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.
While discussion about Maximizing Finance for Development (MFD) is ramping up with governments and the international development community to seek innovative approaches to mobilize more private sector investment in developing countries, there is a group of countries with an additional layer of complex challenges.
It brings me no pleasure to say this, but a fair number of countries have economic and financial conditions, business environments, and rule of law that are almost always weak. Clearly, these conditions significantly increase the risks of investing in infrastructure for the private sector; consequently, the markets for public-private partnerships (PPPs) tend to be less developed.
What do Bangladesh, Honduras, and Senegal have in common?
They all have per capita Gross Net Income below $1,165, allowing them to borrow from the World Bank’s International Development Association (IDA) that provides concessional financing to the world’s poorest countries. There are 72 other such IDA-eligible countries.
IDA countries face many complex challenges in the new global economy, including underdeveloped infrastructure, inadequate access to basic services, and a lack of affordable financing. IDA support simply is not enough to resolve the myriad of complexities in these countries, and governments need to seek alliances with the private sector—especially when it comes to building infrastructure sustainably.
Recent estimates place global annual non-revenue water (NRW), i.e. water produced but not billed because of commercial or physical losses, at 126 billion cubic meters. This translates to nearly $40 billion in annual losses on waste and foregone revenues—a sum, that even if a fraction could be recovered, would underpin a compelling market opportunity for private service companies and a boost to public water utilities’ sustainability.
A new joint initiative is aiming to drive declines in NRW faster, cheaper, and more sustainably by assisting water utilities to engage private companies in performance-based contracts (PBCs). The World Bank’s Public-Private Infrastructure Advisory Facility (PPIAF) and the Bank’s Water Global Practice, in partnership with the International Water Association, analyzed 43 projects and determined that NRW initiatives supported by PBCs are 68 percent more effective compared to those undertaken by utilities alone, (see for example, Using Performance Based Contracts to Reduce NRW) and are systematically faster at reducing the rate of loss.
The simple answer is yes—with a little help from the Infrastructure Prioritization Framework developed by the World Bank.
Experts can make decisions based on remarkably few pieces of information. Research by James Shanteau at Kansas State University has shown that expertise is reflected in the type of information used, not the amount of it. The Infrastructure Prioritization Framework, or IPF, attempts to capitalize on precisely these aspects of expertise and decision-making. This enables objective evaluations of infrastructure projects using minimal but relevant data in information-constrained environments.
Why is this important? But this does not mean the resulting decisions have to be poor. Critical to such situations is the ability to identify and select accurate and relevant information to achieve the desired objectives, something that requires experience, expertise, and judgment.
Photo: World Bank Group
By committing to the Sustainable Development Goals (SDGs), countries pledge to pursue progress on economic, social, and environmental targets, in a balanced and integrated manner. The SDGs are cross-cutting and ambitious, and require a shift in how we work in partnership. They also push us to significantly change the level of both public and private investment in all countries.
We need creative solutions to leverage each partner’s comparative advantage. We also need to mobilize private sector investment and innovation in support of the SDGs.
Photo: Bannafarsai_Stock | Shutterstock
A few years ago, I participated in a meeting to discuss best practices in Public-Private Partnership (PPP) regulation. There was no shortage of examples. In fact, PPP practitioners were eager to share their experiences from countries around the world, but we did not have a systematic way to make all that information accessible to policy makers. Moreover, at the time, I kept thinking that there were many more good examples beyond those we were sharing at the meeting.
The lack of systematic data on the quality of PPP regulation was a serious issue. What we needed was a comprehensive, systematic way to go beyond individual examples. How could we collect available information, organize it in a rigorous and systematic way, and make it all accessible to policy makers?
Photo: People Image Studio | Shutterstock
This World Water Day, the Private Infrastructure Development Group (PIDG) is celebrating the success of the Kigali Bulk Water Project in Rwanda’s capital.
The large-scale water treatment plant, due for completion in 2020, will produce 40 megaliters of clean water per day, equivalent to one-third of Kigali's total supply. Water will be drawn from the Nyabarongo River to be treated before distributing a clean supply to up to 500,000 domestic, commercial, and industrial customers. Kigali Water is one of the first water projects to be developed using a public-private partnership (PPP) model in sub-Saharan Africa.
A major factor hindering infrastructure implementation and delivery is the absence of good governance, according to the 130 delegates from 27 countries who came together for the first Regional Roundtable on Infrastructure Governance in Cape Town in November.
There’s no denying infrastructure is crucial to Africa’s growth prospects. Nor can one ignore the ever-growing need for infrastructure on the continent—in Sub-Saharan Africa, only 35% of the population has access to electricity, and 23% still lack access to safe water and sanitation. Despite an estimated shortfall of nearly $100 billion in infrastructure investment in Africa, lack of financing is not the biggest problem.
The landmark Roundtable brought together representatives from African governments, the global private sector, multilateral and international organizations, civil society organizations and other development partners, for a discussion on the challenges and practical solutions to the governance impeding successful infrastructure delivery in Africa.
Photo: VahanN / Shutterstock.com
Downtown Yerevan. Gusty winds, frosty air. Inside a hotel in the town square, cocktails and canapés, speeches and signatures. On this evening in November 2016, representatives of the State Committee for Water Economy (the Armenian water authority) and Veolia (a large international water operator) gathered to celebrate the signing of a new partnership: a 15-year national lease to provide water and wastewater services for the whole country. The lease began in January 2017, thus marking the start of a “second generation” of water PPPs in Armenia. Solid gains had already been made under the “first generation” between 2000 and 2016. At this crucial juncture, a World Bank study reviewed Armenia’s experience so far and analyzed the way forward under the new national lease.