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Developing countries asked to make Public-Private Partnerships work

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Developing countries have been urged to do more to create transparent, accountable business conditions if they are to raise the capital needed to finance critical infrastructure.

Senior policy makers on Public Private Partnerships (PPPs) at the PPP Days 2012, a global meeting held in Geneva underscored this point.

Some 700 experts from more than 80 countries attended the event. The forum was open to the private sector and allowed a number of developing country governments to present their strategies, policies, projects and support for PPPs to the private sector for discussion.

In a statement issued by the World Bank February 24, 2012, the Director General of the Asian Development Bank (ADB)’s Private Sector Operations Department, Philip Erquiaga said “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.”

Highlighting the role that PPPs can play in assisting countries to meet the Millennium Development Goals, Andrey Vasilyev, Officer-in-Charge of the United Nations Economic Commission for Europe noted that  it can be done through the modernization of infrastructure and the improvement of public services, raising social welfare around the world.

Manager for Public-Private Partnerships at the World Bank Institute, Clive Harris believes that with the 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 programmes,” said Clive Harris.

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,” the bank noted.

In order to promote PPPs that are financially viable, the World Bank said governments need to establish governance frameworks to help with “project selection, development, tendering and management”.

These frameworks, the Bank says 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, it added.

By Ekow Quandzie

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