Public-private partnerships: Driving force of the developing world
While a relatively new phenomenon, public-private partnerships (PPPs) are creating change across the globe and particularly in the developing world. In fact, to date, PPPs have been used in the developing world to achieve outcomes as diverse as combatting malaria, electrifying villages, expanding ports, building roads, supporting the development of utilities infrastructure, and even providing support in the wake of natural disasters.
The way in which public-private partnerships work is relatively simple. Private sector institutions, often large businesses, work together with public institutions such as governments to carry out a specific task (such as the construction of a hospital or infrastructure) – with some sort of mechanism for the private sector partner to generate returns built into the project (e.g. a newly created road may operate as a toll-road for a set period).
Risk (and reward) is spread between the two parties taking part in the PPP, making taking part in such developments a more attractive and viable prospect for both.
While PPPs are used all over the world, they are particularly appropriate in the developing world, where governments often lack the access to finance that enables large capital investment projects to take place. That lack of access means economic and social progress are stymied.
Good infrastructure is required in order to drive development, but the creation of infrastructure requires high levels of funding, which is difficult for a developing country to achieve…unless it has the infrastructure it requires to sustain development. It’s a vicious circle that many developing countries across the world find themselves in. In fact, current estimates of the global funding gap between the money being spent in developing nations, and the levels of funding required to support sustainable growth are as much as $1 trillion US a year.
Public-private partnerships can be used in the developing world to help developing countries escape this Catch-22, and inviting private sector participation through PPPs is one viable strategy countries in the developing world can use to break this cycle. Because so many potential PPP projects in the developing world concern the creation of key infrastructure and utilities assets, which are generally considered to be lower risk investments, it is also a way that the private sector can secure reliable returns for investors for many years to come.
How Rusal has supported public-private partnerships in the developing world
Rusal has taken part in public-private partnerships across the world with great success, investing in everything from building houses to developing ports as part of its PPP projects. How seriously it takes PPP projects can be assessed by the sums it invests. In 2015, Rusal funded its public-private partnerships to the tune of some 90.2 million roubles.
Rusal is so passionate about PPPs that it is actively doing its bit to educate the next generation about how these partnerships can help provide workable solutions to development problems, particularly in the developing world. In 2013, it collaborated with the Russian Agency of Strategic Initiatives to launch the Centers of Innovation in the Social Sphere (CSS), which aims to raise awareness of the power of social entrepreneurship and how PPPs can enable the public and private sectors to work together for public good.
Rusal against Ebola: case study for public-private partnerships in the developing world
Rusal is very well-placed to educate both industry and individuals about how PPPs can be successfully implemented in the developing world, not least because of its recent experiences in creating a leading-edge medical centre that has helped to transform the healthcare landscape in the developing country of Guinea.
As one its largest private sector investors and employers, Rusal has a long-standing relationship with Guinea. When the deadly disease of Ebola began to rampage through the country in 2014, Rusal knew it had a duty to help. The company did this by funding and project-managing the construction of the Centre for epidemic and microbiological research and treatment (CEMRT), a medical centre developed on PPP principles.
Built in just 50 days at a cost of $10 million dollars US, the centre included state-of-the-art healthcare facilities, including a provisional hospital, infection hospital, mobile laboratory and a blood and plasma transfusion department. This particular PPP had two main aims: To treat and prevent the spread of Ebola now, and to play its part in developing vaccines and treatment for this and other communicable diseases in the future.
It has achieved both. Rusal’s public-private partnership had the best response rate of any treatment centre in Guinea; 62.5% of those treated for Ebola at CEMRT made a full recovery. The centre was also a major factor in the development of the Russian Ebola vaccine, Evac Combi and is now a major world hub for scientists who are in the process of developing and testing vaccines for Ebola.
This is not Rusal’s only successful public-private partnership in Guinea, however. In 2014, it also launched the Dian-Dian Public Private Partnership, a PPP which would see Rusal help Guinea benefit from its natural resources through a mining project at what is the world’s largest bauxite deposit. Under the terms of the PPP, Rusal is also investing in infrastructure projects including a road, a railway and a port, assets that will not only support the success of the project, but also support economic development in Guinea for many years to come.
Discussing the inception of this project, Rusal CEO Vladislav Soloviev pointed out that this project was a “win-win” in the way it had potential to “develop a positive investment climate in the republic and improve Rusal's competitiveness as a leader in the global aluminium industry and one of the largest investors to Guinea.”
And that, in essence, is the beauty of public-private partnerships. They enable big business to generate healthy returns and enable countries – especially in the developing world – to benefit from investment which will help them to foster sustainable economic development.