Empirical and anecdotal evidence suggests that SPVs have served the development community and beneficiaries well. With further adjustments in design to make them even more fit for purpose, the future for SPVs in the development business looks fairly secure, with new SPVs being set up more recently. Some key aspects of SPVs, that has led to their popularity, are the ease with which joint/multiparty funding can be handled, longevity, embeddedness and legitimacy, absorptive capacity, value for money, flexibility and other valuable characteristics.
KPMG International Development Advisory Service (IDAS) has been at the frontline in the design and implementation of a number of the most significant SPVs, particularly in Africa, from which millions of poorer households have benefited. This paper by Julio Garrido-Mirapeix and Hugh Scott takes a critical look at Special Purpose Vehicles (SPVs), from the perspective of the development community using such vehicles as one modality through which aid programmes can be delivered if an SPV is to achieve its stated aims and objectives. It also examines why there has been increasing interest in SPVs, their alternative legal forms and domiciles, the various roles “owners” can and should play, and the possible governance and management arrangements they can adopt.
In recognition of the fact that SPVs will be increasingly important as current efforts to blend soft and commercial finance become more frequent, we highlight what needs to be done right for them to work effectively, and share the lessons we’ve learned to inform those wishing to set up similar development mechanisms.
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