New Battlegrounds in Development Finance
Infrastructure financing in the developing world is relying increasingly on public-private partnerships. The new appeal of PPPs may redefine not just development economics, but also the overall relationship between rich and poor countries – though not necessarily for the better.
PRETORIA – The popularity of public-private partnerships (PPPs) to support infrastructure development in emerging countries is growing worldwide. The G-20 backs PPPs to boost global growth and create jobs. The BRICS economies (Brazil, Russia, India, China, and South Africa) see them as a way to build essential infrastructure quickly and cheaply. The United Nations hopes that infrastructure PPPs will provide the means to realize its post-2015 global development agenda. PPPs’ new appeal may redefine not just development economics, but also the overall relationship between rich and poor countries – though not necessarily for the better.
The PPP bandwagon has three essential components: an explosion in infrastructure finance (backed by pension and other large funds); the creation of “pipelines” of lucrative mega-PPP projects to exploit countries’ raw materials; and the dismantling of environmental and social safeguards. Each must be carefully monitored as the use of PPPs expands.
The World Bank is already seeking to double its lending within a decade by expanding infrastructure projects. Its new Global Infrastructure Facility (GIF) will mobilize global pension and sovereign wealth funds to invest in infrastructure as a specific asset class.