WASHINGTON — When USAID administrator Rajiv Shah announced more than $600 million in new partnerships with private organizations last month, including giant multinationals Coca-Cola and Johnson & Johnson, the news was heralded in Washington as another stride in the agency’spath to ending preventable child and maternal mortality.
Shah’s June 25 announcement was another dramatic example of the administration’s signature embrace of private enterprise to help solve some of the most pressing global health crises. As Shah put it in remarks published on the agency’s website, “We cannot go at it alone.”
“These partnerships do more than mobilize more resources,” wrote Shah, 41, a Wharton School of Business graduate who has been a rising star in the White House. “They guarantee that American tax dollars are delivering extraordinary outcomes in challenging places.”
As government cuts have threatened foreign aid budgets, Shah’s more than four-year tenure at USAID, the US Agency for International Development, has been sharply defined by such collaboration with the private sector through arrangements known as public-private partnerships, or PPPs. As he said in a speech last fall, PPPs “form the foundation of a more strategic and smarter approach to development.”
The definition of a PPP differs greatly across sectors, countries, and even US government agencies. Broadly speaking, such a partnership involves financial and in-kind commitments from private players such as corporations or foundations to enhance public projects. Ideally, the partners share common goals. And while PPPs have existed for decades, Shah has sought to leverage the private sector perhaps more than any other administrator of the sprawling agency.
Between 2012 and 2013 alone, USAID increased its investment in PPPs by almost 40 percent, allowing it to leverage more than $380 million from private sources.
And there’s reason to believe PPPs have been effective. Child mortality, for example, has fallen to 6.6 million deaths in 2012 from more than 10 million in 2001, when USAID first formalized such partnerships. But in dozens of interviews conducted over the last several months with experts, questions emerge about whether there are enough precise data to justify the level of confidence that Shah and the Obama administration have placed in PPPs.
The reality is that quantifying the impact of PPPs on health is difficult. Many who have studied partnerships and aid effectiveness say that though the private sector can play an important role in development, to date, comprehensive and transparent metrics justifying increased investments in PPPs do not yet exist.
“What’s new is the nomenclature and the romanticism of partnerships,” said Marc Mitchell, a professor at Harvard School of Public Health who has studied health-related PPPs for over 20 years and participated in several through D-Tree International, a nonprofit he founded. “Rather than looking at what do we do to address real problems with real tools that are available, we make up this world: If only we let the private sector do things, the problems will take care of themselves.”
“In the past there’s been some relatively magical thinking about how to bring the private sector to the table,” said Gregory Adams, director of aid effectiveness at Oxfam America. “One of the most important things that USAID can do is bring some discipline to public-private partnerships and ensure that there’s some accountability to private sector delivering on their commitment.”
Beginning this summer, a team of global health correspondents will produce a Special Report for GlobalPost that examines how US-backed PPPs are impacting global health and how they became a premier strategy for USAID and other government agencies.
The reporters are poring over publicly available evaluations, documents, and audits, along with internal records from the US government, in order to gauge the transparency and accountability of recent global health PPPs. The review, which is ongoing, has found that such public information is limited, and often difficult to track down.
A public online database of USAID PPPs has not been updated since 2009, for instance. A Freedom of Information Act request filed to USAID two months ago for more comprehensive information about PPPs — including the locations of, and planned and actual financial commitments to such projects — has been only partially answered more than a month past the date it was due.
The rise of the private sector and PPPs in global health
Work with the private sector on health and development issues, even through PPPs, certainly is not new. A widely praised partnership between the World Bank, World Health Organization, and the pharmaceutical giant Merck & Co. to address river blindness began in 1974, for instance.
Over the last several decades, however, the landscape for aid to health and development has changed dramatically. In 1970, over 70 percent of financial flows from the US to the developing world came from donor aid, said Chris Jurgens, the division chief for global partnerships in the Global Development Lab’s Center for Transformational Partnerships at USAID. The remainder came from the private sector.
“Today, that’s completely switched,” he said, explaining that now over 90 percent comes from private sources. Globally, the shift from public to private flows is similar. As World Bank president Jim Yong Kim pointed out last fall, whereas official development assistance from donor countries and multilateral institutions now totals $125 billion a year, private investment flows dwarf that amount at roughly $1 trillion.
This broad shift reflects several factors, said Robert Calderisi, a former World Bank economist who wrote a critique of aid in his 2006 book, “The Trouble with Africa: Why Foreign Aid Isn’t Working.” Private companies and organizations are increasingly willing to invest in developing countries as they have grown and matured and become less risky.
“Foreign aid has been the tail trying to wag the dog for at least 20 years now,” Calderisi wrote in an email.
USAID has worked with the private sector for decades, starting with contract relationships dating back to the 1960s. In the mid-1970s, according to a 2013 Congressional Research Service (CRS) report on foreign assistance and PPPs, USAID began working with nonprofit NGOs to implement programs as an alternative to government staffing. And in 1989, USAID began investing in small and medium-sized private businesses as well as pursuing microenterprise initiatives.
George Ingram, a former deputy assistant administrator at USAID under President Bill Clinton, said that in 2000, senior staff at the agency introduced a new concept of working collaboratively with the private sector through a formal structure called the Global Development Alliance, whose partnerships adhere to at least a 1:1 leverage of USAID cash and in-kind resources, among other criteria.
“The Obama administration has built on that Bush legacy and more aggressively integrated public-private partnerships into the normal A-I-D process,” said Ingram, now a senior fellow in the Global Economy and Development program at The Brookings Institution and co-chair of the Modernizing Foreign Assistance Network, a coalition that seeks more accountability and efficacy for US foreign assistance. USAID has been the US government leader on PPPs for development ever since, according to the 2013 CRS report.
Non-governmental organizations, too, are increasingly relying on private sources for funding. InterAction, a coalition of more than 180 such groups, estimates that US government contributions account for fewer than 25 percent of resources to NGOs. The rest comes from private sources, with a significant percentage from corporations, said InterAction’s chief executive officer Sam Worthington.
In a poll of its members conducted in early 2009, InterAction found that more than 80 percent were involved in some way with the private sector.
“A critical dimension of effective development assistance is now the role of the private sector as it works with traditional aid donors and the NGO community,” Worthington said. “There’s been a significant change over the last 15 years from NGOs and civil society largely critiquing the role the private sector plays to one of both critiquing but also looking where to partner and ultimately, to where there may be some shared value projects that might also benefit the private sector.”
Within a year after taking over the reins of USAID, Shah announced in late 2010 a bold plan to reform US foreign aid and dramatically transform the way the world’s premier health and development agency operates. Fundamental to the changes put forth by the new administrator was to increase partnerships with private businesses and organizations.
Nearly four years into Shah’s reform, USAID boasts of more than 1,500 partnerships with over 3,500 private partners that have collectively leveraged more than $20 billion of government dollars and private funds since 2001. The agency estimates that up to one quarter of these partnerships are in global health, with the remainder in other areas in which the agency works such as agriculture and food security and water and sanitation.
Is the PPP model improving global health?
As part of the more than $600 million commitment to partnerships USAID announced last month around child and maternal health, the agency trumpeted a $21 million expanded partnership with Coca-Cola to provide medicines and medical supplies in the most hard-to-reach places in Africa, a $30 million arrangement with Johnson & Johnson to promote newborn survival, and an overall commitment to “partnering with engines of innovation,” listing corporations at the top of the list.
“If a child has access to Coca-Cola,” they should also have access to amoxicillin, oral rehydration solutions, vaccinations, and insecticide-treated bed nets, Shah said in a live speech on June 25 that at times varied from the remarks published on USAID’s website. “Thankfully the leadership at Coca-Cola is willing to lead this fight.”
The partnerships, which also include those with universities and NGOs, come on top of $2.9 billion the agency said it was “realigning” from its budget to save the millions of children and mothers who die each year from preventable causes. The resources give teeth to an unprecedented global campaign on the issue USAID spearheaded in 2012.
For USAID, the PPP model affords a more sustainable alternative to “the paradigm where we fund a program for three years and it ends,” said Chris Jurgens. Achieving the agency’s vision of ending extreme poverty by 2030, he explained, requires partnerships— including those with the private sector where USAID can leverage not only its financial resources, but also its core capabilities and expertise. Such partners can keep efforts going even after USAID’s involvement comes to a close.
The agency is not alone, with the State Department and Centers for Disease Control and Prevention also partnering with corporations to improve health. More broadly, there is consensus from proponents that PPPs provide enhanced efficiency, efficacy, and innovation through work with the private sector.
Robert Calderisi, the economist and author, noted that “proper” PPPs “introduce discipline and incentives for efficiency which no all-public initiative can match.”
But that does not mean that PPPs are necessarily the ideal solution.
“The public system is failing grotesquely in delivering health care to the poor,” said Thomas Pogge, a professor of philosophy and international affairs at Yale University. Pogge has proposed a model for incentivizing drug companies to provide new medicines at lower costs, but sees PPPs as “a kind of Band-Aid” to help overcome the shortcomings of social injustices and unfairnesses wrought by the wide economic gulfs between countries that impact their ability to provide fair health care to all.
But private organizations may come to this work with their own commercial interests and public relations efforts in mind, and because they tend to focus on specific diseases or groups of people, certain groups in need could fall through the cracks, Pogge said. Private players also might not pay attention the negative impact of their work, such as hiring away employees from the public system. Key to a successful public-private partnership, he said, was that the non-commercial partner “has to be in charge of the targeting of how the money is spent.”
Apart from the PPP model itself, there are concerns about the design, implementation and accountability of PPPs, particularly compared to other approaches. In interviews with researchers and representatives from nonprofits and aid and health organizations, little has come up in the way of rigorous independent evaluations of PPPs.
The most recent USAID-commissioned report on its partnerships across sectors was published in 2011. That report, which analyzed 70 partnerships, concluded that “the metrics captured for each alliance in the sample were varied, difficult to find, and rarely outcomes-based.” It was only through “extensive stakeholder interviews and review of program documents” that the research team could find the “value” that the private sector added to USAID’s programs.
To Ingram, who has been a strong proponent of enhanced aid transparency, and others, the transparency of this work has been limited, and that impacts decision-making for both public and private players.
“The best way to ensure accountability is to make information public,” he said. “Allow other people to have access to it, analyze it, evaluate it, and learn from it. And we don’t have that today.”
This is true not just for the specific PPPs, but for USAID’s work more broadly. Ingram points to other US government arms, like the Millennium Challenge Corporation, which he said has been forthcoming about its work from the get-go.
Ingram will turn to researching USAID public-private partnerships under the Global Development Alliance this fall, because, he said, there’s been no “serious analysis” of them to date. It’s not that he thinks that USAID is hiding information—the agency has told him it is in the process of pulling together the data—it’s that he believes USAID never prioritized such transparency when it first launched public-private partnerships nearly 15 years ago.
Transparency is also hindered more broadly by the fact that there is no single or standard comprehensive measure of global PPP contributions. The Hudson Institute’s Center for Global Prosperity produces an annual report documenting global philanthropy and remittances to the developing world with data that take into account public-private partnerships. But even the most recent edition concedes that measuring private giving around the world “still has its challenges.”
The 2013 report, which found that philanthropy from US corporations to developing countries totaled $7.6 billion and US private capital flows another $108.4 billion, does not explicitly tease out the amount going toward public-private partnerships. The Center said that its estimates for US corporate giving are “conservative,” and that because of difficulty separating private flows around the world it does not publish a global total for corporate giving.
In order to conduct a 2011 analysis of private sector support from major companies to global health, including that to health PPPs, the international development website Devex had to cobble together annual company and sustainability reports, along with information obtained during interviews with company officials, the authors said.
“On the whole, there isn’t a lot of transparency that is mandated or built into the PPP model,” Yale’s Pogge said. If a PPP isn’t particularly transparent, there’s no body forcing it to be. A possible explanation for this, he said, could be that people feel hesitant to come down hard on work that purportedly does good. It was the same way with charities, until relatively recently. “I think this will develop [for PPPs], but we are at the early stages,” he said.
USAID’s Chris Jurgens takes such observations seriously.
“We’re working on getting better data out there on who we’re partnering with and why and what some of the preliminary results have been,” he said, noting that the agency plans to update the currently outdated online database of PPPs later this year. “We at USAID as well as other players working in the partnership space acknowledge the need for better evidence on the business case for partnerships.”
The present limited public accountability around US government-backed PPPs may be, at best, a missed opportunity to share and scale-up effective work initiated by coordinated teams of public and private partners. But at worst, the opaqueness of this work may create inefficiencies, corporate profiteering, or corruption – ultimately, with a heavy cost to the health of the most poor and vulnerable populations around the globe. Our reporting this summer and fall will seek to explore the spectrum of reality.
“One of the challenges with anything new is it either gets sold as a panacea for everything or a new way to find resources,” said InterAction’s Worthington, adding that partnerships with the private sector introduce funding but also complexity. “What is the overlap between global business and development? There clearly is an overlap, but let’s not overstate that overlap.”
To Marc Mitchell, such partnerships sound good but can be more window dressing than substance.
“My biggest concern is that they are being held up as a way to privatize the delivery of health care in poor countries and used as an excuse by government, and by some extent donors, to not commit to long-term funding,” he said.
Then there are the concerns about the potential conflicts of interest that arise when profit-minded businesses enter the public health arena.
Speaking at a global conference on health promotion last year, World Health Organization Director-General Margaret Chan said it was “dangerous” when industry gets “involved in policy-making.”
In her speech, Chan pointed a finger at corporate groups such as Big Food and Big Soda that are contributing to the rise of non-communicable diseases around the world, but her message was a direct shot at businesses of all kinds.
“In the view of WHO, the formulation of health policies must be protected from distortion by commercial or vested interests,” she said.
Katia Savchuk, a GroundTruth-Kaiser global health reporting fellow, contributed reporting for this article, which is part of a Special Report for GlobalPost on the role of the private sector in global health in partnership with the Kaiser Family Foundation.