Multi- and Bi-Lateral Agencies to Continue Supporting Public Private Partnership Development

by
Carreen Lawrence,
Regional Coordinator for Africa, IP3

About the Author...

Carreen Lawrence serves as both a Regional Coordinator to Africa and a resource person to the Water Practice for IP3. Her teaching and research focuses mostly on PPPs in water and environment sectors as they apply specifically to Africa.

Introduction

Public-private partnerships as a sustainable development tool enjoyed an important recognition "break out" year in 2002. Governments, consumers, and donor agencies alike are recognizing the vital role that public-private partnership models can play in promoting economic growth, improving public services such as health care, and alleviating poverty. At the 2002 World Summit on Sustainable Development in Johannesburg, the African Development Bank, USAID, and the Groupe Agence Francaise de Development, together with several other African banks, private industries, and development organizations, launched the SAPPID initiative (Sustainable African Public-Private Partnerships for Infrastructure Development). At an open forum Conference in Washington, DC in June 2002, U.S. Secretary of State Colin Powell called for more PPPs to fight the global battle against HIV/AIDS. Nearly all of the major donor institutions have recognized PPPs as key tools of economic development and social reform, and have altered their financing strategies to reflect this recognition. At the annual meeting in Addis Ababa in May 2002, the Private Sector Department of the African Development Bank organized a workshop on PPPs that provided a "forum for exchanging views and sharing experiences on modalities of promoting PPPs with a view to fostering economic development in Africa."

Recognizing this growing trend in leveraging PPPs for economic development, the United Nations Institute for Training and Research sponsored a workshop at UN headquarters in June for UN delegates to increase awareness of the benefit of public-private partnerships for sustainable development. This workshop benefited delegates to the UN and other senior policy makers whose countries will be negotiating, planning for, or currently involved in public-private partnerships.

Below, we outline some recent initiatives undertaken by a sampling of development agencies worldwide.

The World Bank

Rapid Response, an agency of the World Bank, is a knowledge database, which provides case studies, reports, and other valuable information on policy reform for emerging market countries. In the field of public-private partnerships, the wide range of toolkits for infrastructure and public services bares strong evidence to the World Bank's commitment to supporting public-private partnerships. Beginning in 1997, the World Bank began funding the development of a 'toolkit' for introducing private sector participation into water and sanitation services. Since that time, and particularly in 2001 and 2002, several toolkits for PPPs and PSP have been funded, such as Public-Private Partnerships in Highways, and a Handbook on PPPs, created by EdInvest as a guide to facilitate PPPs in Education. Similarly, the World Bank has released toolkits for introducing private sector participation in ports, telecommunications, and solid waste management.

Regarding PPPs in the health sector, the World Bank is a partner in the Global Fund to fight AIDS, Tuberculosis and Malaria (GFATM). This fund is an independent public-private partnership working to increase global financing to combat these diseases. More that $2 billion has been pledged and grants are to be awarded beginning in January of 2003.

African Development Bank (AfDB)

At the 2002 annual meetings of the African Development Bank and the African Development Fund, Omar Kabbaj, president of the AfDB, discussed the newly developed business plan for the Private Sector Department of the bank. Per Mr. Kabbaj, a key element of that plan would be to increase the bank's "support to private sector investment in infrastructure through the promotion of public-private partnerships." The document, "Enhancing Development in Africa: Public-Private Partnerships," published in 2002, clearly presents the challenges to infrastructure privatization facing the AfDB's regional member countries, and lays out the bank's strategy for reducing those barriers through PPPs.

In 2003 the African Development Fund will begin its $3.l3 million financing of a study for the interconnection of railway networks in the Economic Community of West African States (ECOWAS) member countries. The study aims to indicate which of the seventeen regional railways would be potential candidates for private sector operators involvement in a public-private partnership.

United States Agency for International Development (USAID)

In the environmental sector, the United States has embraced public-private partnerships to promote good stewardship of environmental resources. For example, USAID is funding the Mexico Renewable Energy Program, managed by a private US Firm and a Mexican federal agency. The project has sponsored nearly 200 photovoltaic and wind energy projects in eight Mexican states, supplying about 100,000 residents with energy to pump water for human and agricultural use. Similarly, USAID is helping governments in Kenya, Madagascar, Namibia, and South Africa partner with community-based organizations to maintain wildlife sanctuaries. Also, the USAID Democracy & Governance program has been promoting the use of PPPs to fight corruption.

In 2003, USAID has committed $21,500,000 to the Pakistan Primary Education and Literacy project, a program that develops public private partnerships to increase the level of resources available for adult and youth literacy programs. USAID-supported contractors will broker eleven public-private partnerships to produce investments in new clean-energy production capacity and more efficient management of facilities, particularly in Sub-Saharan Africa and Mexico.

Asian Development Bank (ADB)

In the ADB's Private sector development strategy, PPPs are listed as one of four major areas of operation, stating that PPPs represent one of the "key vehicles for promoting private sector development and pro-poor growth in the African context." Specifically, the ADB will provide intervention in the following areas:

• Physical infrastructure development such as energy, transportation and telecommunications
• Social infrastructure development such as education, health, water supply, wastewater treatment, and solid waste management
• Agriculture and rural sector development such as supporting the development of sustainable micro-finance institutions and clarifying land title ownership issues.

The ADB has indicated that funding for these types of projects will be provided through "direct financing and risk mitigation, and through investments in specialized financial institutions and investment funds aiming to support private provision of infrastructure services."

The ADB's 2003-2005 Country Strategy and Program update for China states that ADB will provide funding to support infrastructure development in order to overcome barriers to private sector development. Similarly in India, the ADB will continue its support of PPP arrangements to attract private sector investment in transportation, water and sanitation, and housing.

Going Forward

The support of donor agencies for PPPs is broad based and growing. New projects and programs are being developed and more and more funding is being allocated to promote PPP models. This evolving paradigm can be best summarized by statement made by UNDP Associate Administrator, Zéphirin Diabré at the World Summit in Johannesburg:

"…the summit's recognition of the private sector as a genuine development partner is significant, especially regarding the issues of capacity building, technology transfer and development financing. Public-private partnerships will be critical in the coming months, and UNDP will have to increase its efforts through the existing Public-Private Partnership Programme and other mechanisms."

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