Page 26 - A U4SSC deliverable - Guidelines on tools and mechanisms to finance Smart Sustainable Cities projects

Annex I provides a list of the 10 principles of people-first PPPs. Each of these principles
constitutes a response to a key challenge to PPPs for generating sustainable development,
and should be implemented by undertaking a series of actions. The document Guiding
Principles on People-first Public-Private Partnerships in support of the United Nations
Sustainable Development Goals provides a comprehensive overview of such actions. 4

For example, principle 9 of the Guiding Principles suggests using blended financing (a mix
of public and private-sector money) to promote private-sector investment in people-first
projects. The idea is not to put blended financing into projects that the private sector would
have financed themselves, but rather blending public or philanthropic capital with private
capital leading private investors to invest in areas where they otherwise would not have.

Two types of stakeholders often need to be engaged as part of people-first PPPs. These are:

(a) urban entrepreneurs, construction companies and project developers: these organizations
are the engines that develop the urban ecosystem further by pushing (via their business
missions, milestones and objectives) the growth of urban and suburban ecosystems where
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most economic activity is done. They require financing in order to do this, and spend time,
energy and resources on fundraising activities, and finding financing sources, such as investors,
lenders and grant providers. They commit to timelines and quality regarding delivery. These
stakeholders are often concerned regarding unfair valuations and bureaucratic hurdles and
delays from their “public” partners; and

(b) ICTs, engineering, procurement, and construction companies, and service providers: urban
development opportunities often require a whole set of solutions and equipment, from all sorts
of providers. These include lawyers, financiers, information technology, consultants, engineers,
architects, and manufacturers.

Investors can provide both funding and financing. The basic difference between these is that
funders do not expect repayment, while financiers do, and charge interest. Repayment is usually
financial, but non-financial returns are also possible. In simpler terms, “funding” is usually public
money (collected through taxes, etc.), and “financing” is private money (private-sector investors).

8 U4SSC: Guidelines on tools and mechanisms to finance Smart Sustainable Cities projects