In the poorest countries in the developing world in particular, the classic project finance
approach does not work. In these countries governments and people are often too poor to pay
for the critical water, power, transport, health and other infrastructure facilities that they
need. For many of the world’s poorest countries it is not realistic to expect that, at this stage
in their development, they can attract sufficient trade and investment to help them break the
cycle of poverty.
In the United States and other countries development assistance needs to be put back on
the national agenda — but in a more effective form.Implementing development assistance through Public-Private Partnerships
in poorest countries
Development assistance would be implemented more effectively and quickly, and with fewer
concerns about waste and corruption, if the private sector played a key role in the execution of
development assistance projects. A private sector initiative for the development of critical water,
transport, power, health and other facilities in the world’s poorest countries is needed in part-
nership with local governments, Western government donors and multilateral institutions.
Under one approach for such a partnership:- private-sector companies would take the lead in developing, financing, implementing,
owning and operating critical health, water, transport, power and other projects deemed
to be of the highest priority by the governments of the recipient countries and by Western
donor countries; and
•Western donor countries would pay for the services provided by these projects as part of
a programme of official development assistance (directly or through multilateral institu-
tions such as the World Bank).
Governmental payments would be made through an agreed schedule of payments for services
delivered to provide the greatest incentives for effective service delivery. Where payment for
services is not a practical approach, government donors may need to help pay for the funding
of construction and operation, particularly in the most difficult countries.
Placing the responsibility and the flow of funds for these projects in the private sector
would help address public concerns in the United States and elsewhere that foreign aid is
wasted, being spent on ineffective ‘vanity projects’ that do not help the recipient countries
significantly, and that a large portion of the funds historically has been diverted to the pock-
ets of corrupt politicians.Building on the project finance Public-Private Partnership model
The Public-Private Partnership approach would be based in part on the project finance model,
through which more than US$100 billion per annum of power, water, transport and other
infrastructure projects have been implemented in both the developed and developing worlds.
There are encouraging examples of successful projects, such as the provision in Buenos
Aires over the last eight years of a drinking water network for 1.6 million people and a
sewage system for nearly one million people, but these are exceptions.
Necessary infrastructure projects are rarely implemented in the world’s poorest areasFOREWORDxv
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