Working with the Private Sector for Systemic Change: What Can a Good Partnership Facility Do for an MSD Program?

This is the fourth post in a series by Dan Langfitt discussing partnership principles and partnership implementation. This series explores how a partnership facility can work as an interface between donor-funded programs and their private-sector partners, and how the partnerships that emerge can be an engine driving systemic change. Check out the first, second, and third posts on Marketlinks. 

When we talk to other market-systems development projects about FTF Inova’s partnership approach, we often hear, “Wow, that’s… umm… a lot of systems—you guys really put a lot of thinking and design time into this.” And we did. But in all the time we spent designing and adapting our own partnership facility, we didn’t always keep in mind how many things “partnership facility” can mean. Since any MSD program works through partners in the market system, it must have some way to engage them—in other words, a partnership facility. It might call it a market development fund, a catalytic grants program, or something else. But even if it is just an informal collection of tools and habits the program doesn’t have a name for, it is still a structure for creating and managing partnerships. Our project has dedicated more effort than many others to articulating and systematizing its partnership facility, but that doesn’t make our approach better than any other, nor the most appropriate for a given MSD program.

When an MSD program designs its partnership facility, it should account for its goals, its team, and its resources and think through the trade-offs involved in different approaches. In the previous posts in this series, we related the experience of FTF Inova* with its private-sector partnerships, writing about how our facilitation principles informed our partnership facility, describing the tools and processes we used to manage it, and reflecting on the trade-offs we made in our first year of using it. In this post, we will recall how broad a term “partnership facility” is, and we will reflect on how other MSD programs can think through how they manage their own partnerships.

Between structure and creativity

what Harald Bekkers and Marshall Bear call ‘proscriptive orthodoxy’ and ‘anything goes’, and most of the successes or failures we put into an infographic in our last post are connected to trade-offs between these two poles.

Creating a team around a single vision, especially when many of them have never implemented an MSD program before, is hard work. Having only a five-year program lifespan to do it doesn’t help, either. However, turning everything into a rigid process we could follow robotically wasn’t the answer.  We made trade-offs strategically. For instance, we knew that introducing signed documents as a management tool would not be intuitive for many Mozambican partners in the private sector. However, we recognized our team’s internal coordination needs and our client’s expectations around documenting our activities, so we built simple, brief, but thorough documents for formalizing partnerships and changes we made to them over time. (We also had an ulterior but secondary motive to promote trust in the market system by modelling written agreements, and indeed a few partners have copied the practice of signing their own MOUs with other market actors.)

When it came to the stages of a partnership, we recognized that we needed a more prescriptive structure at the level of field activities, with all the operational coordination involved and the technical compliance requirements like environmental monitoring. On the other hand, partner recruitment and initial partnership development took many factors into account but directly involved fewer people. So we made our trade-offs differently for each stage: we kept our procedures relatively open and less linear when it came to how we selected partners came up with ideas to test, but we prescribed a more consistent sequence of steps and requirements for managing the on-the-ground activities that followed.

Trade-offs in action: the deal note budget

Another example of the trade-offs we made surrounds how we budget. Since partnership documents cannot transfer funds on their own or legally bind either partner, most functions of a traditional budget are secondary or even irrelevant: we and our partner each follow our own procedures for spending the money we budget, we don’t report actual spending to each other (and FTF Inova doesn’t even track every kind of deal note spending internally), and we only return to modify a deal note if something in the activity will change the ceiling so much that we each need to re-commit. (To be honest, we use these words so differently from how managers of donor-funded projects usually understand them that as I was drafting this blog, I was tempted to put them in scare quotes, as “budget” and “ceiling”.)

Instead, we use budget figures—usually the epitome of ‘quantitative’ information—as a qualitative indicator of commitment. We don’t have rigorous leverage ratios or a minimum partner contribution. It’s more useful to us to look at an activity and ask ourselves if, based on what we know about the partner and the risk of the innovation we are testing together, the partner’s contribution lines up with the commitment we need to give the whole thing a green light.

There are trade-offs that come with treating a budget in this qualitative way. In addition to helping us to gauge partner commitment, deal note budgets play their traditional planning role: asking a team to identify all the resources they will need for an activity is valuable exercise that helps avoid surprises and misunderstandings about who will pay for what, and it allows our technical staff to break an activity down into something meaningful to their operations colleagues.  But our approach to budgets has had counterproductive effects as well. For example, planning an activity at this level of detail creates a cognitive bias to follow through on the plan, implementing a budget on auto-pilot. This is very natural and very human, but also very rigid: once or twice we even completed an activity that was no longer relevant to the overall goals of the partnership just because it was in the original budget.

The way we budget also exacerbated another challenge—one likely familiar to all of you. Many companies in donor-saturated Mozambique see traditional foreign assistance as a hand-out that requires only superficial commitment from them.  In a negotiation, dollar signs can be a powerful distraction. During implementation, it is easy for partners to fall into a mentality that FTF Inova “owes” them the total deal note budget amount, even when things change: instead of seeing it as a victory to get finance from a permanent part of the market system (for example, a bank loan that builds credit history) instead of FTF Inova (which has only a temporary, catalytic role in the system), they might see it as “lost funding” that needs to be renegotiated. Planning activities around using up a budget can drive the focus away from what we want to learn from those activities. While detailed budgets helped us plan and quantify commitment, it came at the cost of sometimes distracting our partners from the true objectives of the partnership.

As we designed our partnership facility, we often had to sacrifice creativity for consistency—and vice-versa—as we tried to strike a balance between being overly prescriptive and being too unstructured. We also weighed other factors, like the value of traditional management concepts (like milestones) compared with better-tailored but unfamiliar ones (like probes), or how much to decentralize decision-making in order to empower our staff while maintaining a consistent overall vision.  In sum, our partnership facility has brought value to FTF Inova, but only insofar as the trade-offs we were willing to make.

Why does your own partnership facility matter?

So if you are asking this question about your own MSD program, the unhelpful answer to the question is “it depends”.  It depends on your team’s skills and level of experience, on the flexibility of your budget, on the scale of your partnerships, on the outlook of your client, and on your institutional and country context.

But, perhaps more helpfully, it seems safe to generalize that an intentional, strategic partnership approach and well-designed tools to implement it can coordinate large teams in a bureaucratic donor environment by making partnerships comprehensible to a wide range of stakeholders—especially non-technical staff—so that the people necessary for a partnership’s success all understand its rationale. A partnership facility can also provide structure for a team with less experience with MSD, and it can be used to manage accountability to your donor, either by “proving”—demonstrating that you are accomplishing something—or by meeting technical compliance requirements to mainstream gender, youth, environmental, or other considerations into activities.

More importantly, a well-designed partnership facility can reinforce the core values of an MSD program, just like FTF Inova designed a partnership facility aligned with its “improve” mentality  (instead of “prove”) and probe–sense–respond approach to dealing with complexity. Perhaps most importantly of all, giving a partnership facility a prominent role can help a program to take up the perspectives of partners and give greater agency to the market actors that will be responsible for creating a more resilient and inclusive market system in the long run.

Please contact Dan_Langfitt@DAI.com and Luca_Crudeli@DAI.com for more information about FTF Inova and its partnership approach or to share your feedback.

*The Feed the Future Agricultural Innovations activity (FTF Inova) is a five-year, $21M market systems development activity funded by USAID and implemented in Mozambique since 2017 by DAI with support from Technoserve, MarketShare Associates, and EcoVentures International.  For more information, see the following page on DAI’s website: https://www.dai.com/our-work/projects/mozambique-feed-the-future-agricultural-innovations-inova