Public-private partnerships: lessons on tackling socio-economic challenges in Central America

When done right, public-private partnerships can overcome structural barriers in frontier and emerging economies and take on systemic challenges such as migration, climate change and supply chain disruptions. The Partnership for Central America (PCA) is a case study of one such effort with lessons for similar economic growth efforts globally.

Launched in 2021 with US Vice President Kamala Harris and private sector partners, including the World Economic Forum, PCA is working to promote investment and advance economic opportunities and environmental resilience in northern Central America in order to address the root causes of migration.

With a coalition of more than 100 leading private and public entities, PCA has mobilized $3.2 billion in investments with a 10-year goal to create one million jobs and economically enable 20 million individuals.

Our mission is grounded in a clear set of challenges. As much as 30% of the population of the region lives in extreme poverty, homicide and femicide rates are among the world’s highest and climate disasters have decimated as much as 80% of some of the region’s crops in recent years.

At the same time, the region also has clear trade, geographic and human capital advantages. It is 2-5 days shipping time from ports in the US compared to an average of nine days among peers; 50% of the labor force is below 39 years old; and existing free trade agreements create favorable trade conditions for business partners in the US, Europe and elsewhere.

In this context, PCA has shaped a set of public-private partnerships that cut across climate disaster risk, regenerative agriculture, gender parity, and digital and financial inclusion to support job creation and the enabling factors for long-term growth. While the full impact of these investments will be realized over time, we have already seen progress.

More than 450,000 individuals have been financially included by Mastercard, Davivienda, Visa and Bancolombia; over two million have been reached with new broadband access by Microsoft, Millicom and other critical partners; and we’ve seen new procurement and jobs from programs that include Nespresso sourcing their first coffee from Honduras through a new $150 million commitment to the region.

In just one illustration of the impact of these programs, Microsoft’s new programs have delivered internet access to children in a rural indigenous community of roughly 4,000 near Comayagua, Honduras, which connects families there to the global economy and creates immeasurable potential in their lives.

From this work, we have gleaned four best practices for operating public-private partnerships that can be replicated to improve the likelihood of success in similar frontier and emerging economies:

Shortly after launching the public-private partnership’s goals, PCA was established as an independent 501c3 non-profit organization to mobilize investments and coordinate partners to scale their impact. In structuring the entity, the Partnership leveraged best practices from project management offices by shaping an intentionally lean, outcome-oriented entity with an independent strategy and clear accountability standards for our programs and operations.

Our strategic plan was guided by a Board of Directors with extensive global business experience that brought rigorous principles to our work plan and programmatic mission. Similarly, PCA’s operating model was designed with agile principles to leverage the collective strength of our partners and avoid duplication. Our core management team operates as an aggregator and coordinator with cross-functional steering committees or “consortiums” composed of leads from our member organizations.

Through this model, PCA delivers five core functions in a secretariat model: partner and investment mobilization; convening and cross-sectoral program coordination; deal facilitation; communications and program amplification; and accountability and programmatic metrics tracking.

While PCA partners create jobs, support farmers, provide financial and digital access, and develop the workforce, PCA drives investments to the region and then coordinates programs to ensure their impact is targeted and scaled.

With more than 100 small, medium, and multinational partners across the US, Mexico, Colombia, El Salvador, Guatemala, Honduras, Brazil, Switzerland and Japan–alignment on shared values and mutual understanding is essential.

From day 1, PCA established a big tent approach to strategic planning with working groups that included a cross-section of partners to collaborate on program shaping and goal-setting. The working groups–representing business, indigenous and vulnerable populations, civil society, and public sector perspectives–meet on a monthly basis and include structured agendas and informal dialogue to ensure all voices are heard.

Beyond this, we also established formal agreements with institutional partners to ensure clear program alignment. PCA formalized a Memorandum of Understanding (MOU) with the US Government through the US Department of State and US Agency for International Development; we established formal relationships with the ministers of economy, development, and finance from Honduras, Guatemala, and El Salvador; and formalized partnerships with multilateral development banks, including the World Bank Group and the Inter-American Development Bank.

Through such a model, PCA is able to maintain its independent coordinating role while serving as a facilitator to mobilize investment and form new partnerships that support programmatic development and implementation in the region.

Essential to PCA’s model is the integration of a data-informed approach to programmatic development and implementation. Through our partners, PCA coordinates a set of AI and machine-learning platforms to support a commitment to accountability, transparency, and efficacy.

For example, PCA partnered with Diversio, an AI-informed platform, to use globally recognized standards for diversity, equity and inclusion objectives that measure supply chains through our partner organizations and assess targeted solutions to diversity gaps. We also established a formal relationship with the Harvard T.H. Chan School of Public Health as our primary academic partner. Through the partnership, Harvard developed a comprehensive customized data dashboard, which provides insight into the economic and demographic trends and challenges in northern Central America. This allows PCA and our partners to shape programs and target interventions with the highest likelihood to benefit the local population.

When women have access to economic opportunities in this region, they invest 90% of their income back into their families and communities. However, women in Central America participate in the labor force at far lower rates than men (44% vs. 78%) and suffer from some of the highest rates of violence against women and femicide in the world.

Acknowledging the unlimited potential that comes from empowering women in communities across the region, PCA launched In Her Hands, a women’s economic empowerment initiative aimed to bring a gender lens to investment in the region by connecting 5 million women and girls to the formal economy and training 500,000 in high-tech skills. Through investments in capacity-building and public-private partnerships, we are striving to create opportunities for women through investments in financial inclusion, digital access, technical skilling, and jobs.

As one tangible example, the Mastercard Center for Inclusive Growth is now working with Accion and Fundación Génesis Empresarial (Génesis) to bring financial inclusion to one million people across the region – targeting women as the primary beneficiaries. In all, PCA’s programs and practices have a single aim – to support a future in which families and communities in Guatemala, Honduras, and El Salvador live safely and have access to opportunities. Basic needs – jobs, education, digital and financial access, and infrastructure – are met, and individuals have hope for a better life in their own homeland.

The principles gleaned from this effort are not unique to this region or this organization. The challenges can be tackled and opportunities leveraged with a systemic approach that brings the public, private and social sector to the table.

The private sector has a central role in this partnership – generating employment, driving economic growth and driving innovation. However, the success of public-private partnerships in frontier and emerging markets depends on governments, companies and institutions working together around a focused set of practical solutions that combine investments with a coordinated socio-economic mission.