TRADE & FINANCE
INFRASTRUCTURE
DEVELOPMENT
THE ROLE OF
PUBLIC
PRIVATE
PARTNERSHIPS
MUKHISA KITUYI
Secretary-General of
UNCTAD
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Financing infrastructure to accelerate
transformational change is among the
key challenges of the 2030 Agenda
for Sustainable Development. Public
investment continues to play a strategic
role, but public budgets are often
constrained and governments may lack
required capacity. This has heightened
expectations that public-private
partnerships (PPPs) with the domestic
and foreign private sector could furnish
much of the $3.3 trillion to $ 4.5 trillion
per year, which is the estimated need
for basic infrastructure investment in
developing countries alone (UNCTAD,
2014). In addition to bringing private
finance to the table, PPPs also aim at
sharing risks and combining private and
public managerial and technical skills.
However, it is important to keep in
mind that there is insufficient empirical
evidence t o support the growing
expectations placed upon PPPs,
and governments should be cautious
about viewing them as a panacea. A
prudent approach creating dedicated
expertise on PPPs in public institutions,
supported by technical assistance
from the international development
community, can help PPPs to deliver
their expected development benefits.
PPPs have been widely used
in developed and developing
countries. Private sector participation
in infrastructure projects in developing
countries has doubled since
the beginning of the millennium.
It amounted to about $164 billion in
2014 (Figure 1), roughly equivalent to
overseas development assistance
(UNCTAD, 2015). In 2014, among low –
and middle-income countries, China had
the second most PPP projects – hosting
50 projects with the largest amounts
spent in transport and energy – just
behind Brazil, down from its first position
in 2013. India remained third both years.
However, projects in China involved
smaller investment amounts, with total
PPP investment of $4.0 billion in 2014,
in the 10th place, far behind Brazil
($57.6 billion) and Turkey ($14.4 billion).
PPPs are the most effective when
public budgets are severely constrained
and when the technical expertise
provided by the private sector improves
the effectivity of public service provision.
But there is significant evidence of
inherent limitations, liabilities and
pitfalls (IEG, 2014; ECLAC, 2015;
UNCTAD 2015). PPPs typically make
only a small contribution to total