This sort of renegotiation creates a risk of breaking the initial commitment, changing rewards and risk allocation. Though theoretical economists would say that “in the long-term” renegotiation of incomplete contracts is unavoidable, PPP practitioners should do their best in order to avoid the need for renegotiation, while simultaneously preparing for renegotiation when it is the best solution in terms of public interest.
- public investment
- public investment management
- service delivery
- contract management
- handshake magazine
- partenariats public-privé
- public-private dialogue
- public-private partnership
- public-private partnerships
- Public Sector and Governance
- Private Sector Development
Last month I met with ministers and local officials in Addis Ababa to explore areas where we, at the World Bank, can help build institutional capability in Ethiopia. The trip was an enriching experience, both personally and professionally. It was gratifying to see first-hand the good work and commitment to development exhibited by our staff in the country.
We have had a decade-long engagement with Ethiopia with a successful track-record. and the partnership is strong, with a robust future.
During my visit, I gave a lecture at Addis Ababa University on Public Investment Management before an audience of faculty, students, civil society organizations and donors. I shared with them how much public infrastructure investment has done for the country. and three times the average for Sub Saharan Africa.
This effort has contributed to growth that has averaged 10.9 percent since 2004—a figure higher than that of their neighbors or low-income countries on average. Infrastructure investment has also been helpful in expanding access to services and in gaining competitiveness, being a large landlocked country.
Recently I was invited to speak at Public Investment Management (PIM): Best Practices Workshop hosted in Amman, Jordan by the World Bank Group’s regional Governance team, led by Emmanuel Cuvillier. My job there was to show the linkages between public investment planning (PIP) and PPPs. As I prepped for my speaking engagement, I realized how little progress we, the global PPP community, have made in developing an integrated approach for undertaking investment projects.
One obvious reason for this is that PIMs are not fully integrated in the planning functions by most governments. And PPP projects that follow privatization programs have adopted many of the habits of the privatization programs — for example, only work on a list of selected entities, and establish an ad-hoc commission/committee tasked to undertake evaluation and tendering — with the ultimate aim of obtaining private investment.
But there’s an important difference in the case of PPPs. We are not selling assets, we are creating assets. The project does not end when the public and private parties sign the contract, as is the case in privatization; in fact; the project begins at that point, and has to be monitored over many years for performance and delivery. Typically, the project reverts back to the public sector at the end of the PPP agreement term. And finally, unlike the case with privatization, the public sector almost always commits to various kinds of fiscal commitments (real or contingent) in PPPs.
The Aid Transparency Initiatives and the focus on the use of country systems, emphasized in the Paris Declaration, encourage donors to publish what they fund and to use existing country public financial management systems. However, this focus on the how of development assistance somewhat distracts from the what. The bigger question really is why donors and governments focus on those particular areas and why those donors are the right partners to begin with.
With preparations for the G8 Summit in June in full swing, British Prime Minister David Cameron has made clear that transparency will be a key theme and within that a focus on transparency not just in the extractives sector but around land more broadly. This is in large part a response to concerns around the proliferation of large scale land acquisitions – the “land grab” phenomenon. Certainly that topic dominated discussion at the World Bank’s annual Land and Poverty conference this month.