February 2016: According to a UN Department of Economic and Social Affairs (DESA) Working Paper, international guidelines are needed for public-private partnerships (PPPs), and “should fully support the implementation of the 2030 Agenda for Sustainable Development.” The paper says the UN can play a key role in forging the guidelines, noting that several initiatives are already underway in this regard.

Titled ‘Public-Private Partnerships and the 2030 Agenda for Sustainable Development: Fit for purpose?’ the paper defines and provides a brief history of PPPs, discusses trends in infrastructure PPPs in developing countries, and outlines key issues underpinning the performance of PPPs. It also identifies components of an enabling institutional framework for PPPs and reflects on recent efforts to develop common guidelines for successful PPPs.

The ongoing initiatives to develop international guidelines for PPPs could be strengthened, the paper suggests, if taken up in a more inclusive, multi-stakeholder setting, such as the follow-up process to the Third International Conference on Financing for Development (FfD3). The authors assert that discussions should involve UN Member States, civil society, the private sector and other stakeholders.

The paper reports that there are no widely recognized definition of PPPs or related accounting framework, nor any clear agreement on what constitutes a PPP. However, it notes that from a public policy perspective, the prime objective of a PPP is to improve the quality and efficiency of a given service to the citizen by attracting private resources into public services, thereby allowing public money to be diverted into other areas and alleviating long-term pressures on public finances. It suggests that any definition of PPPs should be anchored in this ultimate purpose.

According to the authors, there is evidence that PPPs have often been more expensive than the alternative of public procurement, and in a number of instances they have failed to deliver the envisaged gains in quality of service provision. The paper reports that PPPs are generally better suited for economic infrastructures such as transport and electricity, where demand is relatively steady and the impact on service quality easy to assess. They are less likely to deliver efficiency gains in the social sector, such as hospitals and schools where access and equity are major concerns, it finds.

Finally, the paper argues that countries must have the institutional capacity to create, manage and evaluate PPPs, in order for PPPs to be effective in financing economic infrastructure projects. In a number of developing countries, putting in place this institutional capacity will require assistance from the international community in the form of technical support and capacity building. The authors remark that donor support for public sector capacity building in those countries would be a better use of resources than the current trend of blended finance, which frequently channels aid money directly to the private sector, including for PPPs.

The paper is authored by Jomo KS, Anis Chowdhury, Krishnan Sharma and Daniel Platz. DESA Working Papers are preliminary documents produced to stimulate discussion and critical comment on economic, social and environmental issues associated with the UN development agenda. [DESA Working Paper No. 148: Public-Private Partnerships and the 2030 Agenda for Sustainable Development: Fit for purpose? (ST/ESA/2016/DWP/148)] [DESA Working Papers]