Photo: Courtesy of Safe Water Network
World Water Day is always a good time to take stock of where we are in achieving the water-related Sustainable Development Goals (SDGs). Most PPPs relate to relatively large investments in major infrastructure run by utilities. But in the developing world’s rapidly growing small towns and urban peripheries, we need something else.
Enter safe (also called small) water enterprises, an exciting group of dedicated social entrepreneurs who are beginning to gain traction providing high quality water to communities not served by utilities. For example, our friends at Safe Water Network recently announced they are now serving more than a million people in India and Ghana (more about that in this blog.) A 2017 report by Dalberg suggested a potential market of 3.9 billion people for safe water enterprises.
“If you want something new, you have to stop doing something old,”—good advice from innovation and management guru Peter F. Drucker. This approach was key to a PPP we coordinated in one of the world’s oldest areas, the West Bank.
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Gaza is one of the most fragile places in the world. Its 2 million people have lived under a blockade since 2007. Crammed within an area of only 365 square kilometers—about the size of Philadelphia—its mostly young and educated population has few economic opportunities, with unemployment topping 50 percent. As GDP per capita falls, more than half of its people have sunk below the poverty line, with few opportunities for prosperity. Only donor support is keeping the economy afloat.
In addition to that, Gaza is constrained by limited access to power—with only four hours per day of electricity. That creates a huge burden to ordinary people, who are forced to plan around the power schedule. But the lack of power is also crushing the life out of the manufacturing sector, which previously served as a major source of employment in Gaza. So, can we in the international development community do something to address this problem?
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Regional trade in electricity and other energy products can be a powerful force for market integration and sustainable development. In the Arab world, there are great potential benefits from increasing electricity trade beyond its current, very low level. The potential shared value of trade in electricity in 2020–2030 is estimated at $12 billion. We can expect even greater savings, about $44 billion, from more optimal power systems operation, with a major role for gas as the main fuel for power generation, displacing expensive liquid fuels.
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This is one in a series of blogs by Jeff Delmon using the metaphor of marriage (or divorce) to explore the dynamics of public-private partnerships (PPPs) as relationships created between two parties.
“If all parties understood the other’s vantage point,” says the recently CP3P certified Francis Chukwu, “more deals would happen—facilitating more investment, and more successfully executed projects.”
Francis Chukwu had a distinguished career as an international project finance lawyer in Lagos, Nigeria, (with Aluko & Oyebode) and then in Paris, France, (with Clifford Chance) advising mostly equity investors and lenders before joining the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) in 2016. He was offered the chance to become CP3P certified through the APMG PPP Certification Program, and when he took the first Foundation-level exam he thought he could just go in and pass. Not so.
While the World Bank’s resources for low-income countries have never been greater, they still pale in comparison with these countries’ needs. Governments always need to make hard choices between infrastructure needs, social programs, and fiscal discipline. One country was recently able to strike the right balance with the support of World Bank guarantees: Benin.
In 2018, I participated in public-private partnership (PPP) initiatives across the globe: in Albania, Switzerland, Turkey, Saudi Arabia, the United Arab Emirates, Sri Lanka, and the United States. I also engaged with PPP thought leaders from the public and private sectors about trends they saw evolving that would impact the practice of PPPs in the next year or two.
A strange irony persists in today’s infrastructure investment market: private capital waiting to be deployed into the sector is at an all-time high, yet investors seem reluctant to commit. Even in developed countries, few investors are willing to partake in transactions with merchant or construction risks without taking a higher risk premium.
This can make the financing of infrastructure projects more costly—a challenge particularly acute in emerging markets where further investment risks abound.