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.
Photo Credit: Xing Yihang | CRIENGLISH.com
Kenya recently launched its high-capacity, high-speed standard gauge railway (SGR) for passenger and freight transportation, which currently runs from the coastal city of Mombasa to the capital city, Nairobi. The SGR replaces the meter gauge railway passenger line that was constructed during the British colonial period that was commonly referred to as the lunatic express.
The Kenyan SGR is part of a proposed wider regional network for the development of railway connecting Kenya, Uganda, Rwanda and South Sudan. Each of these countries is expected to develop the part of the railway line falling within its borders. Kenya is ahead of the pack, being the first country in the region to operationalize the SGR.
from the British colonialists in 1963. From a public-private partnership (PPP) perspective, the SGR is a unique project for various reasons:
Photo: Roberto Maldeno | Flickr Creative Commons
Infrastructure in Ukraine, Europe’s largest country, is extremely underdeveloped. Without significant investment, it cannot support the existing or future needs of our economy or population. The reasons are many: decades of mismanagement under Soviet rule, economic crisis, and more recently, the conflict in the Donbass. Given that these constraints go beyond a simple lack of funding, our government is partnering with the Global Infrastructure Facility (GIF), as well as other international partners such as the European Bank for Reconstruction and Development (EBRD) and the World Bank.
The largest Public-Private Partnership deal in Central America was recently highlighted at one of the world’s most prestigious universities during the Massachusetts Institute of Technology’s (MIT) 9th Annual Sustainability Summit. Under this year’s theme, Funding the Future, the event brought together more than 300 participants from students, startup CEOs, academia, think tanks and financial investors.
Photo credit: joyfull/Shutterstock.com
When the Manila Light Rail Transit (LRT) extension project reached financial close in March 2016 it was a landmark event for the Philippines and for Southeast Asia. It is an achievement for an enormous project worth some US$1.1 billion to go ahead in a region with not much of a track record of large-scale transport Public-Private Partnerships (PPPs). The project’s winning formula is a combination of at-times difficult ingredients: government responsiveness, a balanced risk profile, and project bankability.
Photo Credit: Flickr user highwaysagency
Infrastructure often makes headlines – and the sentiment is not always positive. Major projects must navigate a minefield of potential problems. One that is frequently overlooked is how the local community will react to the physical and environmental disruption that comes with major construction projects.
Achieving consensus and winning the ‘hearts and minds’ of stakeholders and affected communities for the construction of major infrastructure schemes can be challenging, but it is essential to deliver a successful project that benefits everyone in the community.
Gary Sargent, an engagement director from CJ Associates, is involved in a two-year consultation program for a major highway scheme in the United Kingdom and helped the authority design an integrated stakeholder engagement, communications and consultation strategy.
Here is Sargent’s advice:
Public-private partnership (PPP) practitioners are sometimes guilty of thinking that signing the deal is the end of the story. You can’t blame them, really. Making a PPP work is a long-term process with a lot of players involved, each with his or her own priorities. Detailed technical, economic, and environmental and social reviews must be conducted to make sure the project is feasible and bankable. Often, sector reforms are required. Stakeholders – including the public – must be kept fully informed. The competitive bid, critical to any PPP, must be fully transparent so nobody will doubt the legitimacy of the outcome. It’s a long, hard slog to the end, and I can’t blame PPP practitioners from wearily planting the flag, declaring victory, and moving on.
But the signing is not the end; it is the beginning. And you can’t really declare success until the PPP is delivering real results for people. Sometimes, a follow-up PPP adds a new phase to a project, and sometimes new players are brought in. In any case, it’s worth going back and examining the results of PPP projects to see what happened and extract valuable lessons.
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.