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8th October 2014

The achievements of the Private Infrastructure Development Group - ten years on

Keith Palmer heralds PIDG a ‘successful innovation of development assistance’ with its first ten years providing a ‘strong, successful platform for financing infrastructure in low-income countries'.

Keith Palmer has held senior positions in the private sector, the public sector, the voluntary sector and academia, and has worked extensively in developed, developing and transition economies. He previously held the position of Vice Chairman of Rothschild, is founder and Chairman of CEPA, worked for the World Bank and IMF and also in senior positions in the public sector in Tanzania and Papua New Guinea. As a former director of GuarantCo, and former Chair of EAIF and InfraCo Africa, Keith is intimately familiar with the Private Infrastructure Development Group (PIDG).

The report, entitled 'Innovation in International Development Assistance: Ten Years of the Private Infrastructure Development Group (PIDG)', starts by acknowledging that ‘increasing access to affordable infrastructure is one of the greatest challenges facing low-income countries…[with] the World Bank Africa Infrastructure Country Diagnostic [identifying] there is an infrastructure financing gap in Africa of about $35 billion every year’.

PIDG’s ‘novel structure’ means it uses limited public funds from its Donor Members to contract this gap by overcoming the constraints deterring private investment so as to catalyse private sector capital and involvement in infrastructure sectors in low-income countries. The report identifies five distinctive features of PIDG:

  • ‘Separate PIDG facilities each focused on removing different constraints holding back private investment but all operating within a common governance framework;
  • The ‘partnership by contract’ structure where donors collaborate to achieve a common purpose but where each of them can support those facilities it wishes to produce;
  • Private sector leadership and management of the PIDG facilities to enable efficient and effective operations subject to codified PIDG rules;
  • Comprehensive, effective governance at the PIDG and facility levels to ensure PIDG rules are complied with and development impact and financial objectives are met; and
  • Financial structures designed to catalyse additional private capital for infrastructure in low income countries in amounts very much greater than funding provided by PIDG’.

The report continues to identify that ‘PIDG has achieved high development impact’, it ‘has successfully mobilised much more private sector capital than PIDG could ever consider investing with its own resources’, its ‘rules mandate full transparency and clear accountability’, and ‘PIDG achieves very good value for money’. Overall it is considered that ‘PIDG is an example of successful innovation in development assistance’ and that ‘during its first decade PIDG created a strong, successful platform for financing infrastructure in low-income countries'.

The report concludes that ‘as Donors increasingly focus on the importance of achieving a high rate of inclusive economic growth as a necessary condition for achieving rapid poverty reduction, the PIDG approach offers a powerful means of achieving it, in infrastructure and other relevant sectors’.

Read the full report from http://www.keithpalmer.org/paperinter.php