Public-public partnerships as a catalyst for capacity building and institutional development: lessons from Stockholm Vatten's experience in the Baltic region
ENOne mechanism for addressing the problems of a lack of institutional capacity is that of public-public partnerships (PUPs), where by established public sector operators are used to assist the development of local managerial, financial, and accountability capacity. Drawing on empirical evidence on two PUPs between Stockholm's municipally-owned water company and its counterparts in Kaunas, Lithuania and Riga, Latvia and extrapolating from the available literature, this paper looks at the differences between the dynamics of PPPs and PUPs and at the developmental potential of PUPs. The dynamics of PUPs are radically different from those of PPPs, in terms of the underlying objectives and motivations, the basis of the partnership and the configuration of accountability networks, risk management, promotion and implementation of institutional change and in terms of knowledge transfer and capacity building. Institutional and organisational change associated with PPPs is systematically informed by the private operator's commercial objectives, which represents an element of rigidity and potential conflict as profit-seeking might and often does diverge from developmental objectives. The antagonistic character of PPPs and the “shock therapy” approach of related policies have encountered widespread social and political opposition on an international scale. Conversely, as a result of their not-for-profit basis and retainment of public ownership and management of operations, PUPs rely on a more gradual and collaborative approach to change which can facilitate socio-political acceptability and local commitment. The developmental potential of PUPs depends on the establishment of clear objectives, in light of the political mandate, with the collaboration being stimulated by mutual trust and understanding and public sector ethos.Unfettered by any conflict of interest inherent to public water operations, the principal-agent relationship between the PUP's political and financial sponsors and the partners can be strengthened by introducing transparency and accountability requirements in terms of reporting. Discipline in the implementation phase can be further instilled through planning and the thorough structuring of the project. PUPs are intrinsically about capacity building and training, thanks to their advanced ability to transfer knowledge treated as a public good rather than as a private, marketable asset. However, their cost-effectiveness and long-term developmental impact can be enhanced by incorporating investment and in-house restructuring programmes into partnership design. The inclusion of civil society and community representatives among the partners might favour the success of PUPs as local commitment is facilitated and capacity is developed for local governance, with highly interconnected accountability networks acting as catalysts for knowledge transfer and reinforcing the ability to take decisions and actions. Bilateral donors and IFIs should consider supporting PUPs as a viable conduct for inducing sustainable water sector reform provided their focus is on promoting context relevant “good governance” principles rather than changes in the ownership of public operations which have proved counterproductive in the past.Indeed, the effectiveness of PUPs isto be promoted by fostering their public-ness and enhancing their distinctive characteristics rather than relying on mechanisms, such as the competitive selection of partners and mimicking of commercial contracts, which risk to prejudice the dynamics on which the success of PUPs rests. Keywords: Public-Private Partnerships (PPPs); Public-Public Partnerships (PUPs); Public Sector; Capacity Building; Institutional Development; Governance; Contracts; Twinning Arrangements; Millennium Development Goals (MDGs); Training; Knowledge Transfer; International Financial Institutions (IFIs); Investment Finance; Competition; Trust; Human Resources Development; Public Sector Ethos. [From the publication]
