PPP’s are a hot topic… but are they the panacea for sustainable growth?

In 19^th & 20^th November, approximately 170 senior civil servants from across the region,[1] representatives from a range of donor agencies and regional/international PPP practitioners gathered at the Barbados Hilton Resort to attend the Caribbean PPP Forum: Public Private Partnerships for Sustainable Growth. The event was co-sponsored by Caribbean Development Bank; IDB Group; and World Bank Group.

The purpose of the forum was to share knowledge on using PPPs to develop sustainable, productive and inclusive infrastructure and basic services in the Caribbean, while at the same time protecting important assets against environmental risks, including climate change and generating new PPP business opportunities related to climate change.

First of all, what is exactly is a Public-Private Partnership, better known as by the snazzy acronym of PPP? Well, there is no one overarching definition, but Public private partnerships (PPPs) are arrangements between government and private sector entities for the purpose of providing public infrastructure and related services. PPPs are characterized by the sharing of investment, risk, responsibility and reward between partners.[2]

So ….what did we learn – are PPPs the panacea for sustainable growth…??

Before we take a stab at answering the question… let’s take a step back and examine what transpired at the forum…

….first – what are PPPs; why are they on trend?

… Looking at experience with PPPs across the region – the good, bad & ugly

….Regional best practice & lessons learned

… the possibilities – innovation in the application of PPPs – climate change

…. So what are the “must haves” to succeed??  What we learned:

1.       You have to get the basics right:– clearly defined policy framework; supportive legislation; ensure strong political commitment; identify the champion(s) – (e.g. Cabinet Minister/Snr Civil Servant); establish institutional framework; build public sector & private sector capacity;

2.       … Don’t lose sight of the objective it’s about securing the investment (not the process!). Yes you have to get the basics right but keep your eye on the ball… :

• Do the analysis – pick only winners… assess carefully if this can succeed as a PPP? If not – move on…!
• Build a targeted, realistic portfolio – begin with “low hanging fruit;” build credibility as a country and attract more investors for a wider portfolio in the medium/long run;
• Rely on experts to design and negotiate contracts, don’t leave this part for the layperson… remember that private investors know all the tricks of the trade… you have to be able to work together not against each other…
• Avoid crowding out local private sector
  • build their capacity to provide the range of support services needed to manage PPPs (from tendering to monitoring, collecting etc.)
  • identify potential contracts where local investors can compete;

3.       Role of Donors: of course all of this takes time and money….  the 3 sponsors – IDBG, CDB & WBG – committed to financing a comprehensive program to support advancing PPPs across the region. The CBD agreed to house a regional program – the Forum agreed on the following needs

Building capacity of public sector and private sector

Provide a pool of funds to source key expertise on a case-by-case basis: assist governments’ to identify potential PPPs – e.g. conduct prior technical/financial feasibility assessments; provide support through the procurement process (develop contracts, supervise bids, negotiate contracts); ensure capacity is there to monitor PPP implementation (etc.).

Encourage regional networking, sharing of experience and knowledge exchange

Financing – concessionary lending to support governments to advance PPPs e.g. guarantees that will augment the credibility of the offer and lead to secure investors

So what is our answer….?  

…. Well perhaps not the panacea for sustainable growth… but certainly an essential instrument in Government’s toolkit… if you do it right!