Yes they can: SMEs filling the infrastructure gap in fragile countries

Photo: Trocaire | Flickr Creative Commons

In war-torn post-1991 Somalia, running water was a scarce commodity, to the misfortune of millions of people. Members of local communities rose to the occasion, “pooling” consortia of companies to fill the gap in water provisions. Eight public-private partnerships (PPPs) were formed through these consortia, benefiting 70,000 people in the Puntland and Somaliland regions of the country.

As demonstrated in the Somalia case, infrastructure needs are substantial in fragility, conflict and violence-affected (FCV) contexts—especially for recovery and reconstruction in war-torn areas. Yet often there is insufficient public sector funding to address such needs, compounded by lack of interest on the part of large private sector firms, who may not even be on the scene. In such FCV contexts, small and medium enterprises (SMEs), making up a substantial share of the private sector, may be critical to filling the infrastructure services gap.

In light of this not uncommon FCV reality, the Middle East and North Africa team of the World Bank’s Governance Global Practice Solutions and Innovations in Procurement Group has produced a toolkit to help policymakers and other stakeholders create an enabling environment for and arrange SME participation in public-private initiatives in infrastructure (such as PPPs).

By highlighting challenges and solutions to enable SME participation in infrastructure projects, in various capacities possibly also including financing, the toolkit also complements the World Bank’s Maximizing Finance for Development (MFD) approach to crowd in investments from private sector and nontraditional financing to fill critical infrastructure gaps.

The toolkit is based on lessons-learned in real-life case studies, data, responses to a stakeholder survey, perspectives of policymakers from FCV contexts, and experiences of international organizations and NGOs that shed light on key challenges and solutions in facilitating an SME role. The different types of possible SME participation presented in the toolkit can help achieve humanitarian recovery objectives while mitigating factors often contributing to fragility and conflict, such as lack of critical public services and absence of inclusive development. Thus, SME participation in the delivery of essential infrastructure may help set a foundation and serve as an engine for resilient, sustainable, and inclusive development in the FCV context.

The case studies, including from Benin, Mali, Mozambique, Rwanda, Somalia, and Cambodia, present a variety of challenges and solutions that provide invaluable lessons for creating an enabling environment for and arranging SME-based public-private initiatives in infrastructure. These case studies reveal a wide range of factors across legal, institutional, policy, capacity-building, financial, and other dimensions, pertinent to SME participation, as illustrated in Table 1. They also indicate the importance of sustained support and involvement of donors through technical and financial support.



At a global workshop held in Beirut, policymakers and practitioners from fragile environments across the globe confirmed their belief in the value of SMEs’ inclusion in infrastructure projects. They also revealed their willingness to address a variety of challenges to enable SME-based infrastructure delivery projects, across policy, institutional, legal, and capacity/financial dimensions. In particular, the participants noted that donors may help in this objective, such as by staying engaged and providing support in capacity building and financial guarantee programs, including SMEs in donor projects, advocating and raising awareness, strengthening management models, facilitating twinning arrangements, and providing key resources such as SME databases.

Moving forward, the practical utility of the toolkit will be harnessed by operationalizing it in specific FCV country settings in World Bank Group projects, as well as in projects supported by other donors. In that way, the toolkit will deliver on its potential to facilitate access to critical infrastructure services essential for sustainable recovery and inclusive development.

Providing Essential Infrastructure in Fragility, Conflict and Violence-Affected States: A toolkit for enabling SME participation—funded by the World Bank’s Public-Private Infrastructure Advisory Facility (PPIAF)—can assist policymakers and practitioners in government to create an enabling environment for SMEs to be engaged in private sector participation initiatives (such as PPPs) in countries affected by fragility, conflict and violence, and thereby generate benefits for delivery of essential services, recovery and reconstruction, regional job creation, SME growth and competitiveness, and shared prosperity.

The World Bank
Yolanda Tayler
Nazaneen Ismail Ali, Simeon Sahaydachny, Nataliya Langburd