MCC’s Support for Public -Private Partnerships and Infrascope November 22, 2019
Agenda for webinar 1. Introduction to MCC and its support for PPPs (Anthony Welcher, MCC) 2. MCC Infrascope 2019 (Leo Abruzzese, EIU) 3. Q&A (Leo Abruzzese, EIU; Stephen Gaull, MCC) 2
The MCC Mission Reduce poverty through economic growth . MCC Investments • Promote economic growth • Help people lift themselves out of poverty • Create more stable, secure countries and regions • Open the door for companies to work in new markets with fewer up-front risks • Enhance American interests 3
What Makes MCC Unique • Minimum economic rate of return • Strict 5-year clock • Focus on results • Country-led solutions and implementation 4
How MCC Selects Partner Countries We use a data-driven, transparent method to identify the best-governed poor countries where MCC can reduce poverty through Ruling justly economic growth. Investing Economic in people freedom 5
Sectors Where MCC Works Investments selected based on an assessment of the greatest constraints to inclusive economic growth Investments address policy, institutional and social constraints to growth 6
Country Ownership MCC partner countries are responsible for the design and implementation of MCC programs — creating sustainability 7
Countries Where MCC Works Over the last 15 years, MCC has signed 37 Compacts with 29 countries worth more than $13 billion. MCC has also signed 27 Threshold Programs with 26 countries worth $631 million 8
MCC support for PPPs • MCC seeks to strengthen partner countries’ capacity to develop and manage PPPs that are bankable, affordable, and offer value for money . • MCC seeks to bring well-structured PPPs to market in partner countries to support the agency’s mission . • MCC can provide a full suite of blended finance solutions across the PPP cycle , covering upstream enabling environment and downstream project preparation and deal facilitation, including support for transaction advisors, viability gap funding, and guarantees. 9
MCC support for Infrascope MCC commissioned 20 countries in MCC-Commissioned Infrascope Studies addition to the 16 MCC partner countries commissioned by regional MDBs 2019: 2018: MCC support of Infrascope constitutes a Côte d'Ivoire Benin public good, with benefits for: Burkina Faso Ethiopia • Private sector Kosovo Ghana • Governments Lesotho Malawi • Donors Liberia Senegal • Public at large Nepal Sri Lanka Timor-Leste Niger Togo Sierra Leone Solomon Islands The Gambia Tunisia Zambia 10
For more information, visit www.mcc.gov. 11
Infrascope 2019 Measuring the enabling environment for public-private partnerships in infrastructure in MCC partner countries Leo Abruzzese Senior Global Advisor The Economist Intelligence Unit 22 November 2019
Agenda Introduction to the Infrascope and MCC Using the Infrascope II. Methodology Framework and methodology MCC partner country performance Policy implications 13 13
Introduction to the Infrascope and MCC
What is the Infrascope? The Infrascope is a policy benchmarking framework that evaluates the capacity of countries to implement sustainable and efficient public-private partnerships (PPPs). The indicator framework focuses on five assessment domains across 69 countries and regions. Regulations Investment and Financing Institutions Maturity business climate Key infrastructure sectors include: Transportation Water / sanitation Electricity Solid waste 15 15
What is the Infrascope? . The Infrascope was created to fill knowledge and information gaps and to provide cross-country comparisons of the PPP enabling environment to assist in the policy dialogue and to facilitate market-entry decisions for investors. Regional versions of the Infrascope have been produced since 2009. For this edition, 36 MCC partner countries are covered across Asia, Africa, and Europe, of which MCC commissioned 20 country studies. 16 16
EIU definition of PPPs Long-term contracts with transfer of operational and commercial risk to private sector. 17 17
The Infrascope knowledge repository The EIU’s Infrascope website houses multiple resources that are freely available for stakeholders to explore and gain insight into the enabling environment for PPPs from a global, regional and country-specific perspective at www.infrascope.eiu.com. Infrascope Data Comparative digital hub representation visuals Index Detailed Excel Knowledge framework workbook management 18 18
Using the Infrascope
Using the Infrascope Index • Showcases trends towards evolving enabling environments for PPPs in infrastructure; identifies global best practices • Highlights how industry, policymakers, the private sector, and civil Best society can work together practices • Identifies gaps in policy frameworks and enables country-level and regional comparisons, allowing for trend identification and analysis • Leads to concrete policy-based recommendations for action Gaps • Provides a global platform for action around PPPs in infrastructure • Sparks dialogue within the policy community and the private sector • Serves as the basis for broader implementation and technical assistance Advocacy programs 20 20
Using the Infrascope to develop policy response mechanisms Development organizations can use the Infrascope to: Identify opportunities to improve the enabling environment for PPPs; Measure progress in countries’ PPP programs for infrastructure. Governments can use the Infrascope to understand where gaps lie in policies, resource allocation, and transparency, and to continually update their PPP frameworks. The private sector and investors can use the Infrascope as a PPP policy landscape guidance tool to guide new market entry decisions and facilitate ongoing assessment of investments. 21 21
Infrascope framework and methodology
The Infrascope framework 1. Regulations 1.1 Conducive regulatory environment 1.2 PPP selection criteria 1.3 Fairness/openness of bids & contract changes 1.4 Conciliation schemes 1.5 Regulators’ risk -allocation record 1.6 Coordination 1.7 Renegotiations 1.8 Sustainability 5. Financing 2. Institutions 5.1 Government payment risk 2.1 PPP institutional framework 5.2 Capital market for private infrastructure 2.2 PPP dedicated agency, stability Infrascope finance 2.3 Project preparation facilities 5.3 Institutional investors & insurance 2.4 Transparency and market accountability 5.4 Currency risk 4. Investment and business 3. Maturity climate 3.1 Experience with infrastructure 4.1 Political effectiveness PPP contracts 4.2 Business environment 3.2 Expropriation risk 4.3 Political will 3.3 Contract termination 4.4 Competition environment in the local industry 23 23
Overall methodological guidance The EIU Infrascope indicator framework was developed in collaboration with multilateral development banks, government agencies, and the private sector. It consists of 23 main-indicators, with 66 qualitative and 12 quantitative sub-indicators, respectively. 78 sub-indicators Scoring system Rigorous examination of local laws and regulations Qualitative indicators Aggregated category performance on a scale of 0-100 Rankings 24 24
MCC partner country performance
Infrascope findings: global comparisons MCC countries, typically LICs and LMICs, score 55/100 overall and perform well against the global index (57/100), which includes a larger proportion of upper-middle-income and high-income countries. Overall, top scoring MCC countries include – Cote d’Ivoire (69 ), Guatemala (69), Honduras (69), El Salvador (68), Senegal (65) and Kosovo (63). Infrascope scores * Some MCC countries have graduated to UMIC MCC countries All countries Overall score Regulations Institutions Maturity Investment and business climate Financing 0 10 20 30 40 50 60 70 Sources: The Economist Intelligence Unit; World Bank. 26 26
Infrascope findings: 36 MCC partner countries Within their own cohort, many of the 36 MCC partner countries are ranked as either “Mature” (> 80/100) or “Developed” (60 -79) across the domains of the Infrascope. Every MCC partner country has at least one PPP. MATURE (80-100) DEVELOPED (60-79) EMERGING (30-59) NASCENT (0-29) Number of countries ranked “Mature” or “Developed” Overall 11 Regulations 15 Institutions 21 Maturity 19 Investment & Business Climate 22 Financing 3 27 27
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