Photo: Grzegorz Zdanowski / Pexels Creative Commons
Some regard institutional investors—with their deep pockets—as the white knights filling the huge investment gaps in infrastructure development in emerging markets and developing economies (EMDEs). The IMF estimates that some 100 trillion dollars are held by pension funds, sovereign wealth funds, mutual funds, and other institutional investors. Unquestionably, the long-term nature of their liabilities matches the long-term financing requirements of infrastructure projects. So, it’s no surprise that institutional investors are seen as the white knights of infrastructure finance.
Photo: Jorge Láscar | Flickr Creative Commons
The potential economic benefit from the cooperative use of the Nile’s water is estimated to be worth well over $11 billion—from irrigation and hydropower generation alone. But being able to harness those benefits is a far reach; the Nile Basin—a vital source of drinking water, irrigation, hydropower and transport—has a growing need for infrastructure investments to attain the full potential of this resource. Many of these infrastructure investments need to be coordinated between the basin’s 11 countries to ensure they are creating mutual benefits and are not causing harm to neighboring countries.
The Nile Equatorial Lakes Subsidiary Action Program - Coordination Unit (NELSAP-CU), one of the Nile Basin Initiative’s two investment programs, plays a prominent role in the region’s development. NELSAP supports poverty alleviation, economic growth, and the reversal of environmental degradation in the sub-region through cooperative development and water management. Between 2005 and 2015, we mobilized $90 million of cumulative finance for pre-investment programs (e.g. the Lake Edward and Albert Fisheries Project) and $930 million for investment projects (e.g. the Regional Rusumo Falls Hydroelectric Project).
Photo: Carol Mitchell | Flickr Creative Commons
As the backbone of development, infrastructure provides vital support for the twin goals of poverty reduction and shared prosperity. Considering the different needs, roles, and responsibilities of men and women in infrastructure design makes the achievement of these goals more sustainable.
Women and men face constraints both as beneficiaries and producers of infrastructure services. For example, there can be inequitable access to roads, financing for electricity connections, or clean water. There are also inequities in the infrastructure business value chain: Do utilities have a balance of women and men on technical and leadership teams? Is there diversity on boards, with regulators or policy makers? Are women-owned firms in supply chains?
Photo: Devin Poolman | Flickr Creative Commons
Nicaragua’s Public-Private Partnerships (PPP) program is taking off. In less than a year, the country has moved quickly, overcoming hurdles to produce a PPP law, supporting regulations, and a well-staffed PPP unit. Its first deals are getting closer to fruition—the World Bank Group (WBG) team working on PPPs in Central America has just received four pre-feasibility studies for its top projects. Two of these are moving fresh out of the pipeline—the Pacific coastal toll road and a cruise ship terminal and marina in San Juan del Sur.
In March 2011, the Great East Japan Earthquake struck Japan, unleashing a tsunami that left some 20,000 people dead or missing. Sendai, the capital city of Miyagi Prefecture and a regional economic hub, was heavily affected by the disaster. About 500,000 residents in the city lost access to water, and the city’s primary wastewater treatment plant was completely submerged by the tsunami. Also, the tsunami damaged 325 kilometers of coastal railway assets and flooded about 100 kilometers of national highway in the Tohoku region, leading to the immediate closure of inland transport access to the devastated towns in need of assistance.
Four years later, while the recovery effort from the earthquake and tsunami was still underway, a private consortium signed a 30-year concession to operate Sendai Airport, making it the first state-owned airport in Japan operated by the private sector. This success was welcomed by policymakers and public-private partnership (PPP) practitioners with surprise—how could it be possible for a private operator to make a long-term investment decision in such a disaster-prone region?
Between 2004 and 2017, some 30 African countries have adopted laws regarding Public-Private Partnerships (PPP). If we were to add to this list the countries that have implemented PPP policies, and those who are in the midst of drafting PPP laws, the tally would rise, leaving us with less than just 10 African countries that are entirely without a PPP framework.
What this tells us is that the calls by international financial institutions have been heard by decision-makers in Africa:
But how does reality measure up to the theory? How many projects, based on PPP law, have actually reached financial close? Given the time required to prepare a PPP, it is maybe too early to see PPP laws translated into concrete PPP projects, especially as more than 20 countries have in fact adopted their laws only in the last five years.
The APMG PPP Certification Program enables participants to take their skills to the next level, and the Certified PPP Professional (CP3P) credential is a means to officially convey that expertise and ability.
At the core of the program is the PPP Guide, a comprehensive Body of Knowledge that distills globally agreed-upon definitions, concepts, and best practices on PPPs. The program is an innovation of the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the Inter-American Development Bank (IDB), the Islamic Development Bank (IsDB), the Multilateral Investment Fund (MIF), and the World Bank Group (WBG), with financial support from the Public-Private Infrastructure Advisory Facility (PPIAF).
Whether you’re thinking about signing up, or already enrolled, in this series we share some insight from practitioners who have already passed the test. This week, we caught up with Abdul Nafi Sarwari, a Senior Financial & Economic Specialist for PPPs with the Central Partnership Authority within Afghanistan’s Ministry of Finance. Read his answers below.
Photo: Raymond Ward | Flickr Creative Commons
Sector reform is a familiar concept for anyone working in the energy sector, particularly in developing countries. Typically, reforms involve measures such as building an institutional framework that allows for an independent regulator, improving the operational efficiency of utilities (for example, by unbundling vertically-integrated utilities), creating an environment for private sector participation, and last but not least, introducing tariffs that reflect costs. All these measures are designed with one goal in mind: to put the sector on a sustainable path and improve the quality of service for end-users.
While acknowledging the many benefits that sector reforms can bring, one issue we continue to face is the poor financial state of key power utilities. In other words, a lack of creditworthiness. Often, their lack of financial creditworthiness is the most critical obstacle to implementing investment programs. This makes utilities even more dependent on continuous government subsidies.
Welcome to the “10 Candid Career Questions” series, introducing you to the infrastructure and PPP professionals who do the deals, analyze the data, and strategize on the next big thing. Each of them followed a different path into infra and/or PPP practice, and this series offers an inside look at their backgrounds, motivations, and choices. Each blogger receives the same 15 questions and answers 10 or more that tell their career story candidly and without jargon. We believe you’ll be as surprised and inspired as we were.
Photo: Free-Photos / Pixabay Creative Commons
In order for investors to see the potential in developing long-term attractive infrastructure assets, projects must be well prepared. The lack of such primed projects is a major obstacle for ramping up global infrastructure, particularly in developing and emerging economies.
This is one of the priorities for the G20, as Argentinean President Mauricio Macri emphasized in December 2017: "Infrastructure for development" will be one of the key issues of focus during the country's G20 Presidency and it will "…seek to develop infrastructure as an asset class by improving project preparation."