❑ A strong conceptual understanding of PPPs and pro-poor PPPs is key at local level. Initial efforts should raise awareness and conceptual understanding of what pro-poor PPPs are, and are not, and how they can function more effectively than other traditional service approaches (importantly, this should be a realistic understanding of PPPs - their strengths and weaknesses, opportunities and dangers).
❑ Local governments will have a key role to play in driving pro-poor PPPs, although room should be made for 'unsolicited bids' from other stakeholders.
❑ At local levels communication channels may need to be established or strengthened between main local stakeholders - especially between the local government, community, and private sectors. Where such communication is undeveloped, groundwork is required to build a platform of trust and dialogue.
❑ Depending on the national policy and legislative environment, local governments may need to put in place a local "policy on pro-poor PPPs". Much like national policy, this signals intent and lays out procedures and processes. It may be necessary to issues specific bye-laws or similar regulations for pro-poor PPPs. Such local policies should always be informed by a solid understanding of PPPs and their value drivers.
❑ Along with creating a policy environment, it is useful to establish a platform in which the main local stakeholders (private sector, communities, other stakeholders) can engage regarding PPPs. Such a body can be formalised as a forum or even advisory body to the local government.
❑ Regarding private sector involvement, a two-stage process should be used. In the first stage, during initial consultations and discussions on local policies, bye-laws and frameworks for PPP, local business associations, informal trader groups, trade bodies, and similar representative groups representing business should be consulted and involved. In the second stage when particular PPP opportunities have been identified and a private party is sought, open competitive tendering should be used.
❑ Local governments should consider whether existing decision-making bodies are sufficient for handling pro-poor PPPs, or whether purpose specific bodies need to be established. Notwithstanding, decision-making must always be consistent with the legislated and required governance structures (i.e. elected councils have specific responsibilities and accountability which must not be compromised).
❑ Informed local political support is essential. Where it does not exist it can hamper PPP progress and reduce sustainability of projects and contracts. Politicians must be well informed regarding PPPs, specifically what they imply for local government transformation, the role of local government, and the broader public responsibility (they will be held accountable if things go wrong!) and contingent liabilities that the local government retains.
❑ It may be necessary to lump several smaller PPP projects together, or to widen their geographical scale to achieve scale economies and benefits sufficient for the projects to be viable. For example, a small private partner collecting waste in poor communities may need to collect from several neighbourhoods to justify the cost of the basic collection equipment required.
❑ Very importantly, a careful examination should be undertaken of local service industries before PPPs are designed and implemented. This is crucial to ensure that practitioners are aware of the potential impacts and distortions that the PPP might have, and to ensure that it is designed in a sustainable fashion. For example, a new waste recycling PPP with local government support and a formal business partner may put many existing 'informal' recyclers out of business if the PPP is designed without being aware that such informal operators exist.
❑ Local government can identify ways of adding on pro-poor aspects into wider PPPs and service reforms. For example by requiring a water concessionaire to also provide drinking water in poor communities in return for being able to service (and collect payments from) wealthy neighbourhoods or commercial users.
❑ Local governments should approach pro-poor PPPs as part of overall improvement and reform of service provision. A local government with appropriate support can undertake a local services review, to identify all services it is providing, services which are needed, and to identify ways for improving such service delivery, including using pro-poor PPPs.
❑ While not directly addressed in many projects, local government should consider combining pro-poor PPP approaches with subsidy interventions. For example, even though a PPP might improve efficiencies in the delivery of a service (making it more widely available and accessible to the poor), as communities they may still not be able to afford to pay enough to make the PPP viable through its internal financing. In such situations local government can combine subsidy support with PPP efficiencies.
❑ In general pro-poor PPPs should be conceptualised and where necessary linked to wider service operations and systems of the local area. Small, isolated pro-poor PPPs that are based on voluntarism and not related to financial flows, payment streams, wider operations and so on do not seem to be sustainable.
❑ While higher levels of government risk taking may be required during initial PPPs (for example with central government guarantees), local government should avoid carrying too much risk and/or being the principal financial agents for pro-poor PPPs if this results in the PPP loosing its efficiency benefits.
❑ Private partners for pro-poor PPPs can vary widely in formality, size and nature (from large companies, down to individual community entrepreneurs). Emphasis should be placed on what motivates these private parties and on how this motivation can be managed to achieve service benefits for the urban poor through a pro-poor PPP.