PPPLab Day: Re-thinking risk to finance boundary-pushing PPPs

A full-house for the session on financing PPPs as it promised to “show the money!”. But of course, all participants quickly landed with two feet on the ground again, when the banker shouted back “show me the bankable projects!” and the impact funder “show me the impact!”.

An interesting conversation developed around balancing risks, returns and impact. The HIVOS-Triodos fund was an eye opening example, where blending of grant and commercial money not only allowed a €75 million revolving fund to be set up for MFIs and SMEs, it also leveraged an additional € 800 million in additional funds as it showed it was – after all – possible to make it work. After all indeed, as the fund ran the initial 7 years at a loss; a patience that Triodos wouldn’t have had on his own, but did have with the complementary funds from HIVOS.

 A sneak-preview of the PPPLab navigation tool for developing a financing strategy, indicated that smart combinations of financing sources may be a better way to sustainability and scale than hopping from grant to grant. In the food security and water sectors, we need to become better in making our impact clear, as impact equals money, whether through impact investors that are ready to accept lower returns/ longer tenors, or through philanthropists/ donors that are ready to contribute to tangible, proven results. Creativity and engaging key stakeholders from early stages will be needed to leverage additional funding for PPPs.

While all players may speak different languages, we have reached a stage that people understand the need to work together and use each other’s strengths. A positive achievement compared to some time ago, but we aren’t there yet: now this needs to become more action driven, rather than getting stuck in lengthy discussions. These often end up in debates about how inclusive a business can be and about ethical issues around profit-making in the public domain.

While these are important issues, it shouldn’t paralyze us. To move forward, we have to stop expecting others to change their habits to work with us; instead we need  to adapt our own processes to enable working productively together with others. In blending finance with different risks perceptions that is essential.