Photo by Adam Gregor/ Shutterstock.com
The theme of this year’s Global Infrastructure Forum was delivering sustainable and inclusive infrastructure. As a woman who works in the world of infrastructure, I was invited to join a panel at the forum made up solely of women to address gender inclusivity and was asked to provide a specific example of a project beneficial to women. The first thing that came to mind was our solar project in Senegal, which has not only opened up the country to solar for the first time, but has also empowered local women through training in business skills through an organization called Empow’Her that was linked to the project.
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.
Last Saturday, tens of thousands of people gathered on the Washington D.C. mall for the March for Science alongside hundreds of sister marches around the world to coincide with Earth Day. Climate change and environmental protection were high on the agenda as the planet continues to warm and countries confront an increasing number of extreme weather events.
Meanwhile, down the road at the Inter-American Development Bank (IDB), the 2017 Global Infrastructure Forum was in full swing, discussing how to deliver inclusive and sustainable infrastructure to ensure we achieve the objectives of the Paris Agreement and the Sustainable Development Goals (SDGs).
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
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.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us— in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”
- Charles Dickens, A Tale of Two Cities
I recently took part in #skipthegrid, a social media forum about renewables, which has led me to ask: “Is off-grid the way of the future for energy Public-Private Partnerships (PPPs) in lower-income countries?”
At the Private Infrastructure Development Group (PIDG) we are supporting smaller, off-grid projects in the lowest income countries in Sub-Saharan Africa and South and Southeast Asia by mobilizing private investment for the provision of power to commercial off-grid properties and the construction of mini-grids.
Photo Credit: J Endres via Flickr Creative Commons
I’ve spent the last 18 years in Sub-Saharan Africa working with governments on making public-private partnerships (PPPs) work for their countries. My interest is not just professional. My wife is Cameroonian and we live with our children in Senegal. I love this region! So I have a deeply personal connection that drives me, and it is important that my work has a positive impact. But the countries I work in are typically very difficult for businesses and investors to operate in and tend to have regulatory systems and investment climates that dissuade private sector investment, which is critical for PPPs to succeed. So, even though it is personally rewarding, this is not an easy job.
Of the 56 poorest countries, over half had no private investment in infrastructure in the past five years. And in 2015, only 14 energy, transport and water projects involving private investment were concluded in that whole group of 56 countries—with all of them occurring in just eight of the countries. In the past five years, only one country – Bangladesh – has seen private investment in infrastructure each year. Given that well-structured private infrastructure projects can bring a useful infusion of management (and sometimes money) to help provide better quality and access to infrastructure services, this seems like a missed opportunity. Here are five suggestions for actions that governments can take immediately to improve their chances of attracting good quality private management and financing for some infrastructure services.
One night, not too long ago, I was sitting at a bar with a friend of mine. He complained he had just finished a contentious two-week night and day negotiation of a power purchase agreement for a power public-private partnership (PPP). So, as a sensitive and caring friend, I said, “Quit your whining! Power generation PPPs must be the easiest PPP around. You’ve got a tried and tested kit, clear demand, a commercially and socially valued product, a sophisticated sector with strong sponsors and keen financiers, an accepted standard model for PPPs, not too much land. As long as you can get fuel and connect to the grid, all is OK. In fact, the offtaker often takes fuel and grid risk. Easy, right?”