Driving Innovation through PPP

Undoubtedly, innovation is the key to economic development. It is also a fact that small enterprises have proved to be a leading source of innovation. They have become one of the keys contributors. Realizing this potential of small businesses, the Government has also taken initiatives, such as Public Private Partnerships (PPP), that encourage them to participate in contributing to the development of the nation through innovation.


In this article, we look at how PPPs can be used as an effective tool for innovation.


PPP and Innovation:
"There is no denying that the private sector is way ahead of the public sector as far as innovation is concerned. Governments must capitalize on this. Public Private Partnerships opens up new opportunities for innovation and stimulates demand for innovation in multiple sectors such as infrastructure, medicine, science, agriculture etc" says Mr. Arun Lakhani, MD Vishvaraj Infrastructure and leading authority on PPPs.


PPPs can play a key role in not only solving a problem but doing it innovatively. To understand how, we can look at a very common problem that is faced by urban cities around the world; traffic congestion.


For cities like Mumbai, Delhi and other metro cities, the problem is not just insufficient roads but also handling of huge traffic inflow. Constructing more roads might help to some extent but it won’t solve the issue entirely as traffic will keep increasing with economic growth.


"There is a need for an innovative solution that will minimize or eliminate traffic congestion and utilize the existing roads better. This is where government can partner up with private companies to solve this issue" says Mr. Lakhani.


A real life example of such a partnership can be seen in Chinese city Tiajin which faced severe traffic congestion problem. The city, in collaboration with World Economic Forum’s Future of Urban Development & Services (FUDS) Initiative achieved its goal of drastically minimizing the traffic problem.


The goal was achieved through an intelligent transportation system (ITS) technology which uses sensors which provide drivers with real-time traffic information that will enable them to avoid routes with heavy traffic.


Benefits of using PPP for innovation:

  • Helps to attract private sector expertise which is so essential for innovation
  • Optimize the use of available knowledge
  • Pooling of resources can help to address issues that cannot be addressed by a single entity
  • Provides a greater return on research funding
  • Successfully addresses the issues so that commercialization of outcome is possible
  • Create a competitive environment for open and transparent tenders in the implementation of innovative projects
  • Offers a huge platform to apply innovations


Barriers for PPP:


1)   Lack of joint efforts by both the partners:
It has been commonly observed that the Government is like a sleeping giant in PPP ventures. In fact, there is an attitude that once a private partner has been chosen, the work is done.


Also, innovation is generally assumed to be a domain of private sector. If innovation is to be achieved, this cannot go on. There has to be joint effort by both the parties.


2)   Unnecessary interference by public partner (Government) in innovation process:
Time and again we have seen how promising initiatives have gone off track thanks to interferences at every other stage of such ventures; especially political. It is not rare to see political parties trying to exert their influence on how PPP ventures shape up so that they can walk away with the credits.


3)   Unequal financial risks:
This one is not too difficult to understand. Given the laidback attitude of the Government over the years towards PPPs, the private sector has always bourn the financial brunt of such ventures. This has proved to be a big hindrance in encouraging more private entities to participate in PPP.


It is high time government takes steps to ease these inhibitions and fears of the private parties.


PPPs definitely offer us an excellent channel of innovation that can be deliver high quality optimum results.  There are countless ways PPPs can be utilised to not only solve problems but also achieve economic development through innovation and also improve our lives.