Developing countries must do more to create transparent, accountable business conditions if they are to raise the capital needed to finance critical infrastructure. This was a key theme underscored at PPP Days 2012, the premier global meeting for senior policy makers on Public Private Partnerships (PPPs).
"PPPs are facing new and greater challenges due to the global financial crisis, increased regulation and because some banks are reluctant to provide funding, particularly long-dated debt. Multilateral development banks can play a pivotal role by helping governments find the right PPP structure and mobilize commercial finance," said Philip Erquiaga, Director General of the Asian Development Bank (ADB)’s Private Sector Operations Department.
Andrey Vasilyev, Officer-in-Charge of the United Nations Economic Commission for Europe, highlighted the role that PPPs can play in assisting countries to meet the Millennium Development Goals through the modernization of infrastructure and the improvement of public services, raising social welfare around the world.
“With these weakening economic conditions, developing countries have less fiscal and monetary space for remedial measures than they did in 2008-09. They need to prepare for the possibility of sources of financing drying up while creating the optimal business conditions for delivery of their infrastructure programs,” said Clive Harris, Manager for Public-Private Partnerships at the World Bank Institute.
According to the Private Participation in Infrastructure database of the World Bank, the number of developing countries with new infrastructure PPP (PPI) projects in the first half of 2011 was the lowest since the early 1990s. PPI investments, excluding those in India and Brazil, have fallen by 34% compared with the same period in 2010.
In order to promote PPPs that are financially viable, governments need to establish governance frameworks to help with project selection, development, tendering and management. These frameworks should allow for openness and transparency of public sector budgets and private sector contracts, which are crucial for addressing corruption and fraud. Multilateral development banks can help identify good practices in disclosing information on PPP contracts and engage stakeholders such as parliamentarians and national audit authorities so that they can play an effective role in the oversight of PPPs.