Photo: Dominic Chavez / International Finance Corporation
In the early 1990s, Colombia’s road infrastructure was a maze of poorly maintained roads and bad highways. Difficult geography—the Pacific coast jungle and the Andes branching out into three chains—made it harder to improve road conditions and connect isolated communities. Conflict, corruption, and short-term political priorities contributed to the problems plaguing Colombia’s road system. But just as influential were the problems with the nation’s existing concession contracts that had wrong incentives, created opportunities for renegotiating signed contracts, and assigned unproportioned demand risk to the Government of Colombia.
Photo: auphoto / Shutterstock.com
As Washington, D.C.’s infrastructure braces for its first winter freeze and 2017 draws to a close, this feels like the right moment for a recap on what the year has brought us in terms of closing the infrastructure gap across emerging markets and developing economies; policy directions within and outside of the World Bank Group; new instruments, tools, and resources; and—the proof in the pudding—actual investment levels.
There may not be one blog that can capture all of those themes in detail, but here is a brief overview of what 2017 has meant and what is on the docket for 2018 and beyond.
Welcome to the “10 Candid Career Questions” series, introducing you to the infrastructure and PPP professionals who do the deals, analyze the data, and strategize on the next big thing. Each of them followed a different path into infra and/or PPP practice, and this series offers an inside look at their backgrounds, motivations, and choices. Each blogger receives the same 15 questions and answers 10 or more that tell their career story candidly and without jargon. We believe you’ll be as surprised and inspired as we were. For examples of other entries on the IPG blog, click here.
Photo: Diana Susselman | Flickr Creative Commons
I worked with the International Finance Corporation (IFC) for exactly 20 years, all of which was in advisory work. I spent five years in Barbados, five in Washington, five in Zimbabwe and five in South Africa: perfect symmetry. On my 20th anniversary, I took a package and returned home, to the beautiful Caribbean. IFC was a great place to work, where we were challenged every day to come up with innovative solutions to seemingly intractable problems. Some of our deals were truly groundbreaking and lived up to IFC’s motto to improve people’s lives. That’s the kind of job satisfaction that money can’t buy.
After 76 countries, millions of air miles, and some pretty forgettable airport hotels, sometimes I look back and think: what was it all about?
Photo: LWYang | Flickr Creative Commons
Since the 1980s, investment in Brazil’s infrastructure has declined from 5% to a little above 2% of the country’s Gross Domestic Product (GDP), scarcely enough to cover depreciation and far below that of most middle-income countries (see figure below). The result is a substantial infrastructure gap. Over the same period, Brazil has struggled with stagnant productivity growth. The poor status of infrastructure is broadly believed to be a key reason for Brazil’s growth malaise.
Welcome to the “10 Candid Career Questions” series, introducing you to the infrastructure and PPP professionals who do the deals, analyze the data, and strategize on the next big thing. Each of them followed a different path into infra and/or PPP practice, and this series offers an inside look at their backgrounds, motivations, and choices. Each blogger receives the same 15 questions and answers 10 or more that tell their career story candidly and without jargon. We believe you’ll be as surprised and inspired as we were.
Photo: totojang1977 / Shutterstock.com
In my last blog, I compared Public-Private Partnerships (PPPs) with marriage. I had explained that, though very different, the public and private can come together as they each possess characteristics beneficial to the other. Great in theory, but often difficult in practice.
Critics of PPPs abound and listing them here would be impractical. But whether they are auditors, civil society or within the World Bank Group, critics help us improve. We try to respond to our critics, including through blogs such as this one.
Public-Private Partnerships (PPPs) require the coordination of an impressive number of stakeholders to mobilize the commercial financing needed to achieve sustainable, inclusive growth in challenging environments. A great deal of analysis, negotiation, and hard work goes into every project. And each one presents an opportunity to encourage investors to venture into countries and compete for projects they wouldn’t have considered before and, ultimately, to create new markets.
While the commercial and legal challenges involved in structuring PPPs are well known, the efforts that go into conducting rigorous technical due diligence are less well known. For example, projects that aim to provide utility scale solar PV on short order, like the World Bank Group’s Scaling Solar program, require a team of experienced engineers from IFC’s Energy and Water Advisory working hand in hand with our PPP transaction advisors, legal experts, and environmental and social specialists to make them a reality.
There is a famous saying that a successful person can lay a firm foundation with the bricks others have thrown at him.
In real life however, the art of building a firm foundation is not always that simple. Waiting for others to simply throw bricks at you is not enough when the grand task is transforming infrastructure into an asset class. There is a need for a skillful bricklayer—and this is the role we see for the multilateral development banks (MDBs).
To meet this challenge, our two institutions – the International Finance Corporation (IFC) and the Asian Infrastructure Investment Bank (AIIB) – co-hosted a session moderated by AIIB’s Vice President Joachim von Amsberg at the recently-held 2017 Global Infrastructure Forum. The objective was precisely to discuss how to construct and promote infrastructure as a tradable asset class.
Editor's Note: Join us April 22nd at 10AM ET for the 2017 Global Infrastructure Forum when the Multilateral Development Banks (MDBs), the United Nations, the G-20, and development partners from around the world meet to discuss opportunities to harness public and private resources to improve infrastructure worldwide, and to ensure that investments are environmentally, social and economically sustainable. Check out the event site to view the livestream on April 22.
Imagine the difficulty of designing, financing, building and operating a €360 million, 1,000-bed hospital campus that serves a region of 1.6 million people? This is exactly what the government of Turkey is doing in Elaziğ, a city of 350,000 in eastern Anatolia. The facility will serve and accommodate about 20,000 patients and their relatives per day with a broad range of services including women and children’s health, psychiatric services, and a dental clinic.
A project of this size is bound to be challenging and complex. But the approach taken by the Turkish Government has been a success—to involve a private-sector partner through a public-private partnership (PPP) with support from multilateral development banks. How did they do it?