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Capacity Development and Public Private Partnerships

Peter Morgan, UNDP consultant

Contents

  1. Introduction
  2. Capacity Development as Strategy
  3. The Dynamics of Capacity Development
  4. Capacity Development as Process
  5. Implications for Public Private Partnerships

1. INTRODUCTION

1.1.  The term ‘capacity development1' remains an elusive concept for analysts and practitioners in the international development to explain, let alone implement. Part of the reason lies in its complexity as an umbrella concept and the need for the term to encompass ideas to do with politics, culture, organizational development, finance, economics, sociology, psychology and other ways of thinking. Others see little utility in the idea of the ‘capacityEof individuals, groups or organizations delinked from function or performance. Capacity for what? And if only performance and results matter in terms of activities such as the delivery of municipal services or urban environmental protection, why focus on the vague notion of capacity? Still others remain skeptical about the ability of outside intervenors, including donors, to make much of a contribution to building the capacity of organizations or groups in other societies. Many evaluations of donor-sponsored projects continue to point to the continuing difficulties involved in external efforts at improving public functions.

1.2.  There is, however, some cause for optimism with respect to the capacity development issue. There is a growing sense that the process of improving abilities and capacities, as opposed to the eventual results, needs systematic thought and action. Many practitioners and observers, both in donor and partner countries, are developing greater insights into the dynamics of people coming together to get things done and of developing the skills and the willingness to act in collaborative ways for the common good. Many of these imaginative solutions that hold promise for wider application are becoming available to a much wider audience. One example is that of the idea of public-private partnerships, the topic of this Internet conference.

1.3.  This short background paper gives an overview of some of the main ideas to do with capacity development that have emerged in the international development community since the mid-1990s. It then briefly looks at some implications for the design and management of public-private partnerships in urban environmental management. This paper is not, therefore, intended as a road map for designing public-private partnerships or a collection of ‘how toEtips for greater efficiency. These more operational ideas should emerge naturally out of the subsequent Internet discussion amongst practitioners.

1 The debate over terminology - capacity ‘buildingEor capacity ‘developmentE- can reflect different perspectives. For the purposes of this paper, the UNDP definition of capacity development is implicitly used, i.e. the process by which individuals, groups, organizations, institutions and countries develop their abilities, individually and collectively, to perform functions, solve problems and achieve objectives.

2. CAPACITY DEVELOPMENT AS STRATEGY

2.1.  For the purposes of this paper, we can divide the discussion on capacity development into two aspects - strategies for promoting capacity development and second, process approaches that can be used to assist in the implementation of these strategies. Under the category of strategies, four types - technical/bureaucratic, network/partnership, social and political - can be found in most countries. All four represent efforts to devise and implement new forms of collaborative human behavior that enlarge peoplesEchoices and capabilities.

The technical and organizational approach

2.2.  Conventional approaches to capacity development over recent years have focused on internal improvements to individual formal organizations i.e. the specific technical and systemic ways in which formal organizations such as national ministries, local governments and NGOs can better manage their resources and achieve their goals. People look at structure and systems, personnel, the use of technology, equipment and finances and they look at how the organization carries out specific functions including strategic planning, service delivery or procurement. This approach tends to see the organization as self-sufficient and tries to improve its overall performance by breaking it down into component activities, making recommendations about improvements and then integrating these back into the wider organization. This approach provides more of a ‘supply sideEor an ‘organizational engineeringEperspective to capacity development. Not surprisingly, this approach usually comes up with poor structure, systems and staff skills as the root causes of poor organizational performance. The conventional antidotes are the provision of training, the supply of technical assistance and some sort of internal administrative development to do with finance, personnel or strategic planning.

2.3.  For staff under pressure to deal with specific problems in the short term, this approach still has much to commend it. Public sector reforms such as total quality management, re-engineering and results-based management, are all part of this tradition. And there is a great deal of knowledge and experience in all parts of the world on these technical and organizational issues. But it is also clear that the inherent narrowness of this approach to capacity development makes it a necessary but no longer sufficient strategy to deal with broader system-wide issues.

The systems and network approach

2.4.  By the 1980s, the development community understood that the approach to capacity development described in the above section was still necessary and useful but no longer sufficient. Environmental issues were becoming increasingly multi-faceted and could not be addressed within the boundaries of one organization. New political and organizational actors had appeared. Governments at all levels could no afford to monopolize public functions. And it was realized that, in many cases, other approaches to the delivery of services to the public including privatization, contracting out, public-private partnerships were simply more effective than purely state efforts. More attention also needed to be paid to the external and contextual influences on organizational performance, the demands of clients and beneficiaries and the nature of the interactions and relationships among the various actors. This lead to the idea of capacity development as the improvement of systems or networks of organizations that work together to deliver value to the public. In some cases, this was extended to include the idea of productive communities as well as that of networks of organizations.

2.5.  We can now see many examples of this approach. Capacity ‘systemsEin many sectors have been changed drastically in the last decade through changes in the role of the state, privatization, deregulation, increased competition, devolution, partnerships, participation and many other innovations. New kinds of organizations are appearing in many countries including intermediary NGOs, deliberation councils, applied research institutes, public-private partnerships and collaborating networks. From this perspective, capacity development is achieved as much by managing the relationships and interactions between and amongst organizations as it is increasing the efficiency of individual organizations. Such an approach gives added importance to the need for co-ordination, the management of diverse perspectives and conflict resolution. Getting access to existing resources in different parts of the system and combining them in imaginative ways to solve problems becomes a priority. One of the many difficulties arising from this more complex approach to capacity development is that of inducing communities and/or networks of organizations to collaborate and move in the same general direction in the absence of hierarchical authority.

2.6.  An important aspect of this network perspective is that of the relationship between public and private organizations. Agencies such as municipal governments can provide a broader plan of allocation, public goods and services and political legitimacy. Private agencies can contribute technology, productivity and management expertise that is critical to deal with many urban problems. A well-managed partnership and division of labor can create a synergy and a co-producer relationship that can result in a level and a quality of service which neither organization could achieve alone. And it can create new connections, motivations and new solutions for both sides. In short, public-private partnerships are a key part of any capacity building strategy. But they entail both the public and private organizations to behave differently if they are to achieve the kind of synergy that is required for public-private partnerships. Such institutional relationships, if effective, can create a virtuous cycle of capacity development that is discussed in the section below.

The social approach

2.7.  Efforts to build capacity both at level of the single organization and at the system or network need to build upon, and where possible strengthen, deeper patterns of human values, attitudes and behavior. For example, it seems to be true in virtually all societies that social relationships -personal ties, shared values, trust, ease of communications, membership in common social networks - can enable people to work together more effectively. The resulting sense of collaboration can make it easier to organize, make decisions, reduce risks, communicate, acquire information and access services and resources. This appears to be particularly true at the local level where community action plays a greater role in public life. It turns out that these kinds of social behaviors are learned through associations including groups and organizations. Some societies and countries show a stronger capability to collaborate and manage conflict. They can go beyond ethic and family connections to establish a broader sense of common citizenry. Others, in contrast, are beset by personal isolation, mistrust and divisiveness. A deeper, and certainly more difficult aspect of capacity development, thus relates to what is now called social capital - how to take advantage of it where it exists and how to strengthen it where it is weak . Capacity development is thus both a cause and an effect when it is designed to help develop more collaborative patterns of behavior and thinking. It is also as much a social process as it is one of technical and organizational improvement.

2.8.  This has implications for the design and management of any effort aimed at capacity development including public-private partnerships. Incentives for collaboration should be included. Individuals and organizations with demonstrated skills in facilitation and brokering should be made part of the network. The organizational arrangements (e.g. reporting and decision making) can be designed to reinforce existing patterns of social capital. The pressure for production and short term results needs to be balanced off against the time and attention needed to learn new collaborative behaviors and embed those practices in organizational systems. Efforts at capacity development also need to support values - personal responsibility, the public interest, sustainability - that can help to create an environment for collective action.

The political approach

2.9.  Finally, we now know that many of the factors governing capacity development are as much political as they are technical, organizational or social. In this sense, governance - defined here as the manner in which power is exercised in the management of a country’s resources for development - is intimately related to capacity development. Sensible policies and some stable ‘rules of the gameEin terms of political decision making are critical. A political system that can emphasize performance and in the process, protect vulnerable technical and organizational systems from capture and excessive interference is key. And finally, capacity and performance need to be as much ‘demandedEas they are ‘suppliedE A political system that allows citizens to put some sort of pressure on public organizations to respond to their needs seems in most countries to be an essential pre-condition of capacity development. Such a system creates the incentives and the pressures for government organizations, especially at the local level, to innovate and find new solutions. Different countries may well devise their own path to embedding accountability, transparency and responsiveness in their governmental systems but few seem able to develop effective capacity without it over the long term. One of the dilemmas for donors centers around the wisdom of proceeding with more technical kinds of capacity building in the absence of a supportive political environment. And it needs to be kept in mind that certain types of political change can take decades to take place.

3. THE DYNAMICS OF CAPACITY DEVELOPMENT

3.1.  Some of the discussion in the donor community has depicted capacity development as roughly akin to constructing an organizational machine. Some new resources from the outside, usually in the form of training or better management techniques, are made available and are then absorbed into the organization to make it perform better. We now that such an approach is only one of many strategies that can be used to induce better performance. In many cases, most of the needed ‘hardEresources needed for capacity development including skills, financing and equipment already exist in the community. But they need to be combined with some ‘softEresources - imagination, leadership, energy, commitment, confidence, trust - to show results. In this sense, we are talking as much about capacity utilization or emergence as we are capacity development. .

3.2.  Such processes, especially at the local level, frequently take the form of dynamic, self-reinforcing patterns - virtuous cycles - in which different actors learn to trust each other and collaborate for the public good. For example, changes in the political system can lead to a legitimate competition for office at the local level. The anticipation of change and a hope for a better future then encourages other leaders and entrepreneurs to emerge in other parts of the ‘systemEin private firms, NGOs or educational institutions. The gradual increase in community participation in turn leads to an increase in the demand for better services and performance from government. In response, local governments try to both improve their services and get access to resources in the community that had previously been unused. Leadership provides the initial energy. Citizen support and involvement sustain the capacity development cycle. Local leadership and community participation thus reinforce each othersEcontributions. Signs of improvement in services such as security, education, health increase the legitimacy and credibility of the process and which, in turn, attracts more voice and community support. A pattern of incentives for good performance and sanctions for poor gradually takes hold. A sense of transparency and accountability develops. Expert-led ‘organizational engineeringEtakes place but is subordinate to the wider process of social and organizational change in the community. People try to create an environment and a process of state-society synergy which encourages a range of local actors - public, private, NGO, local, regional, national - to offer their political, organizational and technical support.

3.3.  This idealized portrait is obviously difficult to initiate or sustain. An unwillingness or inability to collaborate can stymie efforts at capacity development as ethnic, political, religious and class differences prevent the buildup of communication, trust and resource sharing needed to make the system work.. Vested interests can hijack the process and bend it to serve their special interests. Financial crises can drain resources out of the system leading to collapsing services. Dysfunctional objectives crowd out any sustained attention to performance and results. Many municipal authorities may also lack the autonomy, security and time to help nurture an effective process of capacity development. In the end, the balance of the forces pushing and pulling people nullifies their efforts to build a sustainable capacity.

4. CAPACITY DEVELOPMENT AS PROCESS

4.1.  Two factors need to be kept in mind when discussing capacity development as process. First, no overall formulas or even convincing frameworks exist for developing capacity at the network or systems level. There is, for example, no clear sense about the most appropriate organizational and institutional infrastructure that should be put in place to provide certain kinds of capacity. To the extent that there are ‘answersEto these complex questions., they emerge incrementally over long periods of time depending on the particular need and context in different countries at different times. Second, every effort at capacity development has to deal with an enduring challenge: namely not just understanding the problems and coming up with relevant solutions but doing it in such a way as to build commitment for action amongst those who must live with the results. Given these assumptions, this section briefly discusses five process issues that need to be taken into account in designing and managing efforts at capacity development.

Vision of the future

4.2.  Capacity building for the environment represents a systemic challenge for all societies - namely, how to design and manage a collaborative process in the absence of hierarchical control. Part of the answer appears to lie in the building of a vision or at least a hope for the future that can help to attract legitimacy, credibility, commitment and results. In this sense, capacity building should be an exercise in values and moral imagination rather than simply techniques and strategies. It should be more than operational problem solving, important though that may be to beleaguered residents of many cities. It must be about building productive communities and a preferred future.

Different ways of thinking

4.3.  Capacity development appears to need a different approach to thinking about ‘problemsE i.e. a thinking processes redesign in addition to a technical and organizational processes redesign. As mentioned earlier, many capacity issues are much multifaceted and cross sectoral. Cause and effect is increasingly difficult to specify and to isolate. The phenomenon of ‘everything being connected to everything elseEmakes specialized expertise insufficient. Relentless problem solving seems to have little lasting benefit. Successes in the short term become failures in the medium and long term. Unintended (and frequently negative) consequences accompany most solutions. What is more and more require are two changes to the way we think that need to be reflected in our institutional arrangements - first the creation of an environment of social learning that can help people deal with the dynamic complexity of many capacity issues and second, the evolution to a more holistic or ‘systems thinkingEapproach that can complement the more linear thinking that is still needed to address conventional problems.

4.4.  The changes we are now witnessing in these thinking patterns are part of a long evolution. In the early part of the twentieth century, government and industry began to employ ‘expertsEto solve what were considered to be technical problems beyond the understanding of ordinary staff. The problems ‘in hereEneeded to be matched to the solutions ‘out thereE This perspective accounts, in part, for the rise of the consulting firms and think tanks. In the mid part of the century, people began to realize that they could, in practice, make a critical contribution to the solving of their own problems. This trend accounts for the rise of participative management. In the 1960s and E0s, the notion arose that many of these problems were interrelated and were part of larger systems that needed special knowledge to diagnose. Once again, experts and outside intervenors worked to improve whole systems for other people. What we are now seeing is another turning of the wheel -i.e. the effort to get people and communities improving the performance of their own systems. Capacity development should be part of this letter trend.

New kinds of leadership

4.5.  The approach to capacity development described in this paper needs more varied patterns of leadership to be effective. Conventional notions of senior or heroic leaders giving explicit direction to those below them on matters to do with structure, delivery and production is still useful in some instances but can be deeply disempowering in others. Hierarchical authority can, at times, be more effective at securing compliance than at encouraging genuine commitment. Efforts at capacity development need people at all levels to facilitate, provide energy and ideas and engage in self-assessment and encouragement. In some cases, heroic leaders can end up blocking the emergence of real learning partnerships. What is needed in real capacity development is both hierarchical and collective styles of leadership.

4.6.  Three types of leadership seem essential. First, ‘bottomE(as opposed to ‘topE leadership needs to do the operational experiments that can apply new processes and learning to daily operational problems. Second, senior managers and staff must push for change, articulate some of the guiding ideas and encourage those within the organization and outside that are trying new things. In particular, they need to act as ‘championsEfor efforts at organizational improvement that normally attract little attention or support. And finally, internal networkers who can move around the organization(s) can make the connections between the people and ideas that are critical to make learning happen.

Helping from the outside

4.7.  Some of the efforts at public-private partnerships are encouraged and funded by outside agencies - donor, foundations and NGOs. It may be useful therefore to summarize what we have come to realize about providing assistance from the outside, particularly with respect to capacity development. After decades of providing technical advice, energy, solutions, strategies, conditions, reports, completed tasks and so on, most donors now accept that the process of change, both personal and organizational, is a self-generated one. While expert opinion can obviously be valuable in certain limited technical areas, what matters more is for outsiders to help put in place an open learning environment in which people can sort through and make sense of their own experience. From this perspective, local energy, commitment and expertise are the critical factors that drive capacity development. But outsiders still can play an important role. They can provide access to a range of relevant practice from other efforts at capacity development around the world. They can bring pressure for change and some protection for new experiments and institutions. They can provide critical resources that can help local processes to generate momentum. And they can supply facilitative technical assistance where appropriate that can be used to support local processes.

5. IMPLICATIONS FOR PUBLIC PRIVATE PARTNERSHIPS

Based on this general discussion, we can now see some of the factors that need to be in place to encourage effective public-private partnerships.

5.1.  The key to public-private partnerships for urban environmental management lies in the ability of local participants to induce and sustain a collaborative process involving a wide variety of organizations, groups and individuals in pursuit of a common goal. Abilities, in this sense, are both harnessed and developed in a virtuous cycle of personal and organizational development. But the impact of the broader context must be taken into account. There must be incentives for participation and a stable set of rules of the game. Patent and property rights frequently need to be defined and enforced. The capacity and independence of the judiciary can give participants more protection against arbitrary action and predatory behavior. Efforts also need to be made to limit the impact of politicization on such arrangements. In general, the risks especially for the private sector participants need to be managed carefully.

5.2.  Effective public-private partnerships need to be designed and managed to achieve two objectives. First, they must balance the need to produce both public value and private gain if they are to be sustainable. And second, they must serve a learning function which allows participants and stakeholders to build the collaborative and technical skills which the wider community needs. Such partnerships should be seen as a space and an opportunity to create new meaning and engage in collective inquiry rather than simply as a technique to use existing skills or fix old problems. Making a systemic impact may not be the immediate task but it should be seen as an indirect but essential outcome.

5.3.  We now know that a critical success factor for effective public-private partnerships is improved government accountability and performance. Governments such as municipal councils must be able to understand costs and performance standards. They must be able to structure performance contracts in a way that can create both incentives for and control over the behavior of private sector firms. They must have an effective monitoring capacity. They must show sufficient stability and consistency to engender a sense of trust in outside groups with whom they have co-producer relationships. They must operate with more accountability and transparency. And they must be ready to involve co-producers as partners rather than passive clients. In short, such arrangements mean that state agencies have to rethink not only their own role in society but also the ways in which they are organized.

5.4.  Similarly, private firms must do some things differently. In the new partnerships, they have a new role in demand-making for policy change in addition to carrying out operational tasks. They frequently must form alliances and networks with other private sector organizations. They must begin to communicate more with the public and take the social impacts of their work into account. And they must develop a wider sense of their role in capacity development.

5.5.  The global spread of public-private partnerships and the emerging power of information technology allows analysts and practitioners to trade insights and relevant experience. Support for this kind of networking is rapidly replacing the more conventional approaches to technical assistance. Outside organizations such as the UNDP can play a key role in this kind of activity.

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Contact: Hari Srinivas - hsrinivas@gdrc.org