McKinsey: What makes private public partnerships work 

Check out a real Mckinsey presentation on what makes private public partnerships work.

McKinsey Presentation: What makes private public partnerships work

Key Learnings from the Presentation

The McKinsey report, “What Makes Private Sector Partnership Works: Some Learnings from the Field,” dated September 2011, provides an insightful analysis into effective public-private partnerships (PPPs), particularly in the agricultural sector. It evaluates models that have been successful in creating sustainable value chains and increasing the viability of agricultural outputs. Below is a detailed summary that captures the essence and key insights of the presentation.

Key Insights

• Agricultural Demand Surge: The report begins by highlighting the colossal demands on agriculture, noting that agricultural output must increase by 70% over the next 40 years to meet global food needs. This challenge is set against the backdrop of a growing global population and increasing demand from consumers in developing countries for more and higher-quality food.
• Successful Transformation Models: McKinsey has been instrumental in transforming agriculture in Africa by advocating for scalable and holistic models. These models include:
  • Value-chain interventions: Private investment to fill industry gaps and stimulate growth.
  • Infrastructure corridors: Regional investment in infrastructure to spur ongoing development.
  • Policy facilitation: Encouraging private investment through government incentives to meet development goals.

Strategic Public-Private Partnership Models

• Focus on Value Chains: Effective PPPs require viable models that engage both public and private sectors throughout the agricultural value chain from production to distribution. This includes integrating smallholder farmers into the value chain through structured demand contracts and aggregation services, such as those provided by Frigoken in Kenya.
• Sustainability and Efficiency: The report underscores the importance of ensuring that PPP models are economically viable and efficiently managed. This involves structuring and monitoring contracts effectively and developing innovative models for training entrepreneurs.
• Emerging Partnership Models: McKinsey notes a shift toward more integrated private-sector-led aggregation and extension models. These models aim to enhance sustainability and efficiency but require careful economic planning and robust contract oversight.

Challenges and Solutions

• Economic Viability: For any partnership model to be sustainable, it must be economically viable in the long run. This means that the economics of the partnership must work on a run-rate basis without continuous external support.
• Contract Management: Effective oversight and management of contracts are crucial to ensure that partnerships deliver on their promises and remain aligned with their developmental goals.
• Entrepreneurial Development: There’s a significant need for building business skills and entrepreneurship in developing countries. McKinsey suggests innovative training methods, such as model factories, which provide a mix of theoretical and practical training to disseminate Lean concepts effectively.

About McKinsey

McKinsey & Company stands as a premier entity in the global management consulting sphere, initiated by James O. McKinsey in 1926. Anchored in New York City, this firm has carved a distinguished position in the consulting arena, offering strategic guidance across the globe to a diverse clientele that includes businesses, governments, and various institutions.

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