The costs and benefits of the transaction-only approach

PPP advocacy is still dominated by the transaction-only approach that focuses on the completion of isolated projects and expects the generation of demonstration effects to motivate replication by others, and ultimately market development. This approach has naturally gravitated toward the only type of PPP that has demonstrated any success in developing countries, specifically greenfield projects, like build-operate-transfer (BOT) and build-own-operate (BOO) PPPs mostly for power generation and toll roads. But greenfield projects hardly represent a success in terms of development impacts. These projects maximize the mitigation of private sector risks by allowing private partners to build, operate, and own new assets for wholesale service provision, while leaving the retail management of end-user services to the same government departments and SOEs responsible for sector mismanagement in the first place. The generation of demonstration effects has also not led to project replication as expected, a fact illustrated by a case study that concludes this chapter. The 2017 Kigali bulk water concession was widely heralded as a successful effort to demonstrate the use of the greenfield IPP project structure in the water sector. But the project has resulted in very little in terms of positive demonstration effects and project replication.