Development in Latin America and the Caribbean (LAC) faces significant challenges; one of the most critical is to increase investment in infrastructure projects.
In this regard, data from the Inter-American Development Bank (IDB) and other institutions suggest that there is a significant gap: around a 5% investment of regional gross domestic product (GDP) is needed to reach the development levels of countries such as South Korea or Japan.
LAC governments do not have the financial resources needed to bridge this investment gap. It is therefore essential to increase private participation in the construction, operation, and maintenance of projects in various sectors including highways, renewable energy, water and sanitation, solid waste, hospitals, and schools.
Public-Private Partnerships (PPP) are an alternative for the development of strategic infrastructure projects. In order to successfully implement PPPs, it is necessary to take a series of actions to bolster the structuring process. These range from the creation of a regulatory framework to appealing contractual clauses for the private sector. This will improve the probability of success in infrastructure development and fulfillment of the goals set by governments and companies.
Our innovative solution to support PPP development draws on IDB Invest’s experience and leadership in financing this type of project and developing sustainable infrastructure to improve the prospects for success of PPPs in the region. With this in mind, we offer two kinds of support:
• For LAC governments, we advise on the design and implementation of bankable bidding processes, including the financial, legal, and socio-environmental structure of tender documents and PPP contracts. We provide support during the bidding processes, during the definition process of winning bidders, as well as during the development and implementation of global- scale bid promotion.
• For the private sector, we support the presentation of Private Initiatives, aiming to create projects that have an impact on the development and mobilization of private capital.
We seek to implement sustainable solutions in our support of PPP development, including climate change mitigation and adaptation actions; gender, inclusion, and diversity factors; as well as mixed financing based on the needs of each initiative to improve the bankability of projects and the quality of regional infrastructure.
The added value of the IDB Group guarantees a comprehensive vision of PPP development.
The support provided by IDB Invest is immersed in the context of the IDB Group’s comprehensive PPP strategy. This strategy spurred the creation of a Single Window solution, in which we use the PPP knowledge and experience of IDB and IDB Invest for the development of infrastructure projects. The Single Window allows us to provide complete support for the promotion of private investment and the strengthening of the capacities of the public sector in LAC--from the creation and implementation of adequate legal and regulatory frameworks and the design of a list of solid projects to the structuring of bidding documents and bankable PPP contracts, as well as the financial structuring for private developers. Our operations also benefit from the new structure of the IDB Group which allows us to have just one representative in each country coordinating the work between IDB Invest and IDB, making our support even more efficient.
In this way, we provide full support during the entire PPP life cycle and contribute to the promotion of economic and social development in the region.