Using People First PPPs to Bridge the Digital Divide

Access to the Internet is not a privilege, it is an economic necessity.

A Widening Digital Divide

The recent pandemic has highlighted the digital divide that exists.  With physical stay in place orders issued by governments around the world, physical economic activity was placed on hold and people have been forced to rely heavily on the internet to carry out economic activity and to stay employed.  For those who have ready access to broadband activity, little was required by them to reintegrate into the economy.  Across the world, people repurposed their dining rooms and spare room as work from home spaces, and apart from a few inconveniences, carried on with every day economic activity.  However, the reality was different for those caught on the wrong side of the digital divide who suddenly found themselves cut off from economic participation.  Disproportionately, members of at-risk communities (i.e. women, the disabled, youth, and the elderly, the under employed, and those living below the breadline) have been cut off from the economically active ecosystem, or have found that they have even less of a chance participating in economic activity now. For the disadvantaged, the digital divide has widened.

Defaulting on Economic Development Goal Promises

This new normal is not limited to economic activity. Education and healthcare delivery have also suffered as well.  Unless we find ways to reconnect the vulnerable, virtually, to the economy and needed services economic progression of vulnerable communities will become increasingly difficult and we could find that countries will increasingly default on their promises of economic development and their Sustainable Development Goals.

Harnessing Cumulative Innovation through PfPPPs

The question that is being asked is how do we innovatively harness the resources of both the public and private sectors, in a way that leads to sustainable and resilient communities?

I feel that till now, that genuine benevolent initiatives have often ironically left at risk communities vulnerable due to an over reliance reliance on partnerships between the public and private sectors that lean heavily on philanthropy.  The partnerships – often erroneously called public private partnerships - are unsustainable and therefore not resilient because they do not build up the independent economic resilience of the communities that their well-intentioned architects strive to achieve.  It can be argued that formal public private partnerships (PPPs) have helped bridge the daunting infrastructure finding gap that governments face in their efforts to advance economic development goals.  Unfortunately, there has also been an disproportionate focus on commercial and economic viability and “value for money” assessments, rather than looking at “value for people” and “value for the future” that these projects can offer.  This has in certain instances  led to projects being implemented that do not fully embrace the needs of users, cannot be afforded by the users, and have very little stakeholder engagement.  As a result, many traditional PPP projects have the potential for failure, and overly rely on government subsidies because the users cannot afford their services.

The pandemic and its associated challenges and risks, is currently causing a debate among PPP practitioners in both the public and private sectors on how PPPs should be implemented in the future.  Not only how, by why and where as well.  This debate is leading to a paradigm shift in PPPs where the constrained resources of both the public and private sectors will need to be leveraged through innovative strategies, smart technology and a laser focus on their purpose. Genuine needs assessments must consider the prerequisites for projects and their affordability.  In a May 2020, 69 country PPP practitioners survet (see -https://www.dhirubhai.net/pulse/157-ppp-practitioners-from-69-countries-share-insights-david-baxter/) many participants stressed that PPPs will need to be more people focused that they have been in the past.  

A new approach that answers this need is the concept of People First PPPs (PfPPPs).  Under an initiative led by the UNECE’s PPP Center of Excellence in Geneva - and supported by the International Sustainable Resilience Center (ISRC) and the World Association of PPP Units and Professionals (WAPPP) - offers an alternative way of implementing PPPs that add to “value for money” by calling for PPPs that are future focused, resilient, sustainable, and regenerative beyond their lifecycle expectations.  In this way, PPPs can have an infinite lifetime by innovatively addressing obsolescence, and becoming an asset for future generations instead of a time constrained capsule with a limited lifetime of 30 to 40 years as current PPPs are.

PfPPPs are defined as a public-private partnership model consistent with the SDGs so that it is “fit for purpose” and oriented towards meeting the needs of “people-first”. This new paradigm approach requires a focus on delivering desirable and necessary outcomes from infrastructure investment that focus PPPs on delivering “value for people”. As stated, value for people does not negate the concept of “value for money” but adds to it. Additionally, to ensure future proofing of projects, “value for the future” is also embraced to ensure that governments identify PPP projects that are people focused, environmentally sustainable and resilient to future adverse events (i.e. pandemics, earthquakes, and climate change).

To enhance the practice of PfPPPs, UNECE is currently developing an impact assessment tool composed of a self-assessment and a certification scheme for evaluating PPP projects that aspire to be described as ‘people-?rst’. This evaluation methodology has three elements: benchmarks and evaluation criteria that demonstrate achievement in five people-?rst PPP outcomes; a weighting and ranking of these outcomes along with other issues pertinent to scoring; and a scoring system that can provide stakeholders with the evaluations needed to revise and adjust their project designs and operations to make them more compliant with the people-?rst outcomes and the SDGs. The five achievement outcomes include - access and equity; economic effectiveness and fiscal sustainability; environmental sustainability and resilience; replicability; and stakeholder engagement (refer to article).

Broadband Access is a Vital Lifeline, Not a Luxury

Broadband access, which is the vital lifeline to access to socio-economic activity needs to be delivered to those who have economic challenges and who need an affordable and reliable service compete with those who already have access.  We, as members of society, need to move away from the common mindset that sees broadband access and increasing use of the internet as a luxury.  This is no longer true in a globally linked world where access to information, commercial activity and economic resources is increasingly only possible through digital platforms.  If one does not have access, one is doomed to economic inactivity.

PPPs and more specifically PFPPPs are an opportunity for players in both the public and private sectors to harness resources for the common good.  This marriage between the regulatory bodies (governments) and the innovative IT sector promises boundless prospects to address the digital divide.  

Example of an Innovative Broadband PPPs

There are examples of how broadband PPPs can be innovatively implemented.

In Brazil, the Ceará Digital Beltway (Cintur?o Digital do Ceará, “CDC”) project sought to address the issue of access to reliable and affordable digital infrastructure that would contribute to economic development and social inclusion.  This approach conforms to the PfPPP approach which I am advocating.  The challenge as pointed out by the study is that although affordable and reliable digital infrastructure contributes to economic development and social inclusion, their deployment is limited by spatial and economic realities as well a low revenue generation from low-income users. The CDC Innovative PPP model it was proven can mitigate economic challenges and provide services to peri-urban areas that have unmet bandwidth demand. 

This approach does however require some initial public investment in the supporting infrastructure which can reduce the Capex requirements of the private sector partners that participate. From an economic sustainability perspective, it is important that broadband procurements are competitive and transparent and do not promote monopolies or excessive interference from politically motivated regulators. Additionally, it is imperative that any project that is launched is harmonized with the PPP enabling environment and is aligned with a country’s sustainable development goals.

Opportunities and Challenges

The appeal of broadband PfPPPP enhancement projects for economic community users can be enhanced by expanding the scope of service provision to include business sector users as well as public sector users in the public safety, healthcare, and education sectors.

In other parts of the world broadband projects have struggled with sustainability because their network operators lack the resources and capacity to economically manage the network. This is why well-structured PfPPPs can be so successful as they should lead to partnerships between the public and private sectors where innovative knowledge transfer processes and best practices are championed. This does require considerable stakeholder consultation to ensure that the needs of users will be addressed. Only if stakeholder incentivization occurs, will users be willing to pay the users fees needed to pay for the project. It is also very important that stakeholders have a clear understanding of their responsibilities and are held accountable. Unless this is addressed in the PfPPP, risk perceptions will manifest themselves in investor and debtor hesitation and the bankability of the project could be undermined.

The design and build of PfPPP broadband projects oblige that technology use decisions are also carefully addressed in terms of cost and obsolescence.  What the private sector can do well, is manage the service that is being provided to ensure that it is viable and sustainable. Although competing services can theoretically contribute to better services, it is important that pioneering service providers are offered some form of protection so that their investments are not bankrupted by unnecessary competition.

The Multilateral Investment Fund (Inter-American Development Bank) makes the following points about expanding broadband access -

Broadband diffusion could be beneficial to developing countries for several reasons. First, the vast majority of people live outside urban centers and there is a need to minimize the migration from rural to urban areas. Spreading broadband to rural areas can increase efficiency and productivity and allow users to diversify their off‐farm income and/or increase their farm income. Second, broadband can also help more people transitioning into the formal economy, thus enabling governments to raise more taxes and strengthen the basic infrastructure in rural areas. Third, ICT technology are generally more ecofriendly reducing the need for travel and CO2 emissions. Fourth, broadband allows access to better education, health and e‐government services in a virtuous circle where improved know‐how and health lead to further improvements in productivity and human capital.

These objectives align closely with both the UNECE vision of PfPPPs and that of the mission of the International Sustainable Resilience Center to promote PPPs that are sustainable and resilient and which are focused on achieving the sustainable development goals.

Next Generation Access (Broadband) at (subnational) municipal level is critical. In an Eindhoven Center for Innovation Studies (ECIS) it was pointed that out in the EU public-private partnerships (PPPs) have emerged to promote municipal broadband initiatives. These PPP initiatives have been propelled by public and private stakeholders. The partners have bundled network implementation and operation and have transferred risks to private. The ECIS study found that in order to reduce failure risk broadband PPPs had to “(i) properly identify economic and social targets; (ii) effectively match the resources and competences of the different partners; (iii) design a network in line with the area’s geographical constraints (also adopting the most suitable technology solution); and, (iv) define the expected demand and the services required.”

The Need for Feasibility Studies

Implementation is still a challenge, especially when it comes to finding donor funding for a community level feasibility study.  No sensible investor would be willing to invest in a project without a supporting feasibility study that proves a level of value for money, value for people, and value for the future. Without comprehensive feasibility studies, bankability of the proposed PPP project would be very difficult to determine.  This is an area where project proponents (whether they are members of the public sector, private sector, or civil society organizations are challenged.  Additionally, there might be incidences where an PfPPP project proponent (private sector or civil-society) might want to launch an unsolicited proposal (in an area where no one has shown interest and then be forced into an exhaustive competitive and transparent procurement process that could then be won by larger enterprises that could be focused on protecting “monopolies” and not really interested in providing an affordable and reliable service to at risk communities.

Funding - Venture Philanthropy?

I am not a strong proponent of traditional philanthropic “financing” for PPP projects as it could place a project on an unstable foundation that is not sustainable in the long term.  However, philanthropy could fund feasibility studies that would determine if candidate projects are commercially and economically viable and merit consideration as candidate PPP projects. This would allow philanthropies to foster social change that resilient and sustainable past the transfer of its donation. Philanthropies should consider taking on perceptually risky projects that have a high-reward in terms of being generators (incubators) of socioeconomic upliftment. 

In a recent “Inside Philanthropy” article the role of venture / innovation philanthropy was explored.  It was argued “that philanthropists should adopt a venture capital model of funding high-risk, high-reward projects. Venture capitalists are willing to see nine out of 10 investments fail if the 10th is an early investment in next Apple or Google. The outsized returns in that 10th investment more than pay for the other failures. So too, philanthropy should be open to high-risk projects that might fail.” 

This is where I believe that well-funded feasibility studies – possible funded by philanthropies – would create a situation where a PfPPP project would be considered less risky and then could be financed by venture philanthropists or more traditional investors. The decision to support a less “sexy” project because of its potential to improve the social economic conditions of its users, would obviously be the choice of the investor.  The choice to participate would be driven by an interest in supporting a PPP with lower returns versus a project where the typical investor is interested in a high rate of return.

IMAGO - Model Pilot Project.

The International Sustainable Resilience Center (ISRC) is launching an initiative to bring broadband access to economically at-risk communities.  ISRC is currently developing a PPP focused pilot project to help regional peri-urban economies adapt to the Covid-19 Pandemic economic environment.  The initiative aims to shift small business operations to delivering goods and services via broadband platforms.  ISRC’s “IMAGO” initiative will undertake two interrelated projects—a comprehensive effort to transform small-to-medium sized businesses for digital commerce, and launch a public private partnership to provide broadband infrastructure that will enable this transformation.  

A Federal State of Mexico (Mexico) municipality has been chosen as the pilot for the IMAGO project which will benefit SMEs in the short term. However, the digital infrastructure built through the PfPPPs will have an ancillary benefit for social networks within the municipality (i.e. healthcare facilities, schools, public spaces, etc.). Upon completion of the pilot program, this model will be replicable in additional municipalities within Mexico state elsewhere,  worldwide.  Apart from value for money, value for people and value for the future will also drive the project.

Need for IMAGO Project Donors

Currently IMAGO is seeking donors to fund the feasibility study, so that a bankable project can be presented to debtors and investors for implementation through a partnership with local government. Once this goal has been achieved ISRC will launch the very first PFPPP in Mexico in partnership with its municipal partner which optimistically will lead to a replicable model that can be implemented anywhere for communities that do not have access to broadband.  The proponents of the IMAGO initiative are optimistic that this innovative project model will be increasingly adopted by government institutions around the world as they struggle to implement their sustainable development goals with limited resources in a world impacted by the current global pandemic.

We cannot forget that access to broadband internet is not a privilege, but a necessity for all sectors of society.

 References:

Venture philanthropy - 

https://www.insidephilanthropy.com/home/2020/9/9/how-philanthropy-could-embrace-more-high-risk-high-reward-projects

Research Gate – Private-Public Partnerships for Expanding Broadband Access:  Lessons from the Cintur?o Digital do Ceará Network in Brazil 

Williams, I., Falch, M., Tadayoni, R. (2017). A Public Management Framework for Wireless Broadband Development in Rural Sub-Saharan Africa. Marketing i Zarz?dzanie, 4 (50), 89–116. DOI: 10.18276/pzfm.2017.50-06. 

Multilateral Investment Fund (Inter-American Development Bank) - Economic development and inclusion through broadband access networks – 

ECIS – Working Paper 10 - Emerging models of public-private interplay for European broadband access: Evidence from the Netherlands and Italy