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on Project, Program and Portfolio Management |
| By: | Rao, Vivek (Asian Development Bank) |
| Abstract: | A recent Asian Development Bank publication estimates the large infrastructure financing requirement in Asia for the period 2016–2030, which establishes the strong need to encourage private sector participation to meet investment requirements. This paper analyzes a critical aspect of expanding private finance to infrastructure by examining the role of bank lending to public–private partnership (PPP) projects through the project finance modality. The key empirical results suggest that project financing by banks to infrastructure PPP projects is still in its infancy in several Asian markets, and banks are guided more by macroeconomic factors and by the strength of their balance sheets. The key policy implications to unlock bank finance for infrastructure PPP projects lie in reducing macroeconomic risk factors and having well-capitalized banks. The latter assumes significance, given the higher capital requirements that banks are expected to fulfill, following the adoption of Basel III capital standards. |
| Keywords: | project finance; bank lending; infrastructure; public–private partnership |
| JEL: | G21 G32 H41 H54 |
| Date: | 2018–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0554&r=all |
| By: | Hoppe, Eva I; Schmitz, Patrick W. |
| Abstract: | The government wants an infrastructure-based public service to be provided. First the infrastructure has to be built, subsequently it has to be operated. Should the government bundle the building and operating tasks in a public-private partnership? Or should it choose traditional procurement, i.e. delegate the tasks to different firms? Each task entails unobservable investments to come up with innovations. It turns out that depending on the nature of the innovations, bundling may either stimulate or discourage investments. Moreover, we find that if renegotiation cannot be prevented, a public-private partnership may lead the government to deliberately opt for a technologically inferior project. |
| Keywords: | innovations; moral hazard; Procurement; public-private partnerships; Renegotiation |
| JEL: | D86 H11 H54 H57 L33 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13406&r=all |
| By: | Lee, Minsoo (Asian Development Bank); Han, Xuehui (Asian Development Bank); Quising, Pilipinas (Asian Development Bank); Villaruel, Mai Lin (Asian Development Bank) |
| Abstract: | Developing Asia’s infrastructure gap results from both inadequate public resources and a lack of effective channel to mobilize private resources toward desired outcomes. The public–private partnership (PPP) mechanism has evolved to fill the infrastructure gap. However, PPP projects are often at risk of becoming distressed or worst being terminated because of the long-term nature of contracts and the many different stakeholders involved. This paper applies survival time hazard analysis to estimate how project-related, macroeconomic, and institutional factors affect the hazard rate of the projects. Empirical results show that government’s provision of guarantees, involvement of multilateral development banks, and existence of a dedicated PPP unit are important for a project’s success. Privately initiated proposals should be regulated and undergo a competitive bidding to reduce the hazard rate of the project and the corresponding burden to government. Economic growth leads to successful project outcomes. Improved legal and institutional environment can ensure PPP success. |
| Keywords: | infrastructures; investment policy; public–private partnership; survival analysis |
| JEL: | F21 H54 H81 |
| Date: | 2018–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0548&r=all |
| By: | Hyun, Suk (Korea Capital Market Institute); Park, Donghyun (Asian Development Bank); Tian, Shu (Asian Development Bank) |
| Abstract: | In this study, we attempt to understand the role of greater access to finance, i.e., stocks, bonds, and bank loans, in public–private partnership (PPP) investment in developing countries. Most developing countries still depend heavily on fiscal financing for infrastructure projects. Our empirical results reconfirm the fact that banks remain the major source of finance for infrastructure projects. The domestic bond market should be further developed to have depth and liquidity enough to provide longterm funding for private sector investors. Interestingly, we find a negative impact of bond market development on PPP investment. A possible interpretation is that financing through government bonds, which dominates bond markets in developing countries, discourages private sector participation by reducing financing access to the corporate bond market. Our evidence underlines the importance of a well-functioning corporate bond market in developing countries, which can offer long-term financing to private sector participation in infrastructure investments. |
| Keywords: | bond market development; government bond; public–private partnership |
| JEL: | E20 G10 H00 |
| Date: | 2018–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0552&r=all |
| By: | Ferrarini, Benno (Asian Development Bank); Maupin, Julie (Max-Planck Institute for Comparative Public Law and International Law); Hinojales , Marthe (Asian Development Bank) |
| Abstract: | This paper takes a first pass at assessing areas of implementation for distributed ledger (or blockchain) technology in the context of development finance. It identifies five use cases, including digital identity, trade finance, project aid monitoring, smart energy, and supply chain management. A discussion of the main benefits, risks and implementation challenges suggests that experimentation with distributed ledger technology can produce immediate significant benefits in some areas, while others require further research and investment, as well as additional technical, infrastructural, or regulatory development. Development lenders can play a role in helping unleash these technologies’ positive developmental impact throughout the Asian region. |
| Keywords: | blockchain; developing Asia; distributed ledger technology; financial technology |
| JEL: | G21 M13 O33 |
| Date: | 2017–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0533&r=all |
| By: | Fernandez, Cheryl Joy (Asian Development Bank); Raitzer, David (Asian Development Bank); Ginting , Edimon (Asian Development Bank) |
| Abstract: | Economic analysis often faces challenges in the valuation of nonmarket goods and services. The traditional set of nonmarket valuation tools for measuring Marshallian economic surplus has limitations related to potential bias in stated preferences and endogeneity of nonmarket amenity placement in revealed preference studies. The life satisfaction approach offers a Hicksian compensating variationbased alternative, which uses self-reported subjective well-being to calculate the marginal rate of substitution of income for nonmarket amenities or services. The conceptual basis for the approach is explained and illustrated with an example from Iloilo, Philippines. Recommendations are offered for future application of the technique in the economic analysis of investment projects. |
| Keywords: | economic analysis; life satisfaction; natural disasters; Philippines; valuation; well-being |
| JEL: | D61 D69 D90 H40 Q51 |
| Date: | 2019–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0569&r=all |
| By: | Kim, Jungwook (Korea Development Institute) |
| Abstract: | Private–public partnership (PPP) methods are considered to be an effective way to narrow the gap between demand and supply of social infrastructure. If successfully pursued, PPP can deliver benefits to users, governments, and the private sector, or the so-called triple wins. Enhancing efficiency by reducing cost and time overruns is beneficial to users and governments, and better quality of service is expected via PPP. It will also examine the factors that have been important for shaping the county’s PPP landscape, including fiscal soundness, unsolicited project proposals, and the refinancing and renegotiation of PPPs. PPPs are not a must-have solution but an option for building and upgrading infrastructure. In conclusion, PPPs are being promoted because it can mobilize needed resources from the private sector, maximize value for money, bring creativity and efficiency to a project, and be a source of fiscal stimulus. That said, countries should be clear on why they are promoting the PPP modality for infrastructure. |
| Keywords: | economic growth; infrastructures; public–private partnership; value for money |
| JEL: | E60 H54 H81 |
| Date: | 2018–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0557&r=all |
| By: | Andersson, Per-Åke (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | Sida is exploiting loan guarantee schemes to leverage finance from the private sector in partner countries. This paper is a literature review of the rationale for and experiences of this type of schemes, focusing on Small and Medium Enterprises. Since, credit rationing and moral hazard problems certainly occur in partner countries, loan guarantee schemes could become an important instrument for Sida. Loan guarantee schemes are popular in many countries and the overall experience seems to be positive. Unfortunately, impact evaluations are uncommon. The schemes have positive effects on short-run financial outcome of companies and, in the long run, economic outcomes are more often positive than negative. |
| Keywords: | Loan guarantee schemes; SMEs; development cooperation |
| JEL: | F35 G21 G23 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0752&r=all |
| By: | Aarnoudse, E.; Closas, Alvar; Lefore, Nicole |
| Abstract: | Building on existing literature and the analysis of a portfolio of development projects (past and under implementation), this paper reviews the evolution of water user associations (WUAs) in sub-Saharan Africa (SSA), reflecting on the conceptualization of how they operate, and the promised outcomes related to irrigation development, and the efficient and effective delivery of irrigation services. It also moves one step further from existing studies on WUAs, postulating that additional reflection is needed to understand the limitations of WUAs and proposes alternative, viable and context-based adapted models. This need is particularly strong in SSA where irrigation is incipient, and governments and donors are still consolidating their development approaches. Whereas a growing body of international literature takes into account the sociopolitical context of decentralized irrigation management, practical indication on what remains to be done to address the various limitations found in SSA stays meagre and scattered. The objective of this paper is not to challenge the myth of WUAs but to learn how to better deliver on the promised outcomes. The underlying message is that, if the SSA region is to be made water and food secure while respecting resource sustainability, community development, livelihoods and equality of resource access, the recurrent templates for WUA management and governance need to be revisited and adapted to local needs. |
| Keywords: | Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Crop Production/Industries, Environmental Economics and Policy, Financial Economics, Food Security and Poverty, Resource /Energy Economics and Policy |
| Date: | 2018–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iwmirp:284166&r=all |