Public-private-NGO Partnerships in Agricultural Service Delivery in Nepal

Laxmi Kant Paudel's picture
The delivery of agricultural services is one of the major activities of Nepal government to support the livelihoods of the Nepalese farmers and contribute in the development of the country. The agricultural service provides both productive inputs and services to teach farmers about improved technologies so that they can improve productivity, incomes and standard of living. Effective and efficient services can help both the farmers and the economy of the nation as a whole. Nepal initiated partnership in the 1950s with the Tribhuvan Village Development Program (TVDP) in public-public partnership. Since efforts to transfer agricultural technologies to farmers are more effective when the state (GO), non-governmental (NGO), and private (PO) sectors work in partnership. The most effective partnerships proved to be GO+PO and GO+NGO. In this backdrop, the main objective of this paper is to revisit agricultural extension system in the context of emerging trend of partnership and argues that establishing the right partnerships and strengthening them through information enhances small farmers’ access to improve and relevant sustainable agricultural technologies. For this, this paper outlines the concept of partnerships, the context of agriculture service delivery by means of public-private partnership, emerging trends in agricultural service delivery and finally it concludes with the experiences of PPPs in the Nepalese context. This study concludes that experience with PPPs is moving in the positive direction. Furthermore, the participation of the target group is essential if PPPs are to bring the desired outputs.
Main Article: 

1. Introduction

Agricultural service delivery activities of the public and private sector for technology transfer have largely been undertaken separately in Nepal and South Asia over the years. The search for more effective ways to deliver public services dates back to the early 1980s after several agricultural extension models were tested (Sharma, 2011). The private sector has worked to promote extension activities in the marketing of agricultural inputs and outputs, largely in isolation from public sector activities. The lessons of 1980s and 1990s have shown that neither the public nor the private sector alone can be effective in delivering services. There is a strong need for different types of public private partnerships (PPPs) in agricultural service delivery and development programs. Nepal doesn’t have a long history of public-private partnership as public sector itself was not very mature and the private sector was of the sustenance type for a long time. Therefore, it was only in the late 1990s the concept of PPPs evolved. The main objective of this paper is to revisit the role of government agricultural extension system in the context of the emerging trend of partnership. For this, this paper outlines the concept of partnerships, the context of agricultural extension in agriculture service delivery by means of public-private partnership, its emerging trends and the models used in agricultural service delivery through extension and finally it concludes with the experiences of PPPs.

1.1 Defining public-private-NGO partnership

The term "public-private partnership" carries a specific meaning. First, it relates to the provision of public services or public infrastructure. Second, it necessitates the transfer of risk between partners- Private and NGOs. Arrangements that do not include these two concepts are not technically "public-private partnerships". Public-private partnerships extend a continuum of models that progressively engage the expertise or capital of the private sector. At one end, there is straight contracting out as an alternative to traditionally delivered public services. At the other end, there are arrangements that are publicly administered but within a framework that allows for private finance, design, building, operation and possibly temporary ownership of an asset (Shrestha, 2008).

Partnership is conceived as mutually beneficial and well-defined relationships entered into by two or more organizations to achieve outputs that they are more likely to attain together. Partnerships denote contractual arrangements which focus on performance based outcomes, to which improved management practices assume a great significance particularly to ensure speedy, efficient and cost-effective delivery of services. The main focus of PPPs is to achieve more effective outcomes than what they could have achieved the common purpose by working independently. Furthermore, partnership implies “joint and voluntary endeavors towards a common purpose. The state is very important for encouraging and building meaningful partnerships among various sectors of the society at all levels because many countries lack strong, independent private sector and civic organizations. The essence of effective partnership, therefore, is sharing power, responsibility and achievement. Therefore, partnership involves the poling and exchange of know-how, information, and experiences between and among partners (UN DESA, 1999, p4). In general partnership involves:

•     A minimum of two organizations,

•      An agreement about roles and responsibilities,

•     Common objectives and activities aimed at the delivery of services, and

•     The sharing of risks, benefits, and resources-both tangible and intangible.

Partnership involves different stakeholders including governments, NGOs, civil society, private sector etc. Kantor (1994) described productive partnership as those, which evolve, continue to yield benefits, create value, work through interpersonal connections and internal infrastructures that enhance learning. She identifies eight characteristics of best partnerships:

•     Each partner contributes something of value,

•     The strategic objectives of all partners are addressed,

•      Partners have complementary skills and assets,

•     Each partner makes an investment in the other,

•     Communication is reasonably open,

•     Mechanisms for smooth working together are in place,

•     Each partner becomes both teacher and learner, and

•     There is integrity and mutual trust.

The practice of partnership logically leads us to acknowledge pluralism (e.g. multi actor and agency involvement) in agricultural service delivery and in reality there are a broad variety of institutions providing agricultural extension services. There has been a realization that farmers are best served by the broadest possible array of information sources and structures. The complexity of rural development demands a plurality of technological solutions and service structures (Sharma, 2011). Farmers need access to many services such as input supply, credit, and even emergency responses to disease/pest infestations. Therefore, PPP is to be understood as cooperative venture and coordinated efforts between the public and private sectors, built on the expertise of each partner that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards.

In an increasingly competitive global environment, governments around the world are focusing on new ways to finance projects, build infrastructure and deliver services. Public-private partnerships (PPPs or P3s) are becoming a common tool to bring together the strengths of both sectors. In addition to maximizing efficiencies and innovations of private enterprise, PPP's can provide the much-needed capital to finance government programs and projects, thereby freeing public funds for core economic and social programs. So, it can be deduced that PPPs continue to be valuable contributors to our country's economic health as the private sector still dominates the public sector in the delivery of goods and services to the public and contributes largely to the economy. There has been various reasons that motivate for involving into public private partnership (Shrestha, 2008, p 5).

•     Accelerating the implementation of high priority projects by packaging and procuring services in new ways

•     Turning to the private sector to provide specialized management capacity for large and complex programs

•     Enabling the delivery of new technology developed by private entities

•      Drawing on private sector expertise in accessing and organizing the widest range of private sector financial resources

•     Encouraging private entrepreneurial development, ownership, and operation of related assets

•     Allowing for the reduction in size of public agency and the substitution of private sector resources and personnel.

However, PPPs are not a cure for-all approach as it has been severely criticized from various corners. Those opposed to public-private partnerships most often cite the loss of public control that occurs when a private sector company is involved in financing, building or delivering public services. Public-private partnerships are often seen by organized labor as resulting in job loss, poor quality and lack of oversight. These objections are overstated and often misrepresent fact-based research in this field (Shrestha, 2008, p5). PPPs are an alternative means of delivering services, or delegating them to appropriate non-government partners.

1.1.2 Forms of Public-private Partnership

Five different forms of PPPs can be distinguished as per its application. Some are predominantly state-led, while others are based on presumed mutuality of interest and risk-taking. Their institutional forms can be further distinguished in terms of time scale, financing and partner relationship. The forms of PPPs are as follows (Skelcher, 2005, p351-59, Shrestha, 2008, p2):

Public Leverage

Public leverage occurs where governments use their legal and financial resources to create conditions that they believe will be conducive to economic activity and business growth. This ‘leader-follower’ approach is particularly useful in regeneration strategies for disadvantaged localities for infrastructure improvements, financial incentives, business support services and other measures to promote economic regeneration.

Contracting-out and Competitive Tendering

Contracting-out involves separating the purchaser of a service from the provider. The government assumes that the contractor satisfies the specification given by the government and monitors whether anything is lacking. Contracting-out is the logical outcome of competitive tendering or market-testing process. The main objective of competitive tendering is to improve service quality.


Franchising involves government awarding a license to a business or not for profit to deliver service in which the provider’s income is in the form of user fees. In this process, the government reallocates its monopoly rights to a private entity.

Joint Venture

It is a process in which two or more parties work together in collaborative way while retaining their independence. The joint venture may be managed through a partnership agreement or a separate corporate entity- a special purpose vehicle (SVP).

Strategic Partnering

It involves a situation in which there is boundarylessness in terms of the distinctions between the constituent parties. It may be of open-ended nature, the full sharing of risks and rewards, and the evolving substantive content of the action that rises.

1.1.3 Models of Public-private Partnership

Various models of public-private partnerships have been in application. The following terms are commonly used to describe partnership agreements, although this should not be considered a definitive or complete listing:

Design-Build (DB): The private sector designs and builds infrastructure to meet public sector performance specifications, often for a fixed price, so the risk of cost overruns is transferred to the private sector.

Finance Only: A private entity, usually a financial services company, funds a project directly or uses various mechanisms such as a long-term lease or bond issue.

Operation & Maintenance Con-tract (O&M): A private operator, under contract, operates a publicly owned asset for a specified term. Ownership of the asset remains with the public entity.

Build-Finance: The private sector constructs an asset and finances the capital cost only during the construction period.

Design Build Finance Maintain (DBFM): The private sector designs, builds and finances an asset and provides hard facility management (hard fm) or maintenance services under a long-term agreement.

Design-Build-Finance-Maintain-Operate (DBFMO): The private sector designs, builds and finances an asset, provides hard and/or soft facility management services as well as operations under a long-term agreement.

Build-Own-Operate (BOO): The private sector finances, builds, owns and operates a facility or service for perpetuity. The public constraints are stated in the original agreement and through on-going regulatory authority.

Concession: A private sector concessionaire undertakes investments and operates the facility for a fixed period of time after which the ownership reverts back to the public sector.

The options available for delivery of public infrastructure range from design-build to outright privatization, where the government transfers all responsibilities, risks and rewards for service delivery to the private sector. Within this spectrum, public-private partnerships can be categorized based on the extent of public and private sector involvement and the degree of risk allocation.

1.2 Emerging Trends of Partnership

The emergence of new extension arrangements in agricultural service delivery offered by the private sector, NGOs, and voluntary organizations has created a platform where delivery of services is undertaken independently or through various forms of partnership arrangements. The list of organizations providing agricultural extension services is growing. Organizations, which are providing services, can be put into the following typology:

•     Government organizations: line ministries

•     Local government bodies: DDCs, VDCs and ASCs

•     Project organizations- These are created to oversee implementation of project activities for certain period and are generally publicly funded

•     Private for profit organizations- these include private agri-business, consulting firms, agri-input dealers, traders/processors. It also includes such mechanism as contract farming with inputs, extension services, and markets are provided by agri-business and the provision of embedded services with the sale of inputs or purchase of outputs.

•     NGOs (non-profit) that may be funded by the government, or private sector sources

•     Community-based organizations (CBOs), these are membership organizations based at the village level. They could be self-initiated, self-evolved, NGO initiated, government initiated, and project initiated.

These organizations deliver services in a variety of ways. However, there is realization that there is a comparative advantage with each organization, and that a single organization cannot meet the varied needs of the target group. This has invoked a need for entering into partnership resulting into synergy. Entering into partnership may require a renewal of traditional roles for higher efficiency, effectiveness and sustainability. Partnership can take place at various levels that can be classified broadly into three types (Sharma, 2011):

•     Informational: In such arrangements, organizations with similar interest get together to share information. Such exchange of information can take place through forums, networks, in specific themes like, food security, organic farming, IPM, or rural roads.

•     Institutional: Institutional arrange-ment to forge partnership among various agencies is provisioned through legislation, directives or by-laws or understandings. Develop-ment Boards, project steering/ coordination committees, are some example of institutional partnership where representatives of various organizations work together for common goal. This can be termed as representational partnership.

•     Programmatic: Partnership is reflected at various stages of program implementation.

Partnership could be at the planning stage where planning is done jointly and implementation is done separately. Programmatic partnership can further be delineated into two sub types:

•     Mutual: unifying comparative advantage by cost sharing

•     Contractual: providing services through competitive bidding

Partnership involves various stakeholders. Therefore, partnership arrangements can take the following forms:

•     Public- Public

•     Public- NGOs

•     Public- Private

•     Local bodies- NGOs/private

•     Projects – public / local bodies / NGOs / private

•     Multi-partner (Public-Public-local bodies- NGO- Private)

It is obvious that agricultural extension service providers, government, NGOs, agribusiness, have perceptual differences in extension issues resulting in differences in their focus. A study (Ojha, 2000) on partnership in agriculture extension in Chitawan, Nepal has shown that among partnerships, Public + Private and Public + NGO are more effective than other forms of partnership. The same study concluded that partnership is and effective strategy but is specific to circumstances and should not be generalized in all situations. In this context, it is worthwhile to review the strengths and weakness of organizations in agricultural extension.

NGOs as part of civil society constitute self-governing entities which work independently from the government in a voluntary manner. A voluntary organization may bring experience, expertise as well as finance from both the society as well as donors. NGOs can help in service delivery through partnership. The majority of NGOs are capable of responding flexibly and rapidly to the client’s needs and changing circumstances as they are small and horizontally structured with short lines of communication. NGOs are concerned with the rural poor means that they often maintain a field presence in remote locations, where it is difficult to keep government staff in post. This is well demonstrated in Nepal due to the conflict. A main concern of NGOs is to identify the needs of the rural poor in sustainable agricultural development. For this, they have therefore pioneered a wide range of participatory methods for diagnosis and program implementation. One of the strengths of NGOs has been their work in group formation and mobilization. As a result of working in participatory approaches and close communication with rural communities, NGOs have been effective in lobbying for agricultural reforms and policies to benefit small producers. Despite the importance of NGOs, they have certain weaknesses. The NGOs’ small size means that their projects rarely address structural factors that underlie rural poverty. Some fashionable areas have become so densely populated by a diversity of NGOs that problems have arisen from competition for the same clientele. The NGOs have limited capabilities for agricultural technology development. Some NGOs are accountable to external funding agencies than to clientele they claim to serve. Donor pressure to achieve short-term impacts, combined with a lack of cross-learning, has led in some cases to the promotion of inappropriate technology.

Although public-private partnership is not the solution for the delivery of services, its importance can be explained by these attributes of public sector which is characterized by a wide network of staff covering all geographical areas, better access to technology and resources, well trained personnel, continuous presence thus ensuring sustainability of services, are accountable to farmers and political structures (Nepal, 2006). However, public sector has been criticized for the following shortcomings; supply-driven rather than demand-driven, comerciali-zation of agriculture gave rise to specialized clients and demand for location specific extension service which are not catered to by public systems, extension provided are general in nature rather than specific and intensive, insufficient face-to-face contact between extension agent and farmers possible, inadequate technical qualification of technicians, public extension is target-oriented and less participatory, extension treated as policy administration rather than change process, professional and timely monitoring at all levels is lacking, and not effectively reaching the poor and disadvantaged segments.

The involvement of NGOs and the private sector in agricultural extension has been experimented in various forms around the world. The following examples illustrate some experiences in private sector involvement in agricultural extension.

1.3 Context of Partnership in Agricultural Services

The emergence of the value-chain approach to address agricultural development provides comparative advantages of public and private partners in the delivery of agricultural services and in creating an enabling environment for agricultural development. The value-chain approach as applied to agriculture seeks to identify services that are missing or weak in a sector and develop the capacity of private and public service providers to address weaknesses. There are a variety of services where market failures occur. In such a context, the government has a key role in providing public goods including market and productive infrastructure, research, the provision of basic knowledge, and the role of setting the policies and rules by which economic actors interact. Lessons have demonstrated that the private sector is most efficient at providing inputs, embedded information with the sale of specific inputs, marketing channels, and the promotion of products/markets (Sharma and Bhandari, 2005). Moreover, the NGO sector has shown greater flexibility and efficiencies in introducing and supporting farmers to adopt new technologies, conducting planning and analysis activities, working with the business community and civil society to lobby for reforms, and to act as a facilitator of public- private partnerships. In the case of many agricultural export markets, important public infrastructure, testing facilities and policies must be developed to enable the private sector to take advantage of market opportunities. Export facilities, laboratories, phyto-sanitary certifications, tax policies, and sector policies need to be developed in close public-private partnership to be successful.

Partnership is not a model administered or implemented by the state, but rather, it is a process how government agencies, development oriented NGOs, business and farmer organizations, private sector firms and others can support development. The purpose of entering into partnership is to take into consideration the presence of ongoing activities and, rather than trying to gain control over them, instead to choose niches and to identify common concerns where different approaches may lead to synergy (Sharma, 2011; Oja, 2000). However, in the recent past, public extension has come under scrutiny for its limited accountability, inefficiency, and lack of responsiveness to changing farming conditions. Scarcities of financial resources for extension, changing ideology emphasizing efficiency over welfare, and heightened competitive interests from the private sector has led to acknowledge the private sector and NGOs as an important partner in the delivery of extension services.

1.4 Public-private Partnership: Experiences from Nepal

Nepal does not have a long history of public-private partnership as the public enterprises were established with the view of serving the top ups. Only after 1990 when the Nepalese government started with the new initiatives of liberalization and privatization, the efforts for PPPs geared up. In Nepal as elsewhere, extension has long been grounded in the diffusion model of agricultural development. It is only recently beginning in the 1990s that emphasis and efforts towards involvement of the private sector in agriculture development have begun (Sharma, 2011). Still efforts to involve and link the private sector remain nascent. Donors have begun to promote programs for more private sector involvement. In Nepal, partnership between government agencies existed since early days of agricultural extension. For instance, Tribhuvan Village Development Program was an example of partnership between government agencies (Department of Rural Development and Department of Agriculture). However, partnerships with the private and NGO sector started only in the 1990s. During 1970s and 1980s, the theme of linkage and coordination received prominence as coordination among research, extension, input and credit related agencies was considered important in agricultural development, though research-extension linkages in practice have been weak.

Agriculture Research and Extension Project (AERP): It is an important partnership program with private agencies that began with the World Bank funds during mid-1990s, when the project contracted out extension functions to consulting firms and NGOs. Agricultural Policy, 2004 of HMG/N has laid a policy framework to attract private sector and NGOs specifically in the areas of food and nutrition, agricultural production, collection, grading, storage, processing, packaging etc by providing tax incentives and institutionalizing competitive bidding.

ADB Crop Diversification Project (CDP): The CDP has initiated two modalities of contracting agriculture extension activities:

•     Contracting out extension activities to private extension service providers (NGOs/CBOs) to mobilize farmers in production pockets;

•     Mobilizing farmers group by the social mobilizers recruited by District Agricultural Development Offices (DADO). In this strategy, both DADO and social mobilizers work on their strength such as group formation, mobilization and management to be done by Field Teams (social mobilizers) and technical backstopping by DADO staff. CDP has three types of production pocket areas a) production pocket areas completely contracted to private extension service providers’ b) production pocket areas with field teams; and, c) regular DADO pocket areas.

A mid-term assessment of CDP (CDP, 2005) has demonstrated mixed results as technical staff have not owned and internalized the field teams as their supporting partners and that NGO partners are not providing enough technical backstopping, training and physical support to the field teams. As FTs have limited technical knowledge, their primary job is to convey the farmers’ problems to their supervisors and consequently to the technical staff. But due to the poor presence and inefficiency of supervisors and technical staff, farmers’ problems are not properly addressed. The same report indicates that there has been significant increment in the social mobilization aspects after the involvement of FT.

APP Support Program: DFID had given grant assistance for a period of five years effective from March 2003 for the APPSP. The program is aimed at orienting agricultural services to reach the target groups including the disadvantaged, marginal, poor women farmers, dalits, and ethnic minorities. The establishment and operation of District Agriculture Development Fund (DADF) forms the basis for the implementation of APPSP in the districts. It attempts to devolve agriculture extension services as well the promotion of public-private partnership. APPSP has been implemented in 20 districts. As of July 2005, 217 projects had been funded through District Extension Sub-fund (DEF). DEF is a competitive fund established for service providers to strengthen and decentralize extension services. A total of 1, 287 projects were funded through the Local Initiative Sub-fund (LIF). LIF is a competitive fund established for the farmers’ groups. The purpose of LIF was to address the needs and demands of the poor farmers, particularly marginalized, women, disadvantaged groups and those living in remote area and support their initiatives. There is a wide range of projects funded by DEF but most of the projects fall in the category of goat raising, marketing, vegetable production, and, seed production. The program has been broadly successful but had been challenged to receive strong proposals from local potential service providers.

Third Livestock Development Project (TLDP): Paincho (loan-in-kind) program on goat in TLDP is an excellent example of partnership between the government and NGOs. Under this program, partner NGOs assume responsibility for farmer mobilization, help in establishing private veterinary services, and provide micro-credit to farmer group members, while the government agencies provide funds, supply goats, veterinary services and funding for establishing agro veterinary shops along with other support services like training to NGOs and monitoring and evaluation. This program is implemented in 19 districts in partnership with 77 NGO partners National Agriculture Research and Development Fund (NARDF) was established in accordance with the principles of competitive grant system in 2002 under the Working Fund Act 1986. The fund targets government, non-government, educational, private sector and civil society organizations involved in agriculture research and development. It aims to encourage these organizations to compete in partnership or collaboration for partial or complete funding. So far 23 projects are under operation.

The Nepal Tea and Coffee Global Development Alliance Experience: Starting from 2002 USAID has supported Winrock International to facilitate two public-private partnership alliance programs, for specialty tea and coffee development for international export markets. Under the Global Development Alliance approach, Winrock worked to identify stakeholders, including government agencies, private sector industry associations, farmer/producer organizations, and development partners including NGOs, INGOs, and donors. Each alliance has a formal written constitution, common objectives, a work plan, and a monitoring/reporting function. The alliances meet regularly and have proved highly successful:

•     The coffee alliance - has established Nepal as a specialty coffee exporting country shifting processing from nearly 100% low quality dry processed to over 60% washed/semi washed for international export markets. It has facilitated a tremendous increase in economic opportunities for poor smallholders

•     The tea alliance – has played a major role in establishing international market linkages and a branded identity for Nepalese tea. In the past, Nepalese tea was being sold to India as an unbranded product. The alliance has facilitated Nepalese tea entry the USA market and branded Nepalese tea in the major German market. The alliance has also facilitated the industry to adopt a code of conduct for social and environmental responsibility that is a strong marketing tool. The alliance program is now in its final phase and is working to strengthen the capacity of Tea and Coffee Development Board to continue the coordinating role and success of the alliance approach.

Smallholder Irrigation Market Initiative (SIMI): The Nepal SIMI project supported by USAID and implemented by Winrock International, and partners International Development Enterprises, CEAPRED, SAPPROS, and AEC represents a model program for developing district and local level public-private partnership. SIMI promotes micro-irrigation (primarily drip and the treadle pump) for vegetable production by smallholders. SIMI takes a value-chain approach building the linkages and capacity of agro input manufacturers, input suppliers (agrovets), equipment dealers, micro irrigation installers, and traders/ processors. The SIMI program has closely facilitated partnership with government agencies including MoAC, DOA, DOI, MLD, WDD, MOF, NARC and government projects APPSP, CDP, MGEP, PAF, and others. The government in the partnership has taken a lead role in developing marketing infrastructure, developing multi-use piped water systems, providing market information through radio broadcast, providing basic extension services, adaptive research, providing resources to assist the poorest to adopt micro irrigation, and creating an enabling policy environment. SIMI has facilitated a wide range of partnership types include GO-NGO partnership, GO-Private Sector, and GO-NGO-Private Sector. Examples of GO-Private partnership facilitated by SIMI include the provision of marketing infrastructure that is utilized and managed by the private sector in partnership with the government. Overall, SIMI public-private partnership activities are facilitated by a government advisory body and by participating in the district and local level agriculture development committee meetings and close coordination with government line agencies-Development Boards. Development boards can be conceived as an institutional mechanism for fostering public-private partnership.


Public-private partnership is an arduous task requiring collective effort from its partners. Partnership arrangements are based on medium to long term contracts between the public sector contracting authority and the private sector provider for the delivery of specified public services. Partnership emphasizes enhancing efficiency, effectiveness to provide better services to the public. The evidences show that the carefully structured partnership with mutually reinforcing goals can bring better outputs to the economic development of the country. Partnerships with public, private and NGOs is an essential fact of agricultural development as the public sector can facilitate its partners with legal provision and resources, and the private sector can use its resources as well as managerial skills and the NGOs can mobilize its participatory approach up to the grassroots level which can help boost the economy of a country. PPPs seem to have mixed success in the Nepalese context despite the presence of various environmental as well as structural constraints. Moreover, it is imperative to address legislation and policy, labor and communication, infrastructure investment issues to create conducive environment for the success of PPPs.