Country: Global / Non-Specific
Topic: Fragile and Conflict-Affected States
Keywords: Fragile and Conflict-Affected States - FCS, SMEs
The purpose of the Toolkit is to assist policymakers and practitioners in government to create an enabling environment for SMEs to be engaged in private sector participation initiatives (e.g., public-private partnerships (PPPs)) in countries affected by fragility, conflict and violence (FCV), and thereby generate benefits for delivery of essential services, recovery and reconstruction, regional job creation, SME growth and competitiveness, and shared prosperity.
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. Accordingly, the Toolkit provides an overview of the types of challenges that may be encountered in such scenarios and highlights, based on actual case-studies, possible solutions and conditions that may enable the engagement of SMEs to delivery essential infrastructure services to FCV affected populations through PSPs.
At the same time, the Toolkit is not intended to advocate for the use of any particular strategy for provision of essential infrastructure services. Rather, the Toolkit aims to assist policy makers in considering how to deal with various issues that may arise when a PSP type of approach is applied. The Toolkit does not advocate for PSPs over use of traditional public sector approaches. As noted by the OECD with respect to the water sector, “Debate has now moved on from public vs. private ownership, to consider ways in which water services can be provided not only safely but also most efficiently, effectively and sustainably, regardless of ownership”.
Accordingly, the Toolkit employs a broad notion of private-sector participation (PSP) and does not focus solely on PPPs. Traditionally, doing a PPP will be costly and complicated and often the cost of procuring through PPPs will outweigh the potential value-for-money. However, there are lower-barrier forms of private participation including licensing or fostering competitive markets (such as in small-scale power production) that could be much more suitable for FCVs and SMEs. The characteristics of owning the assets and having the direct relationship with consumers may be better secured with these types of arrangements, which, in some sense, may alleviate political risks. The Toolkit, thus, envisages a range of possible transaction models, with differing degrees and types of private sector and public sector involvement (see section I.C, concerning types and chief characteristics of various forms of PSP/PPP).
Updated: November 19, 2022