In this April
2013 academic paper entitled When Business Meets Aid: Analysing
Public-Private Partnerships for International Development, authors Margaret
Callan and Robin Davies, both visiting fellows at Australian National
University’s Development Policy Center, contend that the huge potential of public-private
partnerships is still largely unrealized because their “purposes and forms are
rarely distinguished and given explicit consideration.” The
paper proposes a new framework and taxonomy for thinking about
public-private partnerships for development to address this gap, .
Callan and
Davies distinguish among four categories of partnerships:
Inclusive business ventures: These core business activities
benefit the population at the bottom of the pyramid. Government-led development
agencies play three roles in making these business activities more inclusive:
improving the knowledge base for inclusive business activity, providing
risk-sharing subsidies, and exercising convening power to broker partnerships.
Pro-poor supply chain initiatives: This consumer-oriented
sub-category of inclusive business aims to include the poor in supply chains in
an equitable way, while reducing others social or environmental harms created
through the supply chain. Labeling and certification mechanisms connect these
practices to consumers, by allowing them to choose “products considered to be ethically
produced and sustainably managed.”
Public-private partnerships for service delivery: Many private enterprises
provide services to their employees and local communities in health and
education. Development agencies often assist by providing in-kind contributions
or funding to expand and improve the provision of services.
Product development partnerships (PDPs): In response to a “gross
mismatch between the burden of illness and investment in health research,”
international organizations, private foundations, and some official donors have
established partnerships to develop new medicines, health technologies or
delivery systems.
The authors
raised critical questions about each partnership model and challenged commonly
held beliefs about partnerships.
Callan and
Davies pointed out, for example, that a surprisingly small amount of evidence
exists on public-private partnership impacts and cost-effectiveness. They also
questioned the view that partnerships need to be mediated by “brokers” who
understand both parties, and the idea that private-sector actors are less
“fickle” than public agencies in their financial commitments. The authors
argued instead that local businesses are, in fact, “the best and most
consistent partners for inclusive business approaches.”
As recently as
June 2013, a conference promoting the use of PPPs was held in Bahamas and
another one is carded for later in the year in Trinidad and Tobago. It is
clear that more and more Caribbean countries are opting for this model for
financing large infrastructure projects which allows for off balance sheet
capital infrastructure long term debt. Jamaica constructed its highway
linking Montego Bay in the north of the island to Kingston through a PPP. This
highway is now a toll road, which means that users have to pay to use the
highway, which cuts transport times between the two main Jamaican cities
considerably. Arawak Cay Port Development Holdings Ltd (ACPDH) in Nassau,
Bahamas was another project developed as a P3, with ownership of the port being
a partnership between the Government, ACDPH and the public (the company is
listed on the Nassau Stock Exchange). This partnership was formed to design,
develop, construct, manage, operate and maintain the Nassau Container Port and
the Gladstone Freight Terminal as a modern container port and warehousing
complex. Alternatively, the private partner could be contracted to take
over management of a public asset, such as an airport which was the approach
adopted in respect of the management of the Lynden Pindling International
Airport in Nassau.” In Trinidad and Tobago, the water desalination project
DESALCOTT is an infamous P3 still plagued with allegations of corruption, though
largely said to be operating efficiently. The Cabinet of Trinidad and Tobago is
also said to have approved PPPs as national policy and there is a robust
pipeline of 90 projects with a value of over US$5 billion that has been
identified in collaboration with ministries, departments and divisions. Some 20
of these has been approved to proceed including two airports, four highways, an
open access broadband system, schools, hotels and diagnostic centres.
Notably no
mention was made at that recent conference of some of the massive P3 failures
which have already been experienced across the globe, resulting in significant
pushback in the UK where the end of the Governments fascination with the
Private Finance Initiative (PFI) infrastructure development model is
being celebrated. The PFI
expedition was one of the costliest public policy experiments in the history of
Great Britain and now initiatives are underway to recoup monies from the
private sector participants. Some of the criticisms include :
- The information, negotiating power and professional
capacity assymetries between the public and private sector participants are
routinely taken advantage of by the latter resulting in long term deals
favouring corporate interests as opposed to the development objectives the
partnership was conceptualized to serve.
- No substantial body of evidence that P3s have delivered
better value for money for the taxpayer, nor that they have been more
innovative or better designed.
- Flawed procurement and tendering processes usually
attend the P3 project model due to a largely unregulated space.
- The recording of the debt is typically off balance
sheet thereby giving the false impression of financial health.
The critical
question is whether policymakers and public sector professionals in the region
have the capacity to engage on an even playing field with their private sector
counterparts so as to ensure that the deals entered into represent best value
and serve the long term interests of the public.
In the
circumstances this paper and others seeking to highlight the pitfalls of the P3
infrastructure financing model are well worth the read for Caribbean public
officials, professionals and technocrats so that as we hurtle along the P3 path
we are mindful of the inherent risks and build capacity to manage them.
References
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