Wednesday, 12 February 2014

Worthwhile approach

IT was noted quite recently that Public-Private Partnerships (PPPs) in the Caribbean hold the key to the success of infrastructural development in the Bank’s Borrowing Member Countries.

There is a recognition that infrastructure development represents one aspect, and a key one at that, to boost the social and economic development in the small island states of the Caribbean.

Towards the end of last month the Barbados-based Caribbean Development Bank (CDB) and the International Finance Corporation (IFC) signed a Memorandum of Understanding (MOU) to support the infrastructural development in the Bank’s member countries.

The MOU between the CDB and the IFC, which is an agency of the World Bank, is aimed at advising governments on new projects with private sector participation, among other things.

It is instructive to note that these arrangements have taken root in a number of countries outside the Caribbean as governments look for ways to reduce spending and to have partners in the area of economic development.

Furthermore, they are very useful when it is considered that governments that previously had taken on the business of building up their country’s infrastructure are hard pressed to find resources to do so.

In a nutshell, the governments have budgetary problems and are unable to proceed as was the case some years ago in meeting the demands to transforming their economies. Looking across the Caribbean, some governments are finding it difficult trying to balance their budgets, whereas in some other instances there are those  which have been cutting back their spending to improve their fiscal position. We expect a more detailed picture of these situations when the CDB hosts its review of regional economies this week.

Faced therefore with pressing economic issues, the PPPs therefore offer governments the opportunity to tackle certain issues with the involvement of the private sector.

Improved infrastructure allows for better roads which improve access and efficiencies; the building of schools and other institutions of learning to broaden opportunities for training at the primary, secondary and tertiary levels; office buildings that allow for better performance of employees; health care facilities; sewerage systems and the list goes on and on.

In the case where Government is involved in key areas of the economy, they are usually called upon to finance and build hotels.

The long and short of these undertakings is that by indulging in Public-Private Partnerships, the private sector uses some of its resources to outfit the projects and at a later stage they are reimbursed.

From this vantage point we think the initiatives being promoted by the CDB and the IFC are worth the while. They must be encouraged wherever necessary since the region is still battling a volatile economic crisis, and has to look for new ways of doing business and to find new avenues for growth. PPPs also allow for better management of projects, while reducing the likelihood of costs overruns which have been a nightmare for governments.

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