How are Social Impact Bonds related to the Sustainable Development Goals? How do Public Private Partnerships promote more transparency? And how can collaborative partnerships between the public and the private sector foster innovation and real impact for Mexico?
The answer to these questions were discussed at the Open Government Partnership Summit in Mexico City at a panel organized and moderated by Ethos Public Policy Lab. On the panel were experts from both the public and private sectors, including Sean Jones from USAID, Cristina Yoshida Fernandes from Innovation, Science and Technology Ministry of Jalisco, Alberto Bucardo from FOMIN Mexico and Ana Paula González from New Ventures.
As a part of the Global Summit for Open Government, Ethos hosted a Panel in which experts presented their knowledge and shared experiences with different public-private instruments to enhance the impact of socia, economic and environmental efforts in Mexico.
By Christine Zülow and José Luis Chicoma
November 12th, 2015
Changing the Paradigm
In Mexico, neither the public sector nor the private sector alone are in a position to tackle the social, economic and environmental challenges that we are currently faced with, challenges that will only accumulate and grow in complexity in the future. As Sean Jones, the Mission Director of USAID in Mexico expressed it, the old paradigm that the government is responsible for both problems and solutions to the challenges in our society is no longer applicable if we want to innovate, make the best use of our resources and to have the greatest impact. This is not to say that the State is free of its responsibility to provide quality public services or that privatization is the way forward, however, there is a need for new models of partnerships to finance and collaborate on creating measurable impact. In Ethos, we are exploring the foundations for innovative partnership instruments including Social Impact Bonds and Public-Private Partnerships for Innovation. These models will not only open the door for innovative policies and programs in Mexico but also focus on results and strengthen transparency.
Ana Paula is the Business Strategy Director of New Ventures and specializes in impact investment through social and environmental start-ups. In her experience, when bringing together the public and the private sector in a partnership based on shared objectives and interests you get to draw on the strengths of each actor. The public sector’s strength lies in knowledge about social, economic and environmental challenges, the infrastructure and access to services and human resources. The private sector, on the other hand, brings financial resources, experience in creating sustainable solutions, innovation and flexibility. Together they can bring the best of two worlds.
The Challenges
Changing the paradigm doesn’t come without its challenges and public officials are not exactly known for their innovation and willingness to take risks. This attitude of risk-averseness is hindering the exploration of new instruments to improve effectiveness and results of efforts in social and economic development. Cristina Yoshida, from the government of Jalisco, pointed out that where Social Impact Bonds had their main selling point with public officials was on the question of risk and the bonds’ ability to distribute risk among the different actors involved.
Moreover, Sean Jones emphasized the importance of creating a sense of ownership with these partnerships. In the experience of USAID, simply providing funding to programs and projects often lacks the ownership nature that fosters sustainable development through promoting leadership and building skills to create a lasting change in local programs and policies. Such progress is much more likely to evolve from a collaborative partnership between the development agency, government and the private sector.
However, working with partnerships pose a whole new set of challenges in itself. From the panel’s experience, focus should be on avoiding what we call the Tower of Babel. This situation occurs in an environment with many different professionals with different backgrounds and perspectives where it often feels as if everyone is speaking their own language leaving much to be desired for a successful collaboration. A main factor behind a successful Social Impact Bond or Partnership process is the ability to translate or create a common language for all the different actors who are often not familiar with the work style, terminology and technicalities of one another. For example, creating an environment where open dialogue is fostered will increase the chances of sustainable and successful collaboration between the many different actors involved in a Social Impact Bond, said Cristina Yoshida. Pair that with well defined objectives in terms of both process and final outcome, and you have set the stage for healthy collaboration.
Results and Transparency
Social Impact Bonds and Public Private Partnerships are also instruments that, through their design and set-up, promote transparency and a result-based process.
Both instruments involve a number of different actors and require that their relationship is managed by contracts to assures accountability for the pre-established objectives and results, which should be very clearly defined. As a general rule, partnership instruments with the public sector also require an open procurement process which in addition to promoting competition enhances transparency. In addition, Social Impact Bonds and Public Private Partnerships instruments are based on on-going tracking and evaluation of progress. In the case of Social Impact Bonds this accelerates the government’s knowledge of which programs have actual impact, thus providing an effective and cost saving model of managing taxpayers resources, which in turn allows the government to focus on scaling up the programs that actually work and reinvest in testing new ones.
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