Chapter XX: PPPs as an Economic Development Tool – Rather than just a Procurement Tool

David Baxter


In February 2015, an article published by Public Services International (PSI) argued that Public-Private Partnerships (PPPs) don’t work.(1)   Although an avid champion of PPPs I feel that valid criticisms were made that should lead to the development of improved PPPs.

The following PSI criticisms were directed at PPPs:

  • “PPPs are shadowy agreements which hide behind confidential negotiations to protect commercial secrecy. 
  • There are no public consultations, lots of false promises, and incredibly complex contracts, all designed to protect corporate profits. 
  • There is also a fair amount of bribery, as privatization contracts can be extremely valuable.
  • PPPs are used to conceal public borrowing, while providing long-term state guarantees for profits to private companies….This is fundamentally incompatible with protecting the environment and ensuring universal access to quality public services.
  • PPPs are an expensive and inefficient way of financing infrastructure and services.”

Additionally, PPPs were described as mechanisms of privatization that essentially cut the public sector out of providing cost efficient and effective infrastructure and public services.

Much has evolved since 2015 and PPPs have been moving to a more people focused and environmentally friendly paradigm that addresses these criticisms. Increasingly, PPP procurements are becoming more transparent under mandates that:

  • require transparent and competitive procurements
  • include obligatory public consultation with multiple formal and informal stakeholders
  • provide public access to PPP contracts so that they are not perceived as being secretive
  • require strong anti-corruption directives
  • require accountability, especially in regards to ESG requirements
  • require strong Value for Money (VfM) assessments to address concerns about expensive PPP projects that don’t necessarily deliver as promised

PPPs as a Development Tool Procurement Approach

Although not yet perfect, a number of recent global events have introduced a progressive paradigm shift where PPPs are being increasingly being seen more as a tool for development rather than just a traditional procurement tool.(2)  This includes new goals introduced at the COP 21 meeting (and following meetings) and necessary changes triggered by the global pandemic and climate change which have acknowledged that PPPs need to be more people and environmentally friendly and should serve as a mechanism to help countries achieve their Sustainable Development Goals (SDGs).(3)

At the 2021 Istanbul PPP Week Conference the changing contextual world of PPP was debated at length among delegates who were unanimous that PPPs should be seen as a tool for development and not just a procurement mechanism. It was also felt that changing national needs should lead to an approach to PPPs that acknowledged changing sector needs and new priorities.

If PPPs are to be more than a procurement tool, they need to be tied to a specific thought paradigm that introduces new best practices. A new generation of People-first Public-Private Partnerships (PfPPPs) attempts to initiate fundamental best practices that will become the cornerstone of PPPs as catalysts of development.

People-fırst Publıc-Prıvate Partnershıps(4)

“A People First Public Private Partnership is a long-term contractual relationship between the public and private sector, where delivering value for people is the core objective, there is a commitment to serving and protecting the community, and the project is developed with the real interests of people in mind.” UNECE – May 2018

“People-first Public-private partnership” means a type of Public-Private Partnership (PPP) designed to implement the Sustainable Development Goals and thereby to be “fit for purpose”. It is defined as an enhanced approach for PPPs that overcomes some of the weaknesses in the way the traditional PPP model has been implemented. PPPs are contract delivery tools for public infrastructure provision involving initial private financing. They include two types: “government-pay PPPs” which are primarily funded by taxpayers and “concessions” which are primarily funded by the users of the infrastructure” UNECE. PPP Model Law 2022.

In May 2018, the United Nations Economic Commission for Europe’s PPP Center of Excellence issued a new draft document that lays out new guiding principles on People-First Public Private Partnerships for the United Nations Sustainable Development Goals (UN SDGs).(5) The draft document provides details on eight new guiding principles (see pages 9 to 63 of the document for more details) that will enhance the implementation of PPPs globally by introducing a “people-first” approach. The eight principles are the following:

  • Principle 1:  Projects and Action Plans 
  • Principle 2:  Capacity Building 
  • Principle 3:  Improving Legal frameworks for People-first PPPs 
  • Principle 4:  Transparency and Accountability 
  • Principle 5:  Risk and de-risking 
  • Principle 6:  Procurement: Promoting, Value for People 
  • Principle 7: Resilience and Climate Change 
  • Principle 8: Innovative Financing: Impact Investing 

In its new guiding principles document, UNECE states that the complimentary SDGs goals are a once in a lifetime opportunity for humanity to change the world for good which will require an economic development approach that is in fact multi-faceted development. It is also stated that the SDG approach is also relevant to PPP and the people first approach should be: 

  • Transformational in an international, global, game-changing sense 
  • Inclusive by ‘leaving no one behind’ 
  • Resilient, adapting and mitigation the multiple challenges presented by climate change 
  • Social , as opposed to just economic infrastructure 
  • Moving from a linear to a circular economy, and fostering more rational and sustainable production and consumption patterns, and to reuse, recycle, and repurpose 

UNECE acknowledges that “achieving such broad economic development objectives will require increases in infrastructure spending.” UNECE concedes that when implementing these new guiding principles, the public sector will not be able to meet the required quantum; hence the need for private finance alternatives and collaboration with the private sector which has an important role as a source of innovative technologies, management and organizational skills and enhancing capabilities. Thus, willing collaboration between committed  public and private sector stakeholders can improve the outcomes of future PPPs which are people focused, environmentally sensitive, and development oriented.

Antıcıpated Outcomes of PfPPPs

In this regard UNECE states that PPPs should in turn be designed to achieve five specific outcomes which include: 

  • Increasing access to essential services, lessen social inequality and injustice
  • Delivering of resilient and sustainable infrastructure 
  • Being economically effective, by bringing transformational economic impact
  • Being replicable and scalable, to allow the development of further projects
  • Bringing all stakeholders together in partnership and consulting those affected 

There is consensus that if these outcomes are achieved, it will change the focus of PPPs to more than just a myopic focus on Value for Money (VfM).

This new approach has required a clear definition of People-first PPPs (see quote above) and a new forward-looking focus that expands the VfM assessment rationale to include assessments of  “Value for People” (VfP). More recently, this view has also been expanded to include “Value for the Future” (VfM) assessments as well, which explore the impacts of decisions on future generations.(6,7)   Details on specific People-First PPP outcomes are further elaborated on by UNECE.  The following expanded details on the five outcomes that are included in the new guiding principles document include:

  • Increase access to essential services and lessen social inequality and injustice; 

Increasing access and equity, means that access to essential services, such as water and sanitation, energy, etc. should be increased to people, especially to the socially and economically vulnerable.

  • Enhance resilience and more care with the environment; 

Developing a resilient infrastructure and moving to a circular economy improving environmental sustainability, cutting CO2 emissions to move to a green economy and developing ‘circular’ not linear projects; 

  • Improve economic effectiveness; 

Demonstrating project economic effectiveness: projects must be efficient, successful, achieve value for money and be transformative in that they have a measurable impact by removing economic barriers or creating new means for integrating groups into the global market place. Empowering women is a particularly important outcome to achieve here. 

Accordingly, PPPs should: 

  • Enhance the role of women inside the companies undertaking PPPs and in the PPPs themselves; 
  • Help women-led companies in the supply chain compete in tenders; 
  • Make a difference in the communities where they do business – train young women to become the business leaders of the future; 
  • Help women deal with the special challenges they face in their daily lives in the design and operational phase of projects. 
  • Promote replicability and the development of further projects; 

Be replicable and scalable so the particular project or approach can be repeated and/or scaled up as needed to attract the investment and transformational impact required by the 2030 Agenda for Sustainable Development. This criterion also needs to consider whether the local staff and the governments have the capacity or receive the necessary the training and knowledge to do similar projects going forward. 

  • Fully involve all stakeholders in the projects. 

Engaging all stakeholders that are either directly involved in t PPP project or directly or indirectly affected in the short and/or long run, including in particular women and minorities. 

If these outcomes are embraced and achived, People First PPPs can become a reality.

Dıgıtalızatıon – A New Tool for PfPPPs

In  May, 2020 the United Nations Economic Commission for Europe’s (UNECE) PPP Center of Excellence held its 6th PPP Forum in Barcelona in partnership with the City Government of Barcelona and the IESE (Business School of the University of Navarra – Barcelona Campus).  At this gathering PPP professionals (from both the public and private sector) discussed the role of People-first PPPs (PfPPPs) for SDGs in delivering sustainable infrastructure to accelerate the 2030 agenda and shared many innovative insights. 

Current and emerging challenges and opportunities at both national and city level, such as climate change, the circular economy, digital transformation, green procurement and the blue economy were the primary focusses of the conference – especially in the context of a post-pandemic world. However, the emerging importance of digital transformation (digitalization) took center stage in many of the discussions.  Innovative digitalization is a critical tool that can strengthen PfPPPs as it provides a “public forum” for transparent and competitive PPP procurements that authenticate stakeholders concerns regarding the focus of PPPs and the “secrecy” surrounding their implementation.

With this in mind, it is consensus that it is time that PfPPP proponents embrace digitalization and address PPP project implementation challenges that include: time, cost, cultural differences, intellectual property and the digital divide.  PfPPPs are ripe for digital innovation as they have the ability to leverage the combined strengths of the public and private sector. PfPPPs have a strong collaborative role in innovative partnerships and smart solutions (including smart documents supported riven by blockchain platforms) that can provide the digital networks that are needed to provide the services needed for countries to achieve their SDG goals. PfPPPs have an additional role as they take PPPs a step further.  They are more than VfM projects, but are also focused on VfP (with ESG considerations) and VfF (future proofing and resilience). 

In a session titled “PPPs and the digital transformation for sustainable development” digital solutions to the delivery of PPPs were discussed in regards to challenges facing PPP project delivery processes, especially when it comes to the project identification and preparation phase which can result in resulting in considerable delays in bringing bankable projects to market.

Central to the discussion was a debate on policy that could introduce digital solutions and which could bring about digital transformation in the delivery of PPPs. It was acknowledged that while digital transformation does not guarantee project success, it certainly can contribute to the speed and integrity of PPP delivery. Digital transformation tools – through enhanced insight into project data – have the potential to increase the likelihood that a PPP will deliver critical sustainable public infrastructure and services as well as desired long-term social and economic impact. Digital tools also leave a digital record (through blockchains) that irrefutably record all project decisions thereby enhancing project management accountability and continuity.

Speakers in Barcelona were resolute in their conviction that we need to deliver sustainable and resilient infrastructure PPPs supported by innovative digitalization as soon as possible, because the world is on the brink of a critical climate change milestone that could cause long lasting damage to our environmental-socio-economic ecosystems.

The impact of thi milestone can be mitigated, it was pointed out,  by digitization tools and platforms that can improve delivery efficiency, strengthen procurement transparency, mitigate risk management and bring about a reduction in corruption throughout the PPP project’s lifecycle delivery process. Additionally, digital transformation would also provide PPP project managers and stakeholders with better data management which would support better project decision making.(8)

UNECE People Fırst PPP (PfPPP) Model Law(9)

For PfPPPs to be widely accepted and implemented, it is important that legal frameworks and PPP enabling environments are reformed and strengthened. UNECE approved a People-first PPP/Concession Model Law with the help of international PPP experts in November 2021 that could serve as a starting pint for many governments.

As stated by UNECE – 

“the purpose of this law is to establish the legal framework for “People-first” Public-Private Partnerships (PPPs) and the contracts that give effect to them in including the rules and procedures governing their selection, preparation, appraisal, procurement and implementation, the contractual principles and institutional arrangements applicable to them, and assist in the orderly and coordinated delivery of PPPs.”

This model law applies particularly to PfPPPs which can help promote economic growth and social development in ways that encourage the UN’s Sustainable Development Goals (SDGs). The law does not stand on its own but is also aligned with the UNCITRAL Legislative Guide on PPPs and related Model Legislative Provisions. The model law states that the People-first PPP Principles included within it represent a new model for PPPs, designed to achieve a range of sustainable development outcomes which are critical to the SDGs and which build on people sensitive PPP attributes that include:

  • Increased access to essential services and decreased social inequality and injustice
  • Enhanced resilience and responsibility towards environmental sustainability
  • Improved economic effectiveness and fiscal sustainability
  • Replicability and the development of further projects
  • Full involvement of all stakeholders in the projects. 

UNECE – as a PfPPP champion – trusts that “PPPs structured and implemented in accordance with the provisions of the non-binding PPP Model law can therefore be expected to promote the abovementioned outcomes. They should thus represent enhanced “value for money” in the true sense of “value for people”, in terms of their long-term, net value for consumers, government and the wider public, considered over their life cycle in the light of all their significant impacts, for the greater good of all.”

PfPPP principles also include a unbending commitment to the inclusion of anti-corruption best practices in PPP procurements, as well as a cautionary approach to USPs which can be fraught with perceptions of corruption and nepotism.

Desıgnıng PPPs that Keep on Delıverıng

If PfPPPs are to address sustainability and be adaptable to change whether it is expected or not, it is important that PPPs are resilient and keep on delivering on outcome expectations throughout their lifetimes. In other words, PPPs need to keep on giving if they are to be effective economic development tools.

At a 2018 Center for Strategic International Studies (CSIS) PPP symposium, Hartwig Schafer, World Bank Vice President for Global Themes expressed his candid support for delivering PPPs more effectively as an economic development tool that also addresses eliminating poverty and boosting shared prosperity is encouraging. This goal can only be achieved if PPPs continue to deliver beyond their expiry date. 

We have to ask ourselves, why do we design PPP projects that have a limited life expectancy?  We do not have to deliver static projects with a limited shelf life. Instead, we need to push for “Regenerative PPPs (R+PPPs)” that incorporate resilience and sustainability best practices and operational architecture and design through an approach that focuses on delivering long-lasting (future proofed) PPPs  that proactively renew their stated purpose beyond a contract’s lifetime. To implement R+PPPs, a change of mindset by PPP architects needs to take place. New considerations include:

  • Flexible agreements that include clauses that can refocus projects to seamlessly adapt to unanticipated changing circumstances such as economic, political, environmental, and climate change influences.
  • The introduction of incentives that encourage the adoption of new innovations and technologies beyond the original design-build stage.
  • Developing a best-practice mechanism that constantly recalibrates projects to adapt to potential challenges of technological and facility obsolescence—a real threat as project delivery periods of performance increase in length.
  • Use of alternative financial (and refinancing) tools that are promoted by responsible investors interested in delivering projects (both infrastructure and services) that can be sustainably operational beyond their original period of performance.
  • Delivering PPPs that are proactively adaptive and produce even better deliverables that were unimaginable under “myopic” insights that existed at the initial project conceptual phase.
  • Synthetization of sustainable and resilience practices into a new generation of practices that create the infrastructure (and services) that are regenerative and don’t need to be rebuilt.
  • Identifying transparent and competitive procurement procedures that allow exceptionally well performing incumbent operators of PPPs to continue delivering projects if they exceed delivery goals.
  • Exploring mechanisms that enhance the regenerative sustainability of projects that are transferred back to the public sector at the end of the contract period of performance.
  • Finding ways to appropriately reallocate new risks that emerge as projects evolve over time under a regenerative paradigm.

We are capable of embracing a new development horizon, supported by exponentially evolving human knowledge that can implement PPP-financed infrastructure projects (and services) that can become regenerative and are as long lasting as they have utility. Detractors may say it is too costly to develop projects with these underlying expectations. It should be asked – would it not be better to embrace regenerative projects that continue delivering than going back to the drawing board every 30 years to launch a replacement project? There are practical limitations on the lifetime of infrastructure, but there are also opportunities to innovatively extend performance and project resilience through regenerative approaches.

It seems counterproductive to focus on projects that have a designed-finite lifetime when we can focus on innovative PPP projects that are truly regenerative and future proofed. The United States would not have the infrastructure crises it currently has if projects that were built 50 years ago incorporated regenerative practices that future proofed them. Time is running out. Financial and capital resources are scarcer as population and climatic pressures increase. Now is the time to explore PfPPP delivery mechanism that regenerate all the building blocks that deliver PPP projects during their lifetimes—and beyond—so we are not limited in our planning to rationales that accept artificial expiration dates for projects that are often induced by contract clauses and not by practical considerations of sustainability, resilience and adaptation.(10,11)

Incorporatıng ESG ınto PPP Infrastructure(12)

The negative impact of global climate change on PPPs is causing private sector investors increasing concern, especially against the context of increasing accountability. The integration of environmental, social and governance (ESG) factors into PPP projects provides an opportunity for investors to reduce environmental and social risk through ESG practices that promote investment in innovative, sustainable, and resilient infrastructure. The principles are also complimentary to those required for PfPPPs. 

Increasingly, perception fears about accusations of project “green washing” ESG have resulted in concerted mitigation efforts that are more than just corporate social responsibility window dressing exercises.  Integrating ESG into infrastructure decisions requires a systematic and verifiable governance (implementation) approach. The adoption and implementation of ESG factors in infrastructure projects is increasingly being driven by a collective (and preferably voluntary) implementation of social and environmental considerations through improved governance and monitoring and reporting of compliance with ESG values. This also requires adherence to prescriptive actions by infrastructure project proponents and investors who are then held accountable for financial returns and well as social and environmental stewardship. 

To ensure accountability, the collection of ESG data should be encouraged by oversight organizations at all levels. For example, the European Union (EU) ESG taxonomy lays out conditions for ESG implementation and accountability. Additionally, the U.S. Securities and Exchange Commission recently announced that ESG accountability will be an important requirement and that its conditions should be monitored. These principles are also reinforced by OECD guidance on strengthening ESG practices, and the Abu Dhabi Investment Authorities ESG policy, which is focused on public-private partnerships.

One of the biggest challenges is the absence of legal frameworks (including the lack of comparable ESG criteria, assessment methodologies, and ESG integrity measures).  If legal precepts are harmonized with the PFPPP model law requirements, then ESG considerations will be an additional PPP tool for PPPs as agents of economic development. The creation of a collaborative coalition of public and private sector partners who can initiate reforms, knowledge sharing and information dissemination is underway. Hopefully PfPPP Incentivizing of ESG project innovations and the implementation of policies that are harmonized internationally will most certainly improve ESG compliance, accountability, and mitigate greenwashing of future infrastructure project’s ESG ratings.


Widespread criticism of PPPs is receiving greater attention from ethical PPP practitioners who want to develop projects that are agents of development and not seen as privatization and excessive profit-making opportunities that privatize profit and nationalize debt.

It is important that mistakes are avoided.  They include: choosing the wrong PPP models for projects, fast tracking of projects without SDG and ESG considerations, incomplete and inadequate feasibility studies that ignore climate, environmental and societal needs, and the absence of project prioritization for maximum VfM, VfP and VFF outcomes.(13)

PfPPPs offer the opportunity to mitigate many criticisms and lead to projects that are more resilient, sustainable and adaptable to the rapidly changing world we live in.  We can navigate new paths to more successful PPPs if we:  are more informed, deliberate and cautious in our approach to PPPs; we apply principled decisions when selecting and prioritizing projects that really do contribute to economic development versus proliferating vanity projects that that deplete limited government resources; we embrace stakeholder participation in project planning; and we strengthen enabling environments and accountability.(14)


  1. Public Services International (PSI) 2015 – Why Public Private Partnerships Don’t Work: The Many advantages of the public alternative –
  2. For additional readings PPPs as development tools see – Public-Private Partnerships and Sustainable Development Goals – What role can they play in their achievement in developing countries?
  3. For additional readings on PPPs as a development tool see –
  4. For additional reading –
  5. UNECE 2018 – Guiding Principles on People-First Public Private Partnerships for the United Nations Sustainable Development Goals (UN SDGs –
  6. For additional readings on Value for Future see – Putting People First, a Necessary Change in the Appraisal of Major Infrastructure Projects –
  7. For additional readings on VfM, VfP and VfF see – Public-Private Partnerships and Sustainable Development Goals – What role can they play in their achievement in developing countries?
  8. To read more – UNECE Commits to Digital Transformation for Sustainable Development PPPs –
  9. To read the model law click on –
  10. To read more on Regenerative PPPs (R+PPP): Designing PPPs that keep delivering, see
  11. To read more about future-proofing PPPs go to – Future-Proofing Resilient PPPs
  12. To read more – see GIH – A strong enabling environment can integrate ESG into infrastructure investments –
  13. To read more about common PPP mistakes see – Five Common Mistakes made By the Public Sector when Procuring Public-Private Partnership Projects –
  14. To red more about new perspectives on PPPs and how to navigate new paths, see –