Not all PPPs are Made Equal

Infrastructure development is an integral part of sustainable economic growth.  Indeed, a recent African Development Bank Group  (AfDB) article estimates that improving African infrastructure would lead to a 3% increase in annual growth.  In order to meet the Millennium Development Goals and achieve this level of growth, it is thought that $93 billion a year  is necessary to spend on infrastructure development in Africa for an entire decade.  The same AfDB article argues that public-private partnerships may help achieve these ambitious goals.

In the European Center for Development Policy Management’s (ECDPM) May 2012 publication of GREAT Insights Melissa Dalleau outlined six necessary conditions for successful public-private partnerships (PPPs) in infrastructure development.  According to ECDPM, the keys to success are “enabling environments” that facilitate PPPs; “project preparation”; “risk mitigation”; “coordination” of various governmental and private organizations; effective communication; and the “alignment of incentives” such that private endeavors benefit the public.  The successes and failures of particular infrastructure development projects best demonstrate the importance of these conditions.

The South African government has been particularly successful in leveraging the private sector to achieve development goals.  As of January 2012 South Africa has completed over twenty different PPP projects.  Most notable among these projects is the Gautrain rail system linking Pretoria and Johannesburg.  Costing nearly $4 billion, the project was realized through the combined efforts of Bombela Concession Company and the Gauteng province. Continue reading

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