Investments in Public-Private Partnership (PPPs) in developing countries increased by six times, from US$24.4 billion to US$144 billion between 2004 and 2012, rising to US$120.2 billion in 2015. Such an overwhelming increase means it is essential to measure the accomplishments and contributions of these investments. In doing so, identifying the factors behind both their successes and failures can provide the essential lessons needed to improve the future design and implementation of the partnerships.
The Independent Evaluation Group (IEG) to the World Bank Group issues an important evaluation report that underpins support for the PPPs. Its report for 2002 to 2012 reviews PPP interventions around the world and then seeks to provide recommendations to related institutions that include the World Bank, International Financial Corporation (IFC) and the Multi-lateral Investment Guarantee Agency (MIGA). Among other tasks, the evaluation teams review project-level assessments of individual PPP projects.
One of the World Bank Group’s central goals is to fight poverty and Group-supported PPP initiatives need to be aligned with this strategic social goal. However PPP projects are more contributory in nature to economic growth through infrastructure development than automatically linked to poverty reduction. When an economy grows in parallel with falling poverty rates, economists call it ‘pro-poor growth’, a concept analogous to PPP development. Development experts hold that pro-poor PPPs must have benefits, outcomes and welfare-distribution channels focused on the poor. For example, PPP performance indicators state that pro-poor PPP projects should display an increase in connections or use in poor areas, in areas that include piped water or electricity projects, access to medication and health services such as health clinics, increased bus share of traffic or the development of economic zones.
Several evaluation systems are used by individual PPPs in client countries. However, their focal point is whether or not the individual evaluations are able to record their achievement in addressing the concerns of stakeholders, including poor beneficiaries.
Pro-poor objective of PPPs
In its 2015 report, the IEG stated that under its new strategy, the World Bank Group intends to work with the public and private sectors to end extreme poverty and promote shared prosperity. PPPs financed by the World Bank must thus include pro-poor objectives of providing infrastructure or services. Project-level monitoring and evaluation systems must be properly designed to include this target as measurement for a project’s success.
But in its 2014 report entitled ‘World Bank Group Support to Public-Private Partnerships’ the IEG admitted that there was a big gap in monitoring and evaluating pro-poor data. The available numbers are mainly business performance indicators, including the number of users for cash flow estimation while there is a paucity of data for other PPP success dimensions such as pro-poor aspects and fiscal effects (See Figure 1).
The 2014 WB Group Support Report reveals that data on the pro-poor coverage and fiscal effects are the least found. Although the central goals of the World Bank are to fight poverty as well as promote prosperity, individual PPP internal audit teams have emphasised financial performance as a PPP project success indicator and have seemingly forgotten that PPP projects in developing countries should be for the poor, a factor that necessitates social targets as measures of success.
Pro-poor data scarcity in individual PPP evaluations
The report reviewed worldwide PPP evaluations from 2002 to 2012. Figure 1 shows PPP projects supported by international financial institutions including the World Bank, IFC and MIGA, together with data on the available results.
Figure 1 Availability of result data for World Bank Group-supported PPPs
Figure 1 shows zero PPPs with data across all dimensions. There are less than 10 PPPs with available data on pro-poor dimensions (about eight percent of PPPs). This ratio is too small to meet the strategic goal of the Bank to assist the poor.
Further, in the IEG Report 22 PPP cases were selected for in-depth assessment. IEG report data was used here because the available summary it provides is needed for the scope of this article. These PPPs are located in three regional clusters: Latin America (Guatemala, Columbia, Brazil), East Asia Pacific (Vietnam, the Philippines, China) and Sub-Saharan Africa (Ghana, Uganda, Senegal). This assessment showed that pro-poor performance indicators for water and transport PPPs (i.e. access for the poor or high coverage in poor areas) are significantly high.