International Investment Perspectives 2005
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Encouraging Public-Private Partnerships in the Utilities Sector
The Role of Development Assistance
Adequate physical infrastructure is a key element of a sound investment climate and development agencies can help countries mobilise private investment through ODA spent on relevant infrastructure. However, the developing world needs far more financing for infrastructure than can be provided through ODA and domestic public finances alone. Given the shortage of public funds in most developing countries, the obvious solution is to invite greater private sector participation, but this too is problematic since investing in infrastructure projects in many parts of the world is not financially viable from a private sector perspective. One solution is to expand the use of public-private partnerships (PPP) in utilities, relying on ODA to enhance the quality of projects, reduce risks and raise profitability. The present article reviews recent experiences with private participation in infrastructure in developing countries, enumerates some of the obstacles that have been encountered and proposes ways in which development agencies may overcome the obstacles to maximise the benefits of PPPs for development.
Also available in: French
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