PROMISES & PITFALLS

Without institutional capacity and financial depth, PPPs can backfire, creating a vicious spiral of debt, delays, and disillusionment. For the Global South, the challenge is not just to build more infrastructure quickly, but to build it right

- Rakesh Mohan & Divya Srinivasan

With infrastructure now seen as the leading engine of growth across the Global South, governments are under pressure to build — and fast.

But for most, fiscal space is limited; development aid is thinning; and long-promised climate financing remains elusive. As a result, countries are turning to private capital and reviving an old idea with renewed urgency: public-private partnerships (PPPs).

According to the World Bank, in 2024, lowand middle-income countries received $100 billion in private participation in infrastructure (PPI) investment, an impressive 20% increase from the five-year (2019-23) annual average of $83.7 billion. Yet history recommends caution. While the logic of mobilizing private finance is often compelling, the record is mixed. Too often, emerging markets have relied on models proselytized by global development finance institutions without paying adequate attention to local institutional constraints.

Moreover, the bankability of some types of infrastructure projectsmeaning a strong risk-return profile - tends to be limited, even in advanced economies. For example, very few highways have been developed by the private sector, which — for obvious reasons - is less inclined to supply non-remunerative public goods and services. This is even more the case with infrastructure projects, which typically come with a heavy burden of long-term debt.