In his March 1996 inauguration speech in Freetown, Sierra Leone, President Ahmad Tejan Kabbah acknowledged the challenge of spurring economic growth in a country afflicted by conflict: “The tasks ahead are monumental… our country stands virtually in ruins, with thousands slaughtered, soldiers and civilians alike, tens of thousands maimed and mutilated, and hundreds of thousands displaced, traumatized, living in poverty, diminished in spirit and body, and the country’s moral, physical, and social infrastructure destroyed.”
Beyond the horrors of conflict itself, its lingering impact on economic growth is unsurprisingly and overwhelmingly negative. The 2011 World Development Report highlights that no conflict-affected state has achieved a single Millennium Development Goal, while Paul Collier’s analysis indicates that states suffering from conflict experience a reduction in economic growth of 2 to 3 percent per year of conflict.
In addition, the link between conflict and poverty is growing more pronounced, demonstrating that poverty is both a symptom and a cause of national fragility. While states that successfully break the conflict cycle grow quickly, those that do not are mired in increasingly bleak circumstances. In 1990, 20 percent of the global poor lived in conflict-affected states. By 2011, it rose to 50 percent. By 2025, the Overseas Development Institute expects that over 80 percent of the global poor will live in conflict-affected states. As a result, conflict-affected states have become a key focus for international donors, consuming more than one-third of total development aid.
Creating economic opportunity after conflict reduces the risk of resurgent conflict and promotes state-building. However, selecting and implementing the right policies to enable economic growth is a task that has eluded most developed countries for the last several years. After months, years, or decades of inter- or intra-state violence and conflict, creating such conditions is even more challenging—yet it is all the more vital, given the far-reaching repercussions of being trapped in the conflict cycle.
Conflict-affected states have become a key focus for international donors, consuming more than one-third of total development aid.
The Need for an Infra-vention
Basic infrastructure services create opportunity and spur economic development. But conflict-affected states are often hindered by damaged and destroyed infrastructure, and a lack of capital funding, technology, and skilled management to turn plans and strategies into power plants and roads. Increasing access and transforming infrastructure service delivery amid fiscal and capacity constraints can lead states to move beyond traditional public provision of infrastructure to consider other service delivery models.
Many developed and developing countries have leveraged private sector expertise in the provision of infrastructure services through public-private partnerships (PPPs). Appropriately designed PPPs can help governments in conflict-affected states increase the availability and efficiency of service delivery, and in some cases mobilize private capital for infrastructure investment. By capturing the innovation and efficiency that private sector involvement can bring, PPPs can help overcome the cycle of low investment and low productivity that may contribute to resurgent conflict. Most critically, PPPs focus on providing access to basic services (power and water), access to markets (transport and logistics), and access to finance (telecommunications), all essential elements in helping post-conflict economies to start moving again.
Sustainable PPPs, however, require careful structuring to delicately balance national development and infrastructure needs with the ability to attract and incentivize experienced private sector partners. Such PPPs recognize the need for flexibility in rapidly changing circumstances and focus on the unique challenges that different states face. One particular PPP model that has demonstrated replicable success in post-conflict environments involves an innovative use of donor funds to develop projects that can be attractive to the private sector, as with Liberia’s quest to restore power to its citizens. By leveraging donor funding to enhance transaction viability in challenging circumstances, PPPs can provide an output-based mechanism for donors to support infrastructure development and the broader state-building process.
An efficient public sector is a prerequisite for a well-functioning state. However, developed country experience has shown that the private sector is sometimes better positioned to deliver necessary infrastructure services. In addition, the expertise and innovation that can be gained from well-designed private sector participation is perhaps even more valuable in a fiscally and capacity-constrained post-conflict environment.
Working together, the public and private sectors can deliver basic infrastructure services to meet critical public needs, resulting in increased opportunities for economic growth. By assisting conflict-affected states in delivering on their promises, the private sector can play a leading role in helping states remain on the road to peace.