken by the partners and development organisation to suport the partners in the arrangement to have a successful business case with a financial return.
Throughout the papers, we will highlight the role of the broker, a specific component of the Partnering for Value project. The broker identifies and develops possible profitable 4P arrangements. The broker will work with all partners to make sure that their voice is heard, that they are treated on an equal basis and that they work towards a sustainable partnerships based on trust. The brokers can assist the partners in the arrangement to create a strategy to develop the capacities of the individual partners and will work with the partners to attract investments and create a return.
The vision papers will be published in preparation for a learning event that is scheduled for early 2018. At the event the final insights from the project will be presented. In all the vision papers we refer on a regular basis to examples of existing 4P business cases from the Partnering for Value project, to illustrate our recommendations. The papers can be read independently, but they do build and inform each other. More information about the papers can be found in our cover note, announcing the papers.