PPPs are designed to achieve improved access to assets, infrastructure and services over a significant number of years. They should have clearly identified objectives, specified outcomes, clear programs of investment over time, and relationships and performance targets to bring to life the Social and Economic Value Equations that underpin them.
As stated in my previous blogs, the Social and Economic Value Equation is:
After a war or a disaster, we naturally think of the victims and survivors. But think, too, of those who have to put all the pieces back together again. Their task is immense, and the lives and well-being of thousands or millions depends on getting it right.
I saw such a process first-hand in Aceh, Indonesia, a region that suffered the unfortunate circumstances of being both a post-conflict and post-disaster region. A three-decade war had already taken 15,000 lives and left the province economically isolated when an earthquake and tsunami struck in December 2004. Entire communities were washed away. Infrastructure—roads, bridges, ports and more—lay in ruins. Schools, hospitals and government offices that remained were unable to function. Huge swaths of coastline, as well as the provincial capital, were covered in debris. Worst of all, over 200,000 were dead or missing, and survivors were left homeless and without food or water.
How do you begin to recover from such a catastrophe? Where do you even start?
Photo Credit: Eduardo Llanquileo via Flickr Creative Commons
The Public-Private Partnership (PPP) concept is actually not very complex. You take the best of the public sector and the best of the private sector, put them together and – voila! The sum of the parts is greater than the whole, 1+1=3, more efficiency, more investment, with public oversight and support. PPPs are not for dumping a problem on the private sector. The problem still belongs to the government, only with a new partner, the private sector, to help resolve it.
So, if the logic is so simple, why do many countries perform so poorly when implementing PPPs?
One of my favorite songs when I was growing up was John Lennon’s “Imagine.” A few months ago, UNICEF created a project around it to highlight the plight of millions of refugee children. As 2016 drew to a close, I couldn’t help but imagine a world with high-quality, affordable, sustainable, well-maintained infrastructure services for everyone.
I’m not sure a video of infrastructure projects set to “Imagine” would fire people up as much as the UNICEF video does. But there is value in reflecting on what we have accomplished in 2016, and what we might hope for and imagine in 2017, to bring this vision closer to reality for millions of people.
- Public Private Partnerships
- Public private partnership
- Labor and Social Protection
- Agriculture and Rural Development
- Climate Change
- Financial Sector
- Global Economy
- Information and Communication Technologies
- Law and Regulation
- Private Sector Development
- Public Sector and Governance
- Urban Development
- The World Region
Interest in Public-Private Partnerships (PPPs) is gaining momentum in Asia. Strong economic development and increasing urbanization have sharply increased demand for roads, bridges, and airports, as well as energy, water, and sanitation. As governments realize they do not have the financial resources necessary to meet these infrastructure needs, many have sought partnerships with the private sector for investment, technical expertise, and management skills. This, in turn, has made the Asia PPP Practitioners Network (APN) – a regional Asian forum for PPP practitioners – an important and relevant event for governments, corporations, and PPP experts. The most recent gathering took place in Seoul from November 30 to December 2, 2016.
The 2016 APN Conference brought together PPP practitioners from more than 12 countries in the Asia-Pacific region, including both jurisdictions with extensive PPP experience – such as the Philippines – and states that have only recently embarked on their PPP programs – such as Myanmar. The discussions were detailed and enriching, with participants actively sharing a wide variety of viewpoints and lessons learned.
Photo Credit: DEMOSH via Flickr Creative Commons
It turns out that airplane pilots and PPP practitioners now share a common training practice to sharpen their skills: simulation exercises.
Kenya is in the process of launching a number of PPPs, and conducting capacity building in the Ministry of Finance PPP unit and within the various implementing agencies is key to preparing professionals and designing and implementing successful PPP projects.
In September 2016, the Public-Private Infrastructure Advisory Facility (PPIAF) conducted two innovative events in Kenya to build the capacity of PPP players at the national and sector levels. The first was the PPP simulation game funded through the PPIAF knowledge proposals in partnership with the Dutch Government. This was the second in a series of the PPIAF-funded activities, following a similar simulation training carried out in Astana, Kazakhstan. The training focused on post-contract monitoring and was offered to the Kenyan PPP unit as well as implementing agencies that are close to launching their PPP projects.
Imagine you fall ill or have a serious accident. You survive, but to recover you need extensive medical care. The problem? You don’t have insurance and have to pay out of pocket. Your life savings are quickly drained away, as are your dreams. Your children lose hope for higher education; your well-researched business plan becomes a work of fiction.
Photo Credit: United Nations
Development of infrastructure services is often a central feature for rebuilding fragile and conflict affected states (FCSs). One of the reasons is that infrastructure is often devastated by conflict, making provision of water, power, communications and transportation priorities for recovery efforts. Another reason is that equitable distribution of services may be an important feature of a peace agreement and any appearance of unfairness could spark renewed unrest. Whatever the motivation, without proper planning for governance, the development can falter.
There are two governance challenges with infrastructure in FCSs. One is that the urgency to provide service sometimes overshadows developing systems that can easily transition from something quickly built to infrastructure with sound governance that grows and matures as the country progresses. Another challenge is establishing regulations that encourage investment by protecting property rights. And given the diversity of FCSs situations, there is no one-size-fits-all answer.
How can development professionals advance good infrastructure governance amongst the turbulence and urgency of infrastructure recovery in FCSs? PPIAF and the Public Utility Research Center (PURC) at the University of Florida recently launched a web portal to assist in this work.
Photo Credit: Pedro Ribeiro Simões via Flickr Creative Commons
Should PPPs in the European Union be included in government deficit and debt figures? A new publication provides guidance for PPP practitioners.
A public-private partnership (PPP) is usually viewed in the context of a single infrastructure or public service project. But PPPs are also part of a bigger economic picture, one that includes governments’ finances.
In the European Union (EU), member states are bound by rules that determine whether or not PPP investments may be excluded from government deficit and debt figures. The EU’s statistical office, Eurostat, applies and enforces these rules. In certain cases, the deficit and debt impact of applying the Eurostat rules has been a factor influencing EU governments’ decisions to procure projects as PPPs.
One of the prevailing notions about PPPs is that upfront costs are wholly paid for by the private sector, allowing the public to spread their costs (whether as users or through taxes) throughout the life of the project. However, this is a myth – governments, multilateral development banks (MDBs), and bilateral financing institutions all play strong roles in the various stages of financing PPPs. Just what kind of role, and how big, requires looking at the data.
Fortunately, now for the first time, it is possible to view the breakdown of financing sources for PPPs in low- and middle-income countries on the PPI Database. Accompanying the data is a recently released note that analyzes the sources of financing for 2015 PPP projects in these countries. The findings indicate that, in fact, financing for PPPs comes from a diverse mix of sources.
The Sources of Financing Note, available on the PPI Database website, breaks down the data on how upfront capital costs in PPPs in the dataset are financed globally, and by region and sector.