Proof is piling up that private sector finance is not an easy development fix

While formal talks at the July UN financing for development summit in Ethiopia were deadlocked, World Bank executives, investors, and developing country officials gathered in Addis Ababa’s best hotels to eat canapés, drink wine and discuss how best to “leverage” private finance into public services and infrastructure in developing countries using public-private partnerships (PPPs).

This benign-sounding investment model is on the up but it also carries some big risks that development analysts and advocates are only just starting to comprehend. Here in the UK, where the PPP model was first invented, the true costs are coming home to roost. Cash-strapped NHS trusts are now paying the private sector a record £2bn a year for fees for the construction and operation of hospitals under the private finance initiative (PFI), and several are facing bankruptcy because of these exorbitant costs.

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