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When the United Nations announced its 17 Global Goals for Sustainable Development (SDGs) in 2015, nobody said it was going to be easy to achieve them by 2030. Three years after the goals’ adoption, given an estimated investment gap of $6 trillion a year, it’s clear that Official Development Assistance (ODA) alone is insufficient.
As such governments are increasingly turning to the private sector – through Public Private Partnerships (PPPs) – in order to channel more money into sustainable development efforts. These partnerships have proved very useful, notably in new infrastructure projects in Africa. But they are not a universal panacea and must be set up carefully and guided by international standards on procurement, the environment and society. This was the main conclusion of a Friends of Europe debate in Brussels on 20 November 2018, assessing how the private sector can facilitate the United Nations’ Agenda 2030.
“PPPs are one solution to ramping up investment in sustainable development,” said Paloma Perez de Vega, of the European Investment Bank. For instance, the EIB has backed PPPs behind two new solar energy plants – one in Zambia and the other in Senegal – which are expected to dramatically cut electricity costs for the local populations.
She added that in PPPs, it is for the private sector to build, finance and operate infrastructure such as roads, schools and solar energy plants; the public sector pays for the services and outputs during the operational period. The banking partner also takes finance risks, after checking out a project’s legal, technical and regulatory aspects. “This project discipline is vital, especially for high-cost projects. PPPs only work when they are well-structured, bankable, competitively tendered, and risk is shared among all partners,” said Ms Perez de Vega.
Shada Islam, Director for Europe and Geopolitics at Friends of Europe and debate moderator, wondered if there were times when PPPs don’t work. In reply, Ms Perez de Vega said that 90% of the EIB’s focus is on projects in the EU, with the remainder spread around the world. She acknowledged that it’s sometimes hard selling the strict EU procurement standards for ethics as well as social and environmental protection.
“The EIB and its public/private partners have sometimes failed to win contracts for African projects, for this very reason. But we’ve noticed that more and more countries are willing to embrace our high procurement standards, because of their sustainability benefits.”