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“Public-Private Partnerships and the Future of Development Projects in the Caribbean”

Presenter: RESEL MELVILLE (PMP, D.E.A, B.A (Hons))

Date: 9 May 2013- repeat

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DISCLAIMER

• THE VIEWS AND OPINIONS EXPRESSED IN THIS DOCUMENT

ARE SOLELY THOSE OF THE AUTHOR AND DO NOT

REPRESENT ANY POLICY INITIATIVES OF THE CARICOM

SECRETARIAT.

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OUTLINE OF PRESENTATIONi. Key Definitions:

* What is a PPP/ P3?

* Who are the players/ parties

involved?

* Types of PPPs

ii. Recent history of PPPs- 1990’s

to 2000’s

iii. Present day: global context

*Busan Global Alliance

*EU Agenda for Change

*WTO Aid for Trade Initiative

iv. Present day- regional context

* CARICOM Single Market and Economy

* CARIFORUM-EU Economic Partnership Agreement

v. P3s for Development- pros and cons

vi. Examples of recent/major Public Private Partnerships in Key Development Sectors in the Caribbean

vii. Part 2: a preview….

“Public-Private Partnerships and the Future of Development Projects in the Caribbean”

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What is Public-Private

“ the essence of partnership is a

relationship based on agreement,

reflecting mutual responsibilities in

furtherance of shared interests (K.Buse/

G.Walt.- Bulletin of the World Health Organisation Vol.

78. no. 4, 2000)

“a voluntary alliance between various

equal actors from different sectors

whereby they agree to work together to

reach a common goal or fulfill a specific

need, that involves shared risks,

responsibilities, means and

competencies.” (USAID/CED, Public Private

Partnerships for Development- A Handbook for

Business, July 2006)

“a contractual agreement

between public sector and

private sector (for-profit)

where resources and risks

are shared to meet a

specific public need.” (UNDP SSC http://ncppp.org/undp/guidelines.html)

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Basic Characteristics of a P3

-Voluntary or contractual relationship

-Reciprocal obligations

-Mutual accountability

-Sharing of investment or risk

- Joint responsibilities in design and execution•World Economic Forum, “Building on the Monterrey Consensus- the Growing Role of Public-Private

Partnerships in Mobilizing Resources for Development,” 2005

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Who are the players/ parties involved

THE PUBLIC SECTOR

THE PRIVATE SECTOR

• That part of an economy run

by private individuals or

groups, usually as a means of

enterprise for profit; not

controlled by the State.

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• The public sector is that part of

an economy controlled by

Government ( national, state,

provincial or local); it aims to

provide public services; and

encompasses state-owned

enterprises and nationalized

industries

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TYPES OF PUBLIC-PRIVATE PARTNERSHIPS

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Examples of the CONCESSION MODEL

• DBFO - Design, Build, Finance and Operate - principles of the private finance initiative apply, the same supplier undertakes the design and construction of an asset and thereafter maintains it for an extended period, often 25 or 30 years

• DB- Design and Build- A single supplier is responsible for designing and constructing a built asset.

• FM-Facilities Management- Management of services re: operation of a building. Includes maintenance, security, catering and external and internal cleaning etc.

• O&M -Operation and Maintenance- Involve the private sector operating a publicly-owned facility under contract with the Government.

• LDO-Lease Develop Operate- Involves a private developer being given a long-term lease to operate and expand an existing facility.

• BOOT- Build Own Operate Transfer- Involve a private developer financing, building, owning and operating a facility for a specified period. At the expiration of the specified period, the facility is returned to the Government

• BOO- Build Own Operate- operates similarly to a BOOT project, except that the private sector owns the facility in perpetuity..

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Other Forms of PPPs

• The Elite Committee

(consultation/ concertation/

collaboration on policy setting)

• The NGO Model (Operational

function)

• The Quasi-public Authority

(Source: C. Weaver Mitchell/ B. Manning, “Public

Private Partnerships in Third World

Development,” 1990)

• a.k.a board or conference; negotiation among partners as equals; decisions taken by consensus; Members exercise influence in their respective sectors/ organisations to achieve the partnership goals.

• delegation to a non-governmental organisation; public-sector transfers material or financial resources to private sector partner to implement ‘public programme’/research etc.

• hybrid organisation with public and private characteristics, created by the public sector ; provides goods or services; enables the private sector to enter a particular market under favourable conditions

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Recent History of PPPs

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“We are moving from a world in which the State has sole responsibility for public goods and where business maximizes profits independently of the interests of society at large, to a world where success depends on the close synergy of interests among business, civil society and the State.” (World Bank- Business Partners for Development-www.bpd.org)

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• 1991- Amnesty International UK Business Group established. ( role of business in preserving Human Rights

• 1992- UK Private Finance Initiative (PFI) launched

• 1993- Canadian Council for Public-Private Partnerships established (a member-sponsored organization with representatives from both the public and the private sectors).

• 1998- World Bank launch “Business partners for Development, 5-year informal network of business, government and civil society- to study, support and promote partnerships.

• 1999- 3rd WTO Ministerial/ Seattle Riots- Business called on to show that globalization inclusive and benefits all.

• 1990s- ideological shift in market

theory from “freeing” to “modifying”

to address resulting inefficiencies

and inequalities

• Political neo-corporatism in UK-

supports private sector role in public

policy-making

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PPP Timeline- 1990s- 2000’s

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PPP Timeline- 1990s- 2000’s• 2000- UN Global Compact, led by

SG Kofi Annan, to promote global corporate citizenship (CSR)

• 2001- WTO Doha Declaration, focus of trade negotiations on promoting development.

• 2002- Monterrey Conference on Financing for Development, speaks to “new partnership between developed and developing countries” and encourages PPPs for effective delivery of basic services

• 2004- Global Compact Leaders Meeting- largest-ever gathering of leaders from business, government and civil society, discusses cross-sector collaboration

• 2000- Bill and Melinda Gates

Foundation formed; today it works

with thousands of partners, across

various sectors in Africa, India,

Europe, South America, and in the

United States

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Globalization

“the worldwide movement

toward economic,

financial, trade and

communications

integration...it implies the

opening of nationalistic

perspectives to a broader

outlook of an

interconnected and

interdependent world,

with free transfer of

capital, goods and

services across national

frontiers”

(www.businessdictionary.com)

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Present Day- The Global Context

Millenium Development Goals

In September 2000, World Leaders,

congregated at the United Nations

Headquarters in New York and

adopted the United Nations

Millennium Declaration committing

to “a new global partnership to

reduce extreme poverty” by 2015

focusing on particular targets,

which have come to be known as

the “Millennium Development

Goals.”

These form the ‘blueprint” for

human development.

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The Busan Partnership for Effective Development Cooperation, 2011 (www.busanhlf4.org)

PRECURSORS:•The Paris Declaration on Aid Effectiveness - 2005•The Accra Agenda For Action- 2008

ENDORSED BY:

- USA, Canada, Germany, the United Kingdom, Australia; the European Commission, Brazil, China, Mexico, Japan, Haiti, Jamaica; the IMF, IADB, Commonwealth Secretariat; the Bill and Melinda Gates Foundation, Global Fund to Fight Aid, Tuberculosis and Malaria, the Caribbean Community (CARICOM), the Caribbean Development Bank etc.

SHARED PRINCIPLES:

- ownership of development priorities by

developing countries

-focus on results

- inclusive development partnerships

-transparency and accountability to all

stakeholders.

COMMON GOALS:

-poverty eradication

-social protection

- economic growth

- sustainable development

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The Busan Partnership for Effective Development Cooperation

“We recognize the central role of the private sector in advancing innovation, creating wealth, income and jobs, mobilizing domestic resources and in turn

contributing to poverty reduction”

Private Sector and Development

a) Engage with representative business associations, trade unions and others to improve the legal, regulatory and administrative environment for the development of private investment…

b) Enable the participation of the private sector in the design and implementation of development policies and strategies to foster sustain

c) Further develop innovative financial

mechanisms to mobilise private finance for

shared development goals.

…

d) Promote Aid for Trade as an engine

of sustainable development focusing on

outcomes and impact …

e) Invite representatives of the public

and private sectors and related

organizations to play an active role in

exploring how to advance both

development and business outcomes so

that they are mutually reinforcing.

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AID FOR TRADE (AfT)• Initiative launched 2005 by

WTO ( Hong Kong Ministerial)

• Objective: To help developing countries build trade capacity and infrastructure they need to benefit from trade opening

• Targets trade-related programmes and projects including ( but not limited to );

- Trade Policy and Regulation

- Economic Infrastructure (transport, storage, telecommunications, energy etc.)

- Building productive capacity (diversification for export)

-Trade-related structural adjustment (to deal with erosion of preferences and declining terms of trade)

AfT Work Programme 2012-2013-Resource Mobilization-Mainstreaming trade into development plans and programmes-Regional trade integration- Private sector development-Monitoring and evaluation of AfT

“Partners prioritize trade and

articulate needs and then discuss

with donors how to finance projects

and programmes to achieve their

development objectives…” OECD

Fact Sheet on AfT, 2012

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AN AGENDA FOR CHANGE- EUROPEAN UNION DEVELOPMENT COOPERATION POLICY

Communication dated October 2011 from the European Commission, “Increasing the Impact of EU Development Policy: An Agenda for Change

Intended to inform programming of the next cycle of EU Development Cooperation from 2014 – 2020

Primary objective of EU development policy: supporting developing Countries efforts to eradicate poverty (Lisbon Treaty)

• Areas of focus: – Human rights, democracy, good

governance

– Inclusive and sustainable growth for human development

“To ensure best value for money, this should be accompanied by:

- differentiated development partnerships

- coordinated EU action

- improved coherence among EU policies

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The EU Agenda for Change

A Differentiated Approach

-No grant aid in geographic cooperation with ‘advanced developing

countries”

-Allocation of development assistance based on country needs,

capacities, country commitments/ performance, potential EU impact

-Comprehensive policy and political dialogue; pursuit of different

development relationships based on loans, technical cooperation,

support for trilateral cooperation.

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EU Agenda for Change

Inclusive and Sustainable Growth for Human Development

-Promotion of decent work, job creation, guarantee of labour rights and

social protection

-Promotion of a ‘green economy’

-Promotion of Public-private partnerships and Corporate social

responsibility

- Support development of competitive local private sectors

- Promote domestic and foreign investment and infrastructure improvement

- Leverage private sector activities/ resources for delivering public goods

- Deploy new financial instruments- blending grants and loans and other risk-sharing mechanisms…

- Support Regional Integration and Development

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The CARIFORUM-EU Economic Partnership Agreement (EPA)

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Source: Overview of the CARIFORUM-EC Economic Partnership Agreement (EPA), Carib Export Tradewinds Vol.1, 2009

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CARIFORUM-EU EPA

Objectives:

• To expand and improve CARIFORUM’s industries and economic growth by enabling CARIFORUM States to develop exports in services and a wider range of goods;

• Increase employment and business opportunities;

• Improve CARIFORUM’s access to European technology and technical ‘know how’;

• Increase competition within CARIFORUM and thereby improve efficiency in production processes.

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CARICOM Single Market and Economy (CSME)

2001- Revised Treaty of Chaguaramas

establishing the Caribbean Community

including the CARICOM Single Market and

Economy

The CARICOM Single Market:

• FREE intra-CARICOM movement

of Goods

• FREE intra-CARICOM trade

in Services

• FREE intra-CARICOM movement

of Skills

• FREE intra-CARICOM movement

of Capital

• RIGHT to Establishment

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CARICOM MEMBER STATES

• Antigua and Barbuda

• The Bahamas

• Barbados

• Belize

• Dominica

• Grenada

• Guyana

• Haiti

• Jamaica

• Montserrat

• Saint Lucia

• St. Kitts and Nevis

• St. Vincent and the Grenadines

• Suriname

• Trinidad and Tobago

Note: The Bahamas and Haiti (and Montserrat)

currently not participating in the CSME.

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Benefits of Public-Private Partnerships for the Public Sector in the Caribbean

• Leverage significant amounts of financing from the private sector and other sources to advance work in relation to development mandates.

• Mobilize other (non-financial) resources, human capacity/ technical expertise, technology and other material inputs, to address the “implementation deficit”- allowing for more timely, efficient and effective implementation of development projects ( value for money)

• Ensure the sustainability of development in the Caribbean, through wider stakeholder involvement and ‘ownership’ ( private sector, civil society etc.) in development initiatives.

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Benefits of Public-Private Partnerships for the Private Sector in the Caribbean

• Secure, long term investments. (Concessions)

• Increased influence in decision-making/ rule setting that affect environments they operate in

• Brand and image promotion, enhanced reputation and visibility

• Regional and global market penetration; new market opportunities

• Common Shared Value- involves creating economic value in a way that also creates value for society by addressing its needs and challenges. (M. Porter/ M.Kramer Harvard Business Review-http://hbr.org/2011/01/the-big-idea-creating-shared-value

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Constraints to P3s in the Caribbean

• Political Will ( or lack thereof)

• Trust

• Representative Legitimacy

• Lack of or inadequate legal and

administrative frameworks for

Governance and accountability

• Competencies

• Limited access to financial and

other resources

• Small market size and

difficulties achieving economies

of scale

• Inadequate inter-firm linkages

• Insufficient investment in

innovation and technological

development

• Lack of management skills

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Examples of Public-private partnerships in Key Development Sectors in the Caribbean

• Renovation and construction, Port of Paramaribo, Suriname– Government of Suriname, European Union, Integra Marine Freight Services,

Continental Shipping Agency, VSH Shipping

• PANCAP-Global Fund Round 9- “Fighting HIV in the Caribbean: A

strategic approach”-Center of Orientacion and Integrated Investigacion (COIN)

• Organisation of Eastern Caribbean States (OECS), University of the West Indies (UWI)

• Caribbean Medical Laboratory Foundation (CMLF), Caribbean Health Research Council

(CHRC), PANCAP Coordinating Unit (PCU), Education Development Council (EDC)

International Labour Organisation (ILO), Caribbean Broadcast Media Partnership on

HIV/AIDS (CBMP), Caribbean Network of People Living with HIV (CRN+), Caribbean

Conference of Churches (CCC) (Phase 2).

• Caribbean Aid For Trade and Regional Integration Trust Fund

(CARTFund)- CARICOM, DFID, CDB

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Project Management Concerns ( a preview to part 2…)

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? key requirements for effective and successful management of P3s for development?

? critical issues that may arise during the various processes for management of a P3 project?

? dedicated PPP units in Caribbean

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THANK YOU!!!

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