Providing Essential Infrastructure in Fragility, Conflict and Violence-Affected States - A toolkit for enabling SME participation

SMEs in general, but especially in FCV contexts, face major costs, risks and capacity and financial constraints. Such challenges may be particularly acute in public procurement and related markets when PSP initiatives are being developed and implemented. Creating an enabling environment for SME participation in PSPs in FCV contexts involves an entire ecosystem.

G20/OECD Guidance Note on Diversification of Financial Instruments for Infrastructure and SMEs

The selected voluntary policy recommendations provided below seek to assist  governments in  tackling key challenges linked to mobilising private financing for infrastructure and SMEs, in particular from institutional investors and capital markets and diversifying financial instruments with special attention to equity financing. As challenges are country-specific, the recommendations are intended to serve as guidance to country authorities in their effort to cope with their specific circumstances, including targeting particular type of investors.

Further Reading in SMEs and PPPs

The role of SMEs on PPP projects has been analyzed from different sectors. Below are some documents on how pro-SME PPP regulations and policies have worked in practice.

中小企业与PPP项目

PPP项目有很多好处,包括能够打造本地的能力和经验(提高成本效率)、鼓励增加消费量并会为更广泛的经济增长创造机会。为了获得这些好处,应当让中小企业(SME)参与到PPP项目中来,这是关键。

但是,PPP项目通常规模大且非常复杂,而且中小企业在市场上难以竞争,尤其是在发展中国家。中小企业在进行复杂的资格预审或编写投标文件时,通常面临成本高、时间长等问题。政府可向中小企业提供一系列的激励措施来促进其发展,如通过采购激励措施或能力建设。与此同时,政府必须平衡建设和使用国内产能的愿望与高质量服务产生的利益。还有重要的一点就是,必须了解中小企业在相关市场中参与更复杂项目的能力。

Examples of Policies that Incorporate Existing Operators into New PPPs

This situation is quite common in the transportation sector, especially in where a new transportation system such as bus rapid transit is created. Examples of countries that have had to face this situation are Colombia and Peru (see below). The governments of these countries recognized the policy need to allow existing operators to be included in the new system, and structured the PPP to allow for such considerations.

SMEs and PPPs

Among the many benefits that PPPs can bring, PPPs can build local capacity and expertise (resulting in more cost efficiencies), encourage increased competition, and create opportunities for broader economic growth. To enjoy such benefits, involving small and medium enterprises (SMEs)* in PPPs is key.

Public Private Partnership: National Treasury PPP Practice Notes issued in terms of the Public Finance Management Act

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National Treasury’s PPP Manual is a systematically guide to public and private parties through the phases of the regulated PPP project cycle for national and provincial government, unpacking policy and providing procedural clarity as it does so. It draws on South African project experience to date and on best international practice, without infringing on the authority of accounting officers and authorities. It sets rigorous risk-assessment standards by which government will make affordable project choices that best leverage private investment for quality public services.

Scaling Up Blended Financing of Water and Sanitation Investments in Kenya

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This PPP case demonstrates how OBA enabled the government to channel private funding for a development priority.  Community-based organizations grew into PPPs with fully commercial business models for delivering water in poor rural areas. A Kenyan micro finance bank provided loans, where part of the principal was paid by GPOBA once the service proved functional and part of credit default risk was guaranteed by USAID.