Bridging a gap.

How to bridge the gap between government and private sector

17 January 2023

The article at a glance

A new Brokering Trust to Accelerate Innovation framework developed at Cambridge Judge Business School helps launch development projects through an honest broker.

A new Brokering Trust to Accelerate Innovation framework developed at Cambridge Judge Business School helps launch development projects through an honest broker.

A new Brokering Trust to Accelerate Innovation framework, developed at Cambridge Judge Business School to promote projects in low- and middle-income countries, has been piloted in Peru and Ethiopia in initiatives that include digital education, hospital efficiency and vehicle solutions for rural farmers.

The framework, which provides a neutral third-party broker to encourage private sector involvement in development projects, was developed by Professor of Marketing Jaideep Prabhu and Carlos Montes, a Visiting Fellow of Cambridge Judge, in conjunction with the Centre for India and Global Business at Cambridge Judge that Jaideep directs.

How an honest neutral broker can ensure better outcomes

Digital innovation is the key to bringing prosperity to lower and middle income countries, and governments have introduced regulation to incentivise the private sector. Yet a private sector response may not be forthcoming for several reasons including commercial uncertainty about the market size, an under-developed technology ecosystem, and continuing regulatory concerns.

Thus, the new Brokering Trust model introduces “the presence of a credible and neutral institution which acts as an honest broker between Governments and the private sector and brings global experience can help to ensure better outcomes”.

Pilots in Ethiopia and Peru to demonstrate new framework

The first pilots, which are designed to demonstrate the new model’s viability, are:

  • A programme in the Cajamarca region in Peru backed by the regional Government that will provide digital education for 150,000 school children and their parents (funded by the National Association of Banks) and support to improve the efficiency of the Cajamarca Hospital (funded by Delivery Associates of Sir Michael Barber).
  • A programme in Ethiopia, funded by the Bill & Melinda Gates Foundation, bringing together 8 innovative companies and the Prime Minister’s Digital Adviser to support the implementation of the country’s Digital Strategy 2025. One of the companies, Hello Tractor, brings the “Uberisation” of tractors to Ethiopian farmers who cannot afford to buy their own vehicles, thus increasing mechanisation and incomes of small rural farmers. Other companies include M-PESA, Precision Development, Africa 118 (implementing training programmes for Google), Amazon Web Services and Simprints.

Simprints, which provides biometric identification for the world’s poorest people, was founded by Toby Norman, a PhD graduate of Cambridge Judge who was a student of Jaideep Prabhu.

“This framework is designed to broker projects between government champions and innovative companies that seek high social impact,” says Jaideep. “Having a third-party broker could be the key to getting many projects off the ground given uncertainties and other issues facing both private companies and governments.”

Five key criteria to brokering arrangements

As outlined in the model, such arrangements require a suitable private sector partner that originates the project, usually selected through a sole-source selection process; a responsive government “champion” to promote the project; and a well-selected project using 5 criteria:

  1. Demonstrated effectiveness elsewhere to suggest success in a new context.
  2. Appropriate scale to demonstrate results, but still restricted in scope to a limited part of the economy or geographical area to allow learning from failures without jeopardising the larger approach.
  3. An incentive to learn by the private sector partner in order to scale the project elsewhere in that country.
  4. Built-in monitoring and evaluation of financial, development and social outcomes.
  5. Leveraging of digital infrastructure already existing or expected to be available in the next 3 to 6 months.

“This model undertakes a bottom-up, experimental, development-by-demonstration approach and as such the broker plays a crucial role in ensuring its success and replication,” says the document outlining the new framework.

The report with the first results of the initiative supporting the implementation of the Digital Ethiopia Strategy 2025 will be presented on 24 January in Addis Ababa, Ethiopia. The Prime Minister’s Digital Advisor and the companies involved will be present.

The framework and report

The framework, Brokering Trust to Accelerate Digital Innovation, is co-authored by Carlos Montes and Jaideep Prabhu.

The report, Accelerating Innovations: Digital Ethiopia 2025, was produced by Carlos Montes, Jaideep Prabhu and Filiberto Sebregondi.