1.1 While global attention has been on large nationally important transport PPP projects, subnational governments at the provincial and local levels have increasingly turned to PPPs for the provision of essential services. These include PPP projects in sectors like solid waste management, community/public toilets, water supply, energy-efficient street-lighting, primary health care, municipal parking, municipal parks and empty spaces, accommodation to students, and grain storage. These services, if delivered well, can have a transformative effect on the lives of citizens. Potable water, sanitation, and waste disposal projects improve local health conditions, increase life expectancy and quality of life, and reduce the duration of sickness and recovery. Rural farm-to-market roads, bridges, warehouses, cold storage, silos, and pedestrian overbridges can transform villages and towns once cut-off from mainstream economic infrastructure. These projects can also have direct implications for the local economy in terms of improving competitiveness by reducing health costs and raising labor productivity, among other things.
1.2 The positive impacts of small projects in various sectors could be substantial given the large numbers of people affected by the lack of access to basic infrastructure and services. In 2012, about 2.5 billion people globally did not have access to sanitation.1 Lack of sanitary landfills and unscientific design of landfills are considered to be responsible for leachate contamination of water sources of towns and cities2 having major impacts on the health of the population. In terms of post-harvest food grain losses, the estimated losses across countries are between 10-30% of total production. A 2007 study estimated up to $4 billion in post-harvest losses in Sub-Saharan Africa alone; this is equivalent to the annual calorific requirements of 48 million people.3 Small PPPs are more attractive and available for small investors, in particular local companies, providing new opportunities for local jobs and investment. Small PPPs are more available for local financiers, in particular banks, giving rise to opportunities for the local financial sector with no foreign exchange risk with foreign debt for the project. In addition, small PPPs, being local in nature, are also closer to the end users, and therefore may be better designed to deliver on their needs,
1.3 These projects may, however, present some intricate and difficult challenges unique to them as compared to larger projects of a similar nature. While the benefits of these projects are undeniable, few have been undertaken relative to the substantial requirement. The reasons for these being less common could include issues relating to government processes and procedures, impediments in sector policy and regulation, high transaction costs, lack of public and private sector capacity, or constraints in financing due to the risk profile of projects as well as the credit profile of the subnational entities sponsoring these projects. Small-scale PPP projects may show variations based on a host of variables and, therefore, may not be fully amenable to standardization in costs or structure beyond a certain point. On preliminary examination, though, there seem to be common constraints in structuring such projects that would need to be looked at more closely with the objective of finding ways to support their growth and sustainability.
1.4 The Investment Climate Unit of the World Bank Group (WBG) has undertaken a quick overview of global experiences in small-scale PPP projects in order to identify broad patterns that can help inform the direction of further work in the area. The PPI database and some larger databases from countries with substantive PPP programs have been examined broadly for trends associated with small-scale PPP projects. Ten projects have been examined in some more detail in terms of project characteristics and issues of interest. In addition, the preliminary review has been informed by discussions with practitioners familiar with small projects inside and outside the WBG.
______________________________________________________________
1 World Health Organization. Millennium Development Goal Fact Sheet 7. http://www.un.org/millenniumgoals/pdf/Goal_7_fs.pdf
2 World Health Organization.
3 Morgan, Nancy; Larson, Gunnar. 2011. Missing Food: The Case of Postharvest Grain Losses in Sub-Saharan Africa. Agricultural and Rural Development Joint Note No. 56. Washington, DC: World Bank. http://documents.worldbank.org/curated/en/2011/05/15283304/missing-food-case-postharvest-grain-losses-sub-saharan-africa