PTP: Alternative models for development financing

In the face of many challenges in the development sector, practitioners have continue to reflect on how to find pathways to achieve the Sustainable Development Goals (SDGs). Ongoing turmoil in the global economy, and the increasing coarsening of politics in the West means traditional development funding channels are being constrained. There are fears among development practitioners that a huge void would be created if the normal funding streams dry up, and there are no innovative alternatives from which to get the finances needed to realise key development priorities as encapsulated in the Agenda 2030. Those in the frontlines of development work have come to terms with the challenge posed by the ascendancy of right wing nationalism and its racist politics in the West. This turbulent and disruptive brand of politics is exemplified by US President, Donald Trump America first refrain, as well as the Brexit quagmire in the United Kingdom. These rumblings in the politics and economies of the metropolitan sources of development funding have forced activists and advocates back to the drawing board.

Enter the concept of philantropication through privatization (PtP), which sustainable development advocates believe could provide the missing link in the frantic search for an alternative development financing model. In a nutshell, the PtP idea focuses on building permanent endowments for the common good. According to the Centre for Civil Society Studies (CSS) at the John Hopkins University, the novel concept is a response to the emerging realty of resources drying up for development interventions. The Centre notes that resources and the ability of governments to tackle a number of key challenges around the world is barely growing or in decline.

This is happening in the face of the problems of poverty, ill-health and environmental degradation. “It is increasingly clear that new efforts, and new financial resources, are urgently needed to address the world’s pressing social, economic, and environmental challenges,” the Centre which pioneered the study of the concept stated. The fact that the PtP model is gaining traction across the globe would be gleaned from the reported identification of more than 557 PtP foundations with assets worth nearly $136billion, according to the CSS.

Recently, front line civic organisation, the Africa Network for Environment and Economic Justice (ANEEJ) hosted Aaron Bornstein, one of the leading expert in the emerging field of PtP. At a dialogue with media and civil society organizations in Abuja, the PtP model was presented as the alternative paradigm, which would provide the framework for institutionally-driven development financing. The interesting feature inherent in the concept is that long term management of funds creates a pool of resources. Those resources would then be used to address specific development issues on a basis that is impactful and driven by clear goals, which put the beneficiaries as the most important stakeholder. In the Nigerian context, PtP was described as an idea, which provides the road map to address the nagging question of how best to use recovered assets. It was similarly stated the concept also presents clear opportunities on how best to use sizeable portions of key national assets for the objective of delivering social goods and services to beneficiaries at the grassroots.

Providing further background on the importance of engaging in a conversation on the relevance of PtP, ANEEJ Executive Director, David Ugolor expressed the view that a window of opportunity has now opened for Nigeria to join other countries around the globe in moving forward with the idea.

He said: “It will be recalled that few years ago, the UN focused on helping developing countries to raise internal resources through the financing for development conference. That was a huge process, which ended in Montreal; after that, there have been discussions around the world on how to raise domestic resources because government alone cannot finance development. “I think it is in this background that more thinking has come out and Aaron Bornstein and his colleagues from John Hopkins University decided Nigeria could be a pilot for this innovation. PtP is a new idea on on how to raise funds for independent endowments, which could finance development. Government alone cannot finance development; the question therefore is about how we can raise independent funds, which will be sustainable.

This comes against the background that the major international donor agencies are now moving out and are planning their exit. However, the more they are planning these exit processes, they more we are seeing the challenge of development.” Drawing from his experiences at the BOTA Foundation, which was set up to manage the proceeds of acts of corruption in Kazakhstan, the World Bank Expert, Bornstein was of the view that endowments set up through PtP would necessarily have to focus on the issues, which are of the biggest concern to poor and vulnerable citizens. “In the case of Khazakhstan, the BOTA foundation was not there to give away the money. We were there to make a change, and to make a difference in the way things are done in terms of delivering social assistance. We focused on the health and livelihoods of the poor; we focused on women and children; the funds could also be spent on whatever the most important thing is in terms of the gaps with respect to meeting the strategic development goals.

“Civil society was involved in how these funds were spent and in my opinion, that is an essential component. We need to have civil society involved in decisions around management and how money can be spent. These assets are the peoples’ money; for me, one of the big lessons from my work with the BOTA foundation is that CSOs were involved. They played their role; it wasn’t like they agreed with us all the time. They challenged us every step of the way, and we used these constructive feed back to improve our programmes.” However, the touchy nature of conversations around privatization in Nigeria came to the fore during the dialogue.

Country Director of Action Aid, Ene Obi spoke passionately on the issue with the admonition that there needed to be a clear emphasis on the aspect of privatization referred to in the concept. She said: “There was a definition of the kind of privatisation involved in this, and I hope people will stay with that definition of the privatization you have talked, not the kind we have seen in Nigeria in the past because almost every asset of Nigeria was nearly privatised. Has it worked for Nigerians; that is why we will take our time to understand the content and the context.

“In Nigeria, we have been privatized; even our lives have been privatized; if you go to the hospitals you will see that the facilities have been there for long, and no new hospitals are being built. So the right of the common Nigerian to access healthcare has become a nightmare. I am happy that we are also talking about the stolen money; we know that a lot of Nigerian money is stolen, and that a lot of the monies are stranded in various places. We are interested in finding out where those monies are, and how we can recover them,” she said. The dialogue concluded with more comments on the need for the concept, which is relatively new in these shores to be explained further to stakeholders. The aspect of advocacy to mitigate the likelihood of resistance from government actors, who would feel threatened by the innovation, was also discussed in the segment on the way forward.