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When I started work in the area of livelihoods, 15 years ago, life was simple for NGOs. They provided resources, technical inputs and voila – production increased. It was only when production increase failed to translate to substantive poverty alleviation that the need to think about markets arose. Consequently, over the last few years, NGOs working in the livelihood area have stepped up engagement with the private sector considerably. This is engagement is not really a new phenomenon. Traditionally it has been at three levels

  1. Dialogue, including an oversight into business practices – readers will remember famous cases involving Nike, Starbucks (sourcing, water wastage etc) amongst others.
  2. Financial relationships – private sector entities, primarily large corporate houses, have been supporting charitable work from time immemorial.
  3. Environment protection – where NGOs have been primarily acting as watchdogs over some of the sharper business practices that could lead to degradation of the environment.

What is relatively new is NGOs partnering private sector in socio-economic development / poverty alleviation programming.

It is easy to understand why private sector engages. At a  basic level private sector is also a supplier / service provider to NGOs.  At the more corporate level, the drive is not just ‘image’ but many a time triple bottom lines of economic prosperity, environmental quality and social justice.

Why do NGOs engage? What is their role?

  • Demonstrating, with evidence, that small producers can effectively engage with markets and this engagement is beneficial for both.
  • Getting small producers engaged in a way that their bargaining power is enhanced – traditionally markets can be quite exploitative for the small producer.
  • Ensuring that markets become gender sensitive and women small producers also carve out a dignified role for themselves.
  • Advocating for policies that favour small producer engagement.

What is (should) NOT the role?

  • To build supply chains for large private sector entities – they can do that much better.
  • Marketing produce for small producers under the guise of establishing linkages.
  • Treating middle-men as evil which needs to be purged. They have a role to play.
  • Distorting market mechanisms by providing inputs to producers – this is not sustainable if done as grants. If it is deemed essential for producers to get technical inputs, it is best that they be provided by a service provider who gets paid by the producers.

One area where I find most programmes failing is by treating private sector engagement as an activity. It is NOT. Engagement requires

  • A change in approach and mind-set.
  • A good understanding of how the private sector operates. What drives it. Having staff who genuinely know this becomes critical.
  • Institutional systems that are flexible to allow this engagement. For instance, one cannot appraise a private sector partner with the same metrics that one would use for an NGO partner.
  • Monitoring & Evaluation mechanisms that look beyond the traditional sphere of control.
  • Short learning loops so that M&E findings can inform programme strategies and tactics and
  • Flexibility in programme design to accommodate these changes.

Questions that come to my mind when I reflect on NGO-Private sector engagement are

  1. How much efforts have NGOs really taken to understand all this? Should they not invest in understanding better? Can they even engage on equal footing if they don’t?
  2. Does engagement with private sector compromise the former’s ability to influence and oversee? Is it genuinely possible to walk the tightrope? If so, which aspect is primary?  Oversight or engagement? How can one decide which delivers more value?