Photo: Highways England | Flickr Creative Commons
When PPP investors are asked what they look for in a project, they would typically reply they like projects that are bankable, where risks are fairly allocated between the government and the sponsor. When one probes deeper though as to where they normally invest, you might elicit this response: in a market where there is deep commitment by the government to undertake an effective PPP program. This is a very telling answer sometimes lost to governments that want to pursue ambitious PPP programs. Bankability for a developing country involves more than de-risking projects. More importantly, it entails de-risking the country and its PPP program.
Public private partnership
Cross-sector collaboration is more important than ever – and needs to be done in a better way. Governments now face a $2.5 trillion funding gap to meet the Sustainable Development Goals, and will need $90 trillion in public private investment to slow the dangerous effects of climate change, according to a UN report.
The potential for partnerships to solve problems faced by the public sector dominates the news: in the United States, the new government has announced plans to prop up a $1 trillion infrastructure plan with public private partnership (PPP) financing. In the wake of the Grenfell Tower fire tragedy, questions have arisen over the UK’s current method of outsourcing.
With ever-shrinking government budgets, the need for collaboration across all sectors – not just infrastructure, but environment, education, migration and many others – is more pressing than ever. Now is the time for government to get it right.
The APMG PPP Certification Program enables participants to take their skills to the next level, and the Certified PPP Professional (CP3P) credential is a means to officially convey that expertise and ability.
At the core of the program is the PPP Guide, a comprehensive Body of Knowledge that distills globally agreed-upon definitions, concepts, and best practices on PPPs. The program is an innovation of the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the Inter-American Development Bank (IDB), the Islamic Development Bank (IsDB), the Multilateral Investment Fund (MIF), and the World Bank Group (WBG), with financial support from the Public-Private Infrastructure Advisory Facility (PPIAF).
Whether you’re thinking about signing up, or already enrolled, in this series we share some insight from practitioners who have already passed the test. This week, we caught up with Kaara Wainaina, an external affairs officer in Kenya’s PPP Unit. Read his answers below.
Photo: Giuseppe Milo | Flickr Creative Commons
This year’s Infrastructure Week held in May came as public support for infrastructure investment is at an all-time high. According to a recent Gallup poll, three out of four Americans support increasing investment in the U.S. transportation and energy systems. And with the majority of infrastructure projects in the U.S. already funded by the private sector, all the pieces are in place for large-scale investments.
“Proceeding from the Islamic Development Bank’s interest, as well as my personal concerns about what benefits the Member Countries, where the subject of partnerships between the public and private sectors (PPPs) has become a major hub in fostering development in several sectors in many countries, I have initiated a forum to address the most significant issues and topics related to the importance of partnerships between the public and private sectors, in addition to the optimal means to activate them and benefit from their acclaimed development role."
– Dr. Bandar Mohammed Al-Hajjar, President, Islamic Development Bank
The first Islamic Development Bank (IsDB) Public-Private Partnership (PPP) Forum took place in Riyadh, Saudi Arabia in March 2017, which I attended as a guest moderator and panelist. The IsDB organized the Forum to support its communication with its member countries by initiating a debate that would introduce forum participants to opportunities and challenges that PPPs present in various countries and various sectors.
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:
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 10 questions that tell their career story candidly and without jargon. We hope you will be surprised and inspired.
We’ve just released the 2016 update for the World Bank’s Private Participation in Infrastructure (PPI) Database and it makes for some gloomy reading. Investment commitments (investments) in infrastructure with private participation in Emerging Markets and Developing Economies (EMDEs) fell by a whopping 37% compared to 2015.
Photo: Japanexperterna | Flickr Creative Commons
The world is crying out for new infrastructure. In emerging market countries, growing populations and rapid urbanization mean that cities are struggling to keep pace with the needs of citizens. Meanwhile, infrastructure is outdated in many developed countries.
Yet there is a $1 trillion annual shortfall in infrastructure investment, mostly in emerging markets. At the same time, there are billions of dollars in debt capital seeking secure and healthy returns.
Given the long-term, stable cash flows of many infrastructure projects, it seems the perfect destination for such capital. But in large part, this investment is not taking place. What will it take to increase the supply of well-structured projects?
Photo: Munish Chandel | Flickr Creative Commons
This is the final blog in a three-part series on traffic risk in PPPs
As explained in the previous two blogs – Traffic Risk in Highway PPPs, Part I: Traffic Forecasting and Traffic Risk in PPPs, Part II: Bias in Traffic Forecasts – traffic risk is inevitable, given our imperfect ability to predict traffic and revenue a long way (often several decades) into the future. And what makes it harder is that there are often biases at play in the typical project environment, which can cause a skewness towards over-estimation rather under-estimation of traffic flows. This, of course, can then result in financial losses and distress for the project, as manifested in a number of high profile bankruptcies, renegotiations and bailouts in the toll road sector.
In the new PPIAF and GIF publication, Toll Road PPPs: Identifying, Mitigating and Managing Traffic Risk, we outline various ways in which governments, bidders and financiers can take important steps to reduce the amount of traffic risk in projects. But we also acknowledge that the use of, for example, industry-standard forecasting techniques, better due diligence and a more stable policy environment will only go so far in reducing traffic risk. The reality is that there will always be some risk in any project, regardless of the best endeavors taken by the project parties. So, the key question is, what should we do with traffic risk and who should be responsible for bearing that risk?