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Partnership Agreement

PMSD Toolkit

In a nutshell: A partnership agreement is a formal way to set expectations between a project and a market actor. They vary depending on the intervention, the level of resourcing, and the type and size of market actor in question. This tool includes a few alternative structures and templates to consider.

Status: Core

Key principles: To develop partnerships that lead to systems change in markets, it is important to structure those partnerships in ways that value systems thinking. This means creating the space for adapting the terms of agreements, and avoiding fixed targets and deliverables over a long term that may end up skewing incentives for partners. Partnerships should embody the principle of participation – whereby market actors are engaged based on their own interests, not because a project wants them to do something.

Preconditions and preparation: This template/tool is most useful after a project has established its overall market system analysis and vision, and has had several interactions with prospective market actors as partners. Ideally, these prospective partners will be engaged based on principles of self-selection – i.e. based on their incentive to improve, rather than just to access resources.

In parallel, project teams need to engage and build relationships with procurement, grants and/or finance colleagues to understand the PMSD approach and the reasons behind wanting a flexible and adaptive partnership agreement. Ideally, these colleagues can be invited into PMSD trainings and orientations so they understand the approach and feel included in the strategy.

Timeline and resources: The actual development and revision of partnership agreement should only take a few weeks, but this may be expanded greatly depending on the number of approvals – both from internal managers and from the donor. This can vary greatly by context, but you should expect there to be delays regardless. One way to decrease delays is to have a couple of experts – a technical PMSD expert and an operational/finance expert – who understands the rules for grants and procurement, and can help navigate the sign-offs and approvals.


The ultimate output of this ‘tool’ is a signed agreement. The structuring of this agreement can be carried out in a number of ways. Below are a few main examples:

Adaptive Market Actor Agreements (AMAA): a non-binding umbrella agreement that captures collaborative activities between project and market actors

An AMAA should detail the following information:

  • Background/justification for AMAA;
  • Overarching objective/purpose – the wider systemic change goal;
  • Period of performance (ideally short – 6-12 months);
  • Overarching strategy – set of main business behaviour changes (e.g. build a robust supply chain; establish an effective distribution channel) along with specific targeted actions for each;
  • Mode of work – describing how the project will support/engage, and the use of business metrics (not project metrics) for tracking progress;
  • Roles and responsibilities (use table format for clarity here);
  • Key deliverables;
  • The adaptive process – note specific dates for internal project review meetings; and
  • Module Review: “the project and the Market Actor together will decide whether to proceed with additional modules based on the experience of the first modules, including the responsiveness of the partner with regards to communications, management, financial matters and technical outcomes”.

Partnership justification: a preliminary and internal document

A partnership justification should consider, and detail, the following points:

  • Proposed partner’s core business;
  • Which market systems changes the partner could contribute to;
  • Evidence of will/motivation to pilot new ways of doing business;
  • Evidence of skill/capacity;
  • Reasons for partner suitability relative to others;
  • Preliminary ideas on possible activities;
  • Risks; and
  • Preliminary budget estimates.

“Fully loaded” partnership agreement

A more detailed document, the “fully loaded” partnership agreement should detail the following:

  • Standard Terms and conditions as per formal contract;
  • Commercial partnership strategy: background, commercial business plan, implementation strategy for partnership, monitoring plan;
  • Partnership budget; and
  • Payment plan and schedule of deliverables.

“Light” agreement: for small, semi-formal businesses with limited capacity

A “light” agreement should detail:

  • Short background and rationale on partnership; and
  • Table of activities, timings and costs for both parties.

Outcomes/behaviour changes

These should be specified in the partnership agreement itself – having behaviour changes clearly articulated (and incentivised/rewarded) is crucial to designing effective partnership agreements.