12/07/2015 05:52 pm ET Updated Dec 06, 2017

This Public-Private Partnership Serves Chicken Soup

By David Bloomgarden and Guillermo Villacorta

David Bloomgarden is the Acting Chief of the Access to Basic Services and Green Growth Unit and the Topic Lead of the Public-Private Partnerships program. Before, David was Deputy Director of the Office of Multilateral Development Banks in the U.S. Treasury Department's International Office.

When you think of public-private partnership (PPP) projects, you imagine a large airport project or a new highway. But in the case of a micro PPP in Santiago Nonualco, El Salvador, you could take a walk and buy some Indian chicken soup or warm chocolate or pupusas from friendly vendors in a clean, safe and historic market. We're referring to the Anastasio Aquino central market in the small farming community of Santiago Nonualco in central El Salvador, which is administered jointly by the microentrepreneurs who sell there and the town government.

The only other micro PPP in Latin America--and the inspiration of the Santiago Nonualco market--is one that has managed two central markets in the town of Siguatepeque, Honduras, for the last 15 years.

The initial challenges

Just because the project is micro doesn't mean the process of creating the PPP was easy. First, neither the mayor nor the co-operative of market vendors knew what was involved in creating a partnership. They were not convinced that the partnership was viable nor in the best interest of everyone involved. Also, the co-operative of entrepreneurs needed to strengthen itself to prepare to co-administer the market. Finally, there was doubt about the rights and responsibilities involved in the new concept of a micro partnership, and what's more, there was uncertainty about the legal form for the PPP. These questions were valid, considering the traditional issues evoked by a central market, which is a microcosm of the economic and social reality of a city: crime, social unrest, occupation of public roads, political interests, economic vulnerability, and other problems.


A giant leap forward

It took four years, but in the end, the town government and the co-operative overcame the challenges. With help from the Multilateral Investment Fund, the co-operative vendors and the mayor of Santiago Nonualco established a micro PPP to manage the market. The results are macro for all those involved: the vendors, customers, and town government. These are small steps for a country, but a giant leap for the development of the people of this town, who managed to empower, modernize, and strengthen themselves.

Blanca Alfaro, who has been a vendor in the market for many years, told us, "We will improve the health of our businesses, which is the most important thing."

Her neighbor, Mirna Lopez, said that she would give her clients better service, so they would have a good experience in the market.

Meanwhile, the directors of the new joint venture agree that together, they want to make the market safe, clean, modern, and--above all--competitive. Other municipalities in El Salvador are watching. Who will be the next to create a micro PPP? Zacatecoluca, San Salvador, Suchitoto? We'll tell in our next blog.

Guillermo Villacorta

Guillermo Villacorta works for the Multilateral Investment Fund in El Salvador, where he manages a portfolio of about 20 projects supporting micro, small and medium-sized enterprises and low-income people. He has an MBA from Georgetown University.

From the Multilateral Investment Fund Trends blog