ADB Support for Public–Private Partnerships, 2009–2019
With increased urbanization, an acceleration in the pace of economic change, and increased demands on government budgets, growing infrastructure deficits have emerged in many of Asian Development Bank (ADB) developing member countries (DMCs). Due to both historical underinvestment and poor maintenance of existing infrastructure assets, new solutions are being sought as countries seek to attract the private sector to address this infrastructure investment gap.
Public–private partnerships (PPPs) are an important infrastructure and service procurement option for countries in the Asia and Pacific region. Well designed and implemented PPPs can transfer risks from the public sector and effectively mobilize private-sector-led design, construction, operational, maintenance, and financial expertise to deliver greater efficiency gains and service quality. That said, experience with PPPs in both developed and developing economies has often been challenging. Lessons from previous experience with PPPs need to be applied with care in order to deliver the intended benefits.
This evaluation covers the period 2009–2019 and provides guidance to enable ADB to provide more effective support for PPPs. The evaluation examines ADB’s PPP activities in four operational areas: advocacy and capacity development, policy development and the enabling environment, project development and transaction advice, and project financing and credit enhancement. The evaluation assesses how effective ADB has been in supporting these operational areas and examines how ADB can best position itself to respond to demands for PPP policy guidance, transaction-specific advisory work, and investment opportunities in different country contexts and across sectors.
The evaluation found that ADB’s support for PPPs has delivered mostly positive developmental outcomes through both upstream interventions and downstream investments. The nonsovereign PPP projects that have been evaluated have performed particularly well, with an average success rate of 91%. ADB’s sovereign-led work in support of PPPs, combining both upstream and downstream activities, had a success rate of 65%. ADB’s work was assessed as relevant but has on occasion fallen short of facilitating the transformational change required to crowd in the private sector and promote quality infrastructure outcomes.
In the context of ADB’s corporate Strategy 2030, this evaluation calls for the preparation and implementation of an updated public–private partnership directional guidance paper that is consistent with ADB’s revised operational priorities and the G20 principles for quality infrastructure. The evaluation calls for proactive engagement by ADB with DMC governments at an early stage of infrastructure planning and for the development of local capacity to screen and select projects using cost–benefit and value-for-money analysis. If ADB is to achieve long-term beneficial outcomes through PPPs, it needs to expand the use, scale and scope of its risk mitigation products and improve its monitoring and evaluation systems. Lastly, the evaluation recommends some organizational changes so ADB can deliver more effective support to external clients and optimize developmental outcomes through PPPs.