IMPLEMENTING UNIQUE GHANAIAN PPP

By: Tony Yeboah-Asare Saturday, 26 September 2015 13:11

At the second Global Public-Private Partnership (PPP) Conference recently held in Kumasi, the Minister of State in charge of Public, Private Partnerships (PPP), Mr Rashid Pelpuo, reiterated the government’s decision to partner the private sector for infrastructural development to stimulate economic growth.

He identified energy, roads, hospitals, harbours, aviation, housing etc. as key priority areas. But, what has elicited this write-up is the call at the conference by the Metropolitan Chief Executive of Kumasi, Mr Kojo Bonsu, for a framework that allows the private sector to channel resources and expertise into infrastructural development at the local level. According to the 2010 Africa Infrastructural Country Diagnostic Report (AICD) published by the World Bank, Ghana is ahead of much of the continent in many facets of infrastructural development. We score well above our low-income peers on household access to road, power, water and mobile telephones. Nonetheless, the country still has a long way to go as it ranks 110th out of 139 countries on infrastructure under the World Economic Forum’s Global Competitiveness Index (GCI) 2011-12 and lagging behind middle-income countries in Africa. The bases of these statistics are in the key infrastructural sectors of utilities and transportation. It therefore makes perfect sense that the government’s priority areas are in these economic infrastructural categories. However these areas require massive capital injection mainly from foreign capital markets.

Statistics

Incidentally, available statistics indicate that there may be realistic prospects for increasing the flow of resources to infrastructure from the private sectors; Ghana had not attracted as much private finance for infrastructure as have other African peers. The country captured private investment commitments worth approximately 0.9 per cent of GDP as against other countries such as Benin, Democratic Republic of Congo, Kenya, Nigeria, Senegal, Tanzania and Uganda which all captured between 1.0 and 1.6 per cent of GDP for infrastructure investment, while the most successful country in this regard, Mozambique, had captured in excess of 3.5 per cent of GDP. Private-Public Partnership worldwide, as part of solution to close funding gap for infrastructural project, is unique for each country. Our attention, therefore, should also be focused on developing our unique PPP framework, which can respond to our peculiar challenges especially in the social infrastructural category at all levels. And this should be led by the indigenous Ghanaian private sector.

Successful PPPs

Successful PPP’s are not easy to implement. It requires careful planning and due diligence. Countries like Brazil and India, which attract more than a third of the Global PPP budget between them, are successful mainly because of the attention paid in the preparation of bankable PPP projects as well as the legal and home-grown institutional frame that had been put in place for analysis, approval and implementation of such projects. It is in this direction that there is the need to operationalise our PPP to allow the indigenous private sector to be involved in especially the social infrastructural sector. There are several examples of the chief executive’s reference point with regard to social infrastructure such as markets, car parks, health, education, sanitation, tourist facilities etc that can be done with the involvement of the Ghanaian private sector operatives for the mutual benefit of the investors and the public if the right framework is put in place. For a start, government must partner the various stakeholders for the preparation of appraisal and feasibility studies of the identifiable projects at the national, regional and district level. There is the need to develop good and viable PPP projects, i.e. projects that are cost benefit justified and promote value for money than traditional procurement.

Whether a project meets all these criteria cannot be fully assessed until the project is fully designed. This risk/cost of developing such projects could be offloaded to a private entity; be it designing consultants, financial institution or investor. This can be a significant advantage where limited government capacity means the private sector is better able to identify infrastructural bottlenecks and innovative solutions. I am sure if there is a proper framework arrangement in place; one can literally take monies from the occupants/tenants in the Central Market in Kumasi or at Market Circle in Takoradi to develop the respective markets. Is it not possible for government to partner our indigenous private sector to develop first-class residential facilities?

At the district level, where government resources are always not enough, indigenous private capital can be encouraged to develop markets, car parks, tourist attraction sites, toilet facilities etc. on PPP basis. There are countless examples where the private sectors can see opportunities that government agencies miss. For this reason, many successful PPP programmes provide ways in which the private sector may originate projects for consideration by government. This allows government to benefit from the knowledge and innovative ideas from the private sector. It must be stressed that the development of PPP cannot be the entire solution to fill the infrastructural gap of any country. But if it is well structured it can provide a proper impetus to fill the gap of especially the social infrastructural sector which affects the citizenry on a daily basis. This will create a cycle of mutual benefit for all parties involved, with the private sector not just a benefactor but a beneficiary as well of the output service that PPP projects provide.