Public-Private Partnership

"PDDP has exemplified that it is possible to have national consensus on the development of public-private partnership through participatory means"

Mr. Neelhari Sharma Subedi
LDO, Banke DDCO

A participatory approach to development entails that there should be a non-central but polycentric process of development. This approach stresses on a multiplicity of sources for initiatives and decision-making, allowing a wide range of alternative institutions and funding mechanisms for rural development programming and management.

The decentralised and sustainable participatory development advocated by PDDP argues that development efforts, in order to be relevant to local needs, as well as sustainable, must be an integrated effort of all the stakeholders involved: the government line agencies, the local bodies, private organisations, NGOs, and community organisations.

Nepal's rural development policy, like most other developing nations, has so far relied extensively on government agencies to implement projects that provide social services and infrastructural development. The demands, however, far exceed the capacity of the government agencies to deliver. On the other hand, the private sector has more resources, and the NGOs and women organisations more capacity to deliver on a sustainable basis. Contribution of the private sector is especially significant for the generation of employment and income in the non-agricultural sector and in the post production stage in the agricultural sector. In the absence of organised institutions at the community level, these communities have not been able to exploit the resource potentials of both these sectors.

So far there has not been much effort to exploit the resource potential of the private sector at the district level for the promotion of local industries and commercial development by enhancing intra, district as well as local-urban linkages. Whatever efforts there have been in the public sector, private sector and the communities, have been scattered and isolated, and therefore have had limited impacts.

The public sector has provisions for resources and services for economic development, but these provisions have not been coordinated or have not reached the private sector and the communities such that the private sector could exploit the potentials in the district for economic development.

The private sector has the resources, skills and the expertise to commercialise the potential in the district but lacks reliable access to support the provisions in the public sector, as well as the organised communities. Lack of reliable access to the communities is due to the absence of organised institutions of people at the community level.

The communities have the potential to produce but face difficulty in accessing the resources of public and private sector due to poor governance at the local level. This results in a disorganised and irregular supply of low quality products in the local market.

Local markets, which manage the supply and demand of the products and services in the districts, have to rely on import of goods due to the disorganised and irregular supply of low quality products from within the district.

It is to coordinate and link these resources available in the private and public sectors and to strengthen the community-level institutions for exploiting the potentials existing in the districts that PDDP has been promoting Public-Private Partnership among DDCs, VDCs, private organisations, NGOs and community-based organisations. This partnership will focus on promoting rural investment opportunities by tapping into the production capabilities of the rural communities, linking them to existing capital resources of the private sector and by exploiting existing market potentials. Such partnership between local authorities and the private sector will have a synergistic effect on the overall development of the district. Joint efforts complementary to each other will be demand-based and pre-planned to achieve the objectives of economic development.

Through Public-Private Partnership PDDP aims to initiate and support the mechanism for building confidence amongst the public and private sector for the promotion of coordination, planning and implementation of district development programmes. It also aims to initiate and support the mobilisation of the private sector, producers, investors, marketers and other partners together with communities to form institutions for the enhancement of local governance, rural investment and development.

Based on the successes of the district and village development programme activities, PDDP emphasises on people oriented co-operative self-help efforts to implement Public-Private Partnership in selected districts to support rural investment opportunities and also to strengthen local governance. This programme envisages joint efforts by the DDCs and the private sector organisations to promote rural investment opportunities by tapping into the production capabilities of the rural communities; linking them to existing capital resources of the private sector; and by exploiting existing market potentials. Partnership between local authorities and the private sector will have a synergistic effect on the overall development of the district as joint efforts complementary to each other will be demand-based and pre-planned to achieve the objectives of economic development.

Capitalising on the lessons learrit from the public-private partnership programme in Chitwan, PDDP developed the conceptual and operation framework of PPP. The Programme implemented activities concentrating on fostering partnership building among the various actors in local development in a planned and systematic manner in mid-1998.

According to the new strategy the Programme works at initiating partnership building with private sector leadership, The local Chambers of Commerce and Industry represent the private sector and lead as Support Organisation in partnership building endeavours. These Support Organisations have a Partnership Promotion Facility to strengthen partnership initiatives. The Facility also has a Public-Private Partnership Committee with representation from both public and private sector to facilitate the creation of an environment for public private partnerships to materialise. The Programme also aims at promoting self-governance at the community level through the formation of self-help cooperative organisations, as partners in economic development projects.

The Public Private Partnership is implemented through the Support Organisations. The local Chambers of Commerce and Industries (CCI), which have representations from various types of private sector organisations operating in the districts, and which also possess sound knowledge of the problems and opportunities for economic development that exist in the districts, are the ideal institutions for Support Organisations(SOs).

The Programmee provides the PPF with a revolving fund as a supplementary resource that is utilised to support the investment/credit need of the enterprises (groups/institutions) selected through partnership efforts. It also has provisions for providing technical support for skill enhancement of the partners. Besides this the PPF also extends a one-time "prototype support" for innovative and low-cost technologies to increase productivity/ efficiency of the projects supported.

The main task of this committee formed at the district level under the chairmanship of the CCI Chairman is to facilitate coordination amongst various district-level development agencies. The committee discusses on various development issues and uses of PPF, and offers guidance to the SOs.

These self-governing organisations formed through the combination of groups of producers/ processors/ marketers and investors, are the partners at the community-] evel. The Programme promotes and strengthens these institutions, so that they can be better equipped for self-governance and developing linkages with others partners of the trade.

Once the institutional arrangements have been assigned their terms of programme, the Support Organisation initiates the process of identifying potential projects for partnership. This is done by first assessing the district's production and market potential, availability of services, investment required, possibility of creation of Cooperative Organisations, as well as economic impact on rural community and/or involvement of women.

The Public Private Partnership Committee (PPPC) selects the partnership project from amongst the identified projects for implementation. In keeping with the spirit of partnership the partners in both the public as well as the private sectors will be brought together right from the project selection stage.

The projects can be a new project and/or modification and/or improvement in the existing projects. Priority is given to projects that maximise the utilisation of local resources, women's groups and which have maximum economic impact on the rural community

The Support Organisation, in consultation with selected communities/groups and other partners of the selected projects, prepare a detailed project plan. The plan analyses the viability of projects by assessing the situation of the market, the production/economic potential, technology and investment requirement as per the sought partnership.

Once the action plan is ready the Support Organisation mobilises the business and rural communities to form institutions and community organisations for the formation of social capital and partnership as per the requirement of the project plan.

The Support Organisation also assists the partnership organisation with the arrangement and management of necessary technical aid and credit, help enhance coordination among the partners for project implementation and development, as well as assist in establishing business linkages with various market forces. PDDP's assistance to the Support Organisation will be extended on demand from the partnership organisation (see above chart for step-wise process)

PPP with the new concept and arrangement is being implemented in six PDDP districts- Banke, Kaski, Nawalparasi, Rupandehi, Syangja and Tanahun. PPP's support in Chitwan is assisting the DDC, Narayangarh CCI and the milk-producing farmers to establish the country's largest milk processing plant. PPP will be expanded to other PDDP districts in a phase-wise manner after evaluating the implementation strategy of the six pilot districts.

Public Private Partnership Committee (PPPC): Fully functional PPP Committees comprising of members from the public as well as private sectors have been formed in the six districts. The Committees have been making decisions and guiding the Support Organisations in implementing partnership activities. The Committees generally meet once every month, but have also been meeting as required. Apart from the enterprise-related agendas, the Committees have also initiated discussions on other social issues like sanitation in the market places and systematising the market centres, especially the vegetable markets.

Support Organisation and the PPPC Secretariat: The Local Chambers of Commerce and Industries (CCIs) have provided logistics, office space in all six districts. Program Coordinators (from their executive members) have been assigned to lead the Secretariat and the costs have been borne through the CCIs' own resources. The Ms have provided Rs. 88,000, ranging from Rs. 5,000 to Rs. 25,000 as matchingfund for the programme as per their resources. The matching fund is put in the revolving facility of the PPF. The SOs are actively involved in implementing the activities.

Enterprise Selection and implementation: As of December 1999, out of the 63 enterprises proposed by support organisations, 29 initiatives were provided support. The enterprises that have emerged from the districts and the ones that are being supported are mainly agro-based and traditional skills. In Syangja, farmers are involved in orange marketing, ginger fanning and cultivating off-season vegetables. Similarly, in Banke, two SHOs are engaged in tomato farming and stringed-beads production. Poultry fanning and goat rearing have been adopted by SHOs formed in Rupandehi. SHOs in Kaski have pne for fresh vegetable farming. In Tanahun, two SHOs are involved in producing woollen bags and vegetable farming respectively. Five SHOs formed in Nawalparasi district are engaged in vegetable fanning, papaya nursery and milk collection enterprises. (for detailed progress report see Annexe 11)

The enterprises are promoted by mobilising rural functional communities to form SHOs which will eventually convert into cooperatives with their own group assets, governing rules, workplans and enterprise feasibility. These enterprises were identified by assessing the market potential and willingness of business communities to handle the products and are linked with the support agencies for the necessary inputs through public private partnership mechanism.

Training
for SHOs

Women in Rupandehi learn about raising pigs, goats and chicken

SHO members in Kaski try the
germination test for seeds ...

Trainer Kesh Kumari Thapa,
answers a query raised by
a farmer of the Pakan Agricultural
SHO in Syangja

... and learn to make
organic compost

Farmers learn to prepare nursery beds
for off-season vegetables in Lamake, Syangja

PPP programme has supported 35 SHOs of which 4 are male groups, 9 are female groups and 22 are mixed groups. Altogether 997 people535 men and 462 women-are members in these groups. These SHOs are organisations of functional people who have come together for common economic goals and purposes. Formation of SHOs is a continuous process, and the numbers keep increasing as economic opportunities are identified in a district. 287 men and 181 women are involved in the production of the enterprises the SHOs have undertaken.

SHO formation follows the principle of formation of community organisations under VDP and according to the manual "How to Form Self-Help Organisations." The SHOs have regular meetings, and conduct savings and investment activities like the socially mobilised COs.

As of December 1999 the 35 SHOs had saved a total of Rs. 274,288 and have made a cumulative investment of Rs. 262,351. They had mobilised Rs. 2.49 million as equity investment to have a turnover worth Rs. 9. 2 million materialising a profit of nearly Rs.1.36 million.

The Partnership Promotion Facilities operational in the districts have been channelling the funds contributed by the Programme and the matching funds from the support organisations to the SHOs. These funds are utilised for providing credit to the enterprises and for training too. By the end of 1999 a total of Rs. 1,142,600 had been disbursed as credit in the six districts capital for business promotion, marketing and production.

The PPF coordinates training as per the demand/need of the SHOs to undertake specific economic activities. Resources to conduct these training are mobilised from local institutions as far as possible and linkages are established with these supporting agencies for continuous technical backstopping. The SHOs receive training on record keeping, functional skill, organisation and marketing practices. Bythe end of 1999, 264 male and 247 female SHO members had been oriented and trained through 47 training packages. PPF bore Rs. 149,859 of the cost, support agencies bore Rs. 100,912 of the cost and the SHOs contributed Rs. 7,900 for the training.

Times are getting better for the 25 women members of Pragati Women's Agricultural Group in Prasauni VDC (see photo) in Nawalparasi. The group was formed in September 1998 and meets every fortnight and saves Rs. 5 each. Early on after formation, the group members received training in establishing a papaya nursery by a DADO technician and were also provided facility to buy papaya seedlings. The group intended to earn Rs. 56,000 from the sale of two batches of papaya seedlings and so far they have managed to cam 60 percent of that amount.

The papaya seedlings are sold to the local farmers involved in papaya farming. The lower and middle class women involved in this enterprise can plant, prepare and sell the seedlings from their homes so they prepare the nursery either on their own plots or on common plots.

This group has also set up a food processing enterprise to prepare jam and jelly from papaya and banana. The farmers received assistance for the necessary training, machinery, as well as for the construction of the building to house the enterprise. The food processing machines were available from the DADO under the TeleFood programme of the Australian government. The SHO is selling the 500gmjars of papaya jam and jelly for Rs. 50. They make little over Rs. 10 profit per jar. As the members have not been able to sell more than a couple of dozen bottles in the local market, the Nawalparasi CCI is going to help them market their wares at the Butwal Industrial fair to be held from Feb 19 -28, 2000 by providing them with a free stall. The members say that they have yet to improve the packaging of the product to capture more market.

In order to take advantage of the lean season in winters when work is slow in the papaya nursery, the group members took credit of Rs. 25,000 for potato farming too. The total credit taken by the group amounts to Rs. I 10,000. This season the farmers also sold fresh papaya at Rs 8 per kilo to distributors all over the country.

The bags being woven by the Mahila Jhola Bunai Samuha, (Women's Bag Weaving SHO) in Tanahun are becoming immensely popular and are finding an ever-increasing market in neighbouring towns and districts as well. (also see 1998 Year in Review) The main markets for the bags are Damauli, Dunne, Khaireni, Dulegaunda, Pokhara and even Chitwan.

The transportation cost for taking the bags for the markets is bome by all the members. Since these bags are cheap and of a superior quality they are consumed more than the bags coming from outside. Presently the group produces 200 bags every month. According to a group member, they earn a profit of Rs. 20 to Rs. 25 per bag.

In the initial eight months itself the group had made 4257 bags out of 738.5 kgs. of wool, out of which they made a net profit of Rs. 66,470. In order to keep up with the demands, a new bag weaving CO has been formed organising women of Ward no. 2, 3 and 4, Chhang VDC. The two COs have decided that they will maintain uniformity in setting the price of the woven bags.

The 24 women members of the Chandika Self Help Organisation in Ward 4 2 of Kohalpur VDC in Banke are busy these days making bead necklaces... an integral part of the attire of married Hindu women.

In May 1999 the group availed of Rs. 30,000 credit from the Programme for their enterprise. PPP Banke helped the SHO establish linkage with the wholesaler of beads as well as stringed (woven) beads, thus ensuring a guaranteed market. The group buys unstrung beads and supplies the stringed beads to the same wholesalers as per the latter's orders. The SHO also sells the ready-to-wear beads at retail rate in the shop that they have opened with their investment. The shop also sells cosmetic and grocery items.

The group members take the unstrung beads and thread from the 'Collection and Distribution Centre' of the SHO after weighing it. They string the beads as per orders in their homes during their leisure hours. When they supply the finished products to the SHO they are paid on the basis of the weight of the beads.

The enterprise is a very profitable one and the women of the group are very happy with this project. Their work is being admired by a lot of developmental organisations (I/NGO'S too). The group has also started knitting woolen sweaters, gloves and caps to sell from their outlet.

The Shivashakti Dugdha Utpadak Samuha (Milk Producing Group) was formed at Gaidakot, Adarsh VDC, Ward # 7 to develop the market for milk and for the organisational development of farmers involved in cattle rearing and milk production. Although milk collection began in July 1998, the SHO faced difficulty selling milk to the more than 200 potential households, as they could not afford to buy the lactose and fat meters and milk cans. The Programme then provided a credit of Rs. 50,000 for this purpose. Currently the centre collects 400 litres of milk a day and supplies the milk to the Himalayan Dairy at Gaidakot. The milk collection is expected to increase during the flush season.

The membership of the group has increased to 70 and there are 11 members in the working committee. By encouraging farmers who supply milk to the centre to become members of the SHO, the membership is expected to cross 100.

The annual profit of this milk production scheme is expected to be Rs. 2,40,225.

Pakan Hariyali Tarkari Krishak Samuha of Swarek VDC in Syangja was formed after joint meetings between the market research line agencies and the PPPC. The 34 male and 9 female members of the group meet fortnightly and collect Rs. 10 individually. They have prepared a workplan to grow off-season vegetables.

Initially the group was involved in potato, cabbage and cauliflower farming but now they are also growing off-season vegetables like cucumber and bitter gourd. The group took credit capital of Rs. 50,000 for purchasing potato seeds. By June the group had already paid back the loaned amount.

The group invested Rs. 7,735 for potatoes that included seeds, manure, and fertilisers. When they sold 16000 kgs. of potatoes, they made a profit of Rs. 69,184. Similarly they invested Rs. 6200 on vegetables, and earned Rs. 6,500 profit by selling 2500 kgs. cabbage, Rs. 15,900 from the sale of 1500 kgs. cauliflower and Rs. 28,800 from the sale of 3000 kgs. cucumber.

The Langhali Tarkari Samuha-SHO of Mainaghat, Nawalparasi, have been selling seasonal and off-seasonal vegetables in the regular weekly haat market by the East West Highway and in the markets of Chormara, Narayangarh and Butwal. (also see 1998 The Year in Review) They had originally planned to earn at least Rs. 157,000 profit from their first produce, but due to unfavourable weather conditions, they could only raise 50 percent of that amount. Nevertheless, the income is still good. According to one group member, "We have come a long way since we formed this group. Although the income at present enables us to fulfil our daily household expenditure we hope to yield a higher produce in the future."

The Janjagaran Tarkari Samuha formed in early September 1998 in Jamune-2 Mathillo Gunadi in Tanahun has 19 members (one member from each household) who save Rs. 10 individually every month.

The members received a 4-day training on vegetable farming the following winter. They were oriented on the basics of nursery management, farming procedures of vegetables like green chillies, bitter gourd, gourd, lady's finger, cucumber, pumpkin, brinj al, tomatoes, cauliflower, cabbage and root vegetables like carrot and radish. They also received first hand knowledge on the various kinds of pests and measures of controlling them.

These members have now taken up commercial vegetable farming. The main markets are Damauli, Dulegaunda and Pokhara. In the first half of 1999 the members had invested Rs. 36,190 in vegetable farming and produced, sold and distributed vegetables worth Rs. 51,650. The members are highly encouraged because they feel that they have been directly benefited through this SHO.

The Siddeshwori Orange Farmer's Group of Dahathum VDC, Ward # 1 Bhalluwadoda in Syangja, who were among the SHOs engaged in exporting of oranges to Bangladesh, have come up with alternative income-generating means for the 'orange-lean' seasons. These farmers have started garlic and coffee farming, and are also experimenting with raising ginger and pigs and growing vegetables.

The 27-member strong Siddeshwori SHO has received a credit of Rs. 10,000 to buy the ginger seeds. They have earned Rs. 6780 from the sale of 113 kgs. of dry coffee and Rs. 4000 from the sale of cucumber and tomatoes. This exemplifies how rural investment in economic activities can be promoted with nothing more than little organisational and technical inputs, As a result of which the income of the group members increases and thus helps them to lead better lives.

The SHOs formed in Rupandehi have mainly concentrated on poultry and goat farming, Of the five SHOs all except Shree Janabikash Multipurpose Cooperative have taken poultry as an income generating enterprise. Of the rest, Shree Navajyoti Multipurpose Cooperative is only concentrating on poultry, and is thinking of diversifying into feed industry as well.

Selected group members of the SHOs received orientation on rearing broiler chicken in a 4-day training programme through the technical support of the DADO, Rupandehi. During the training the farmers learnt how to construct sheds, provision of feed and water, common poultry diseases and their treatment, as we] I as the theoretical and practical aspects of marketing of chicken. The members of Shree Navajyoti SHO also received refresher training on poultry farming.

The Shree Navajyoti Multipurpose Cooperative of Jyotinagar, Karaihiya VDC with 26 male and 6 female members have been making substantial income from poultry fanning. By mid-1999 the group had sold upto 5600 kgs. of chicken and had been able to make a net profit of Rs. 8150 from the sale of chicken. The SHO is now thinking of rearing layers chicken as well. They have also prepared a financial scheme for the establishment of a feed industry.

The SHOs involved in goat rearing have also received orientation on rearing improved breed of goats. The Shree Janabikash Multipurpose Cooperative of Semlar VDC, the Shree Bhrikuti Women's Multipurpose Cooperative and the Shree LaliGurans Multipurpose Cooperative of Semara Bazaar in Karaihiya VDC as well as the Shree Rohini Multipurpose Cooperative of Mainihiya in Makrahar VDC are all involved in rearing goats,

The members of the Rohini Multipurpose Cooperative, comprising of the ethnic Tharu community are preparing to utilise their traditional skills of weaving dhakki (baskets) for income generating purposes. The women of the SHO are excited about the prospect of making dhakkis for the market.

The Chitrawon Milk Processing Limited (CMPL) whose construction work was supposed to commence in 1999 got delayed. (also see 1998 The Year in Review) Technical difficulties in sorting the! bids for supply of machinery and the delay raising the stipulated sum from the promoters were some of the factors that delayed the progress of CMPL. The plant, which will be the nation's largest milk processing plant and with a total proposed investment of Rs. 133,200,000/-, is owned jointly by Narayangarh Chamber of Commerce and Industry (NCCI), the Milk-Producing Cooperatives (MPQ and the Chitwan DDC.

The compound wall surrounding the four bighas of land has already been constructed and so has the guardhouse. Shital Nirman Sewa was contracted to build the compound wall of the Chitrawan Milk Processing Plant for Rs. 17,3 8,123. 10. The premises already has a 15-meter approach road as well as an 11 KV 3-phase line.

Meanwhile the board of directors have decided to buy the dairy plant from Alfa Laval (India) Ltd. at the cost of US$ 14,70,588. After a meeting of the board of directors with then Prime Minister Girija Pd. Koirala regarding the support of National Dairy Development Board, the dairy development board has pledged a Rs. 3 crore soft loan to District Milk Cooperative Union.

With Chitwan's focus on livestock development and development of the necessary infrastructure and services in lieu of the upcoming Chitrawan Milk Processing Plant, a weekly livestock market has been established under the initiation of PDDP and Ratnanagar Municipality. Buyers and sellers gather at Tikauli every Saturday for this "Pashu Haat". In the very first week of its inception, Rs. 1.5 lakhs worth of animals had been traded at the haat.

The officials of ADB/N in Chitwan, impressed with the credit capital utilisation record under VDP, decided to channel Rs. 1.5 million of its credit facility for livestock to CO members in Jutpani and Pithuwa. It was for the convenience of the CO members availing the credit, and the credit providers that the pashu haat was created. The District Livestock Office (DLO) assists in the task of bringing the animals from Birgunj in their trucks. The Ratnanagar Municipality pays for the gas of the vehicles. In order to keep track of the animals bought with credit, the cattle are tagged and their records kept with the DLO and the respective VDP offices. Veterinary technicians are at hand to check the health of the animals that are then also insured.

The Aandhi Khola Milk Chilling Centre set up at Putali Bazar, Syangja, in the joint partnership of 33 VDCs, two Municipalities, 12 Milk Producers, Cooperative Associations and the Dairy Development Corporation of Pokhara has been operating since June 1999. (also see 1998 The Year in Review) The plant has been collecting 1600 litres of milk every day and officials expect the quantity to increase to 3000 litres. The Cooperative has decided to purchase a generator to deal with power outage.

Farmers across the six districts where PPP is being implemented have shown that all they need is a gently push, a nudge in the direction of entrepreneurship. The women SHO members in Nawalparasi have proved that with just some catalytic support, they can break out of their traditional cloak of domesticity and move into the arena of business and market along with the men. The orange farmers of Syangja who made huge profits last year by exporting oranges to Bangladesh, have proved this year that even when sold in the local market, they can make substantial income. Similarly the woollen bagweavers of Tanahun have exemplified that a well-made product can be sought after from all over.

Follow-up on SHO's activities and technical backstopping to the support staff in the districts was hampered a bit in 1999 with the gap in the departure of the former Enterprise Development Advisor (EDA) and the appointment of a new EDA.

In the year ahead, PPP activities will be consolidated and assessed before they are extended and expanded to other districts. The biggest challenge for the Programme will be to link PPP interventions in VDP areas. A modality will have to be worked out whereby PPP's excellent forum of networking among the private and the public sectors can be tapped by the COs and thus provide outlets and market linkages for their products/produce.

Another challenge for PDDP will be to re-energise the Chitrawan Milk Processing Plant whose establishment works have slackened down due to problems in fund-raising. The plant that was slated to operate in mid-2000 has yet to break ground... and already, the other ancilliary enterprises like milk chilling plants, livestock development, feed and fodder supply, have been initiated, or are in the process of fruition. The CMPL should now be jumpstarted so that it can soon become the nation's largest milk processing plant.