Media

NEWS

People First Public Private Partnerships (PfPPPs) and the United Nations Sustainable Development Goals (UN-SDGs): an African perspective

Since the outset of Covid-19, Public Private Partnerships (PPP) practitioners around the world have been engaged in discussions on the impact of the pandemic on PPP projects.

According to a survey carried at the beginning of the pandemic[1], some of the biggest Covid-19 related challenges for PPPs included:

  1. Concerns about shrinking investor interest in certain types of PPP projects (especially future projects) due to the weakening financial markets;
  2. Investors’ concerns about project bankability due to declining economies and user activities;
  3. Concerns about current projects being able to generate sufficient revenues and ability of governments to make availability payments;
  4. Concerns on how to address force majeure provisions in contracts (this was identified as being the most common type of concern by the survey);
  5. Adjusting project contract deliverables expectations due to project delays, potential terminations and the costs thereof; and
  6. Concerns regarding inflexible legislation, being legislation that is unable to proactively address impacts to PPP projects.

The survey also conveniently grouped the responses received by regions. The sectors identified as being most susceptible to the pandemic out of the Africa region were the transportation; tourism & leisure; power & energy and healthcare sectors. In the transportation sector, the most recurrent types of vulnerable projects (internationally) were toll roads; rail; airports and ports.

The sectors with the greatest post Covid-19 potential identified by survey respondents in Africa instead included the healthcare; digital infrastructure; agriculture; renewable energy and water & sanitation sectors.

As the survey points out, it is interesting to note, how, although healthcare was regarded as one of the riskiest sectors it was also widely regarded as one of the most promising sectors for PPPs. Green, renewable and smart technology reliant sectors were also seen as promising sectors for future PPPs.

The survey also included a section where respondents were asked to provide recommendations relating to opportunities in a post Covid-19 era. According to the survey’s report, some of the answers provided included assessing whether projects contributed to creating value for the people, value for the future, sustainability and resilience. Enhanced project selection criteria tied to the United Nations (UN) sustainable development goals (SDGs) and enforcement of feasibility studies that allow for the selection of meritorious, viable and resilient projects also constituted part of the recommendations as did the one’s that demanded an increase of PPP priorities for those projects that will focus on the achievement of the UN SDGs and People First PPPs[2].

The UN-SDGs

The UN SDGs[3] are a collection of 17 global goals designed to be a “blueprint to achieve a better and more sustainable future for all”.

The 17 SDGs are integrated – that is, they recognize that action in one specific area will affect outcomes in others and that development must balance social, economic and environmental sustainability.

Since the adoption of the UN SDGs a wide-ranging conversation is taking place on how to divert more public and private investments towards the world’s infrastructure needs. Indeed, recent estimates from the African Development Bank suggest that Africa’s infrastructure financing needs amount to USD 130-170 billion a year, with a financing gap in the range of USD52-92 billion[4] and PPPs have been seen as a possible modality through which to attract these resources. In this regard, it is also worth noting that under SDG 17 (‘Revitalize the Global Partnerships for Sustainable Development’), PPPs have been identified as a preferred implementation tool.

However, as the United Nations Economic Commission for Europe (UNECE) notices, not all PPPs meet the goals and objectives of the UN SDGs, notably sustainable development or poverty eradication[5]. In addition, evidence suggests that PPPs have sometimes failed to deliver the envisaged gains in terms of quality of service provision including its efficiency, coverage and development impact.

In light of these developments, the UN has been taken initiatives to make the PPP model fit for the UN SDGs, broadening the scope of PPP from a primarily financial tool that offers value for money, to a development tool with sustainable development as the objective and the real ‘value for people’ at its core[6].

People-First PPPs

People-First PPPs (PfPPPs) set out a clear statement that out of all the project stakeholders, people should be the priority and main beneficiary. The focus of PfPPPs should be in increasing access to water, energy, transport and education for instance, particularly for the most vulnerable segments of society. PfPPPs should also promote social cohesion, justice and disavow all forms of discrimination based on culture, ethnicity or creed.

The five criteria that define People First-PPPs (PfPPPs) also go beyond the traditional quantitative analysis of projects and focus on both qualitative and quantitative dimensions before, during and after a project’s implementation.

PfPPPs include projects that deliver the following outcomes:

  • Improve access to essential services and reduce social inequality and injustice;
  • Improve economic effectiveness and fiscal sustainability;
  • Enhance environmental sustainability and resilience;
  • Promote replicability and development of future projects; and
  • Ensure large stakeholder engagement.

These criteria, or outcomes, together constitute what is called a PfPPP. UNECE is currently working on a self-assessment tool with the intent to offer applicants the possibility to evaluate a project compliance to the PfPPPs outcomes. But with an infrastructure-financing gap in Africa estimated to be in the range of USD52-92 billion, working only on a small number of PfPPP projects will not be sufficient going forward.

Hundreds of PfPPPs projects will need to be launched and with PPPs having so far failed to gain momentum in Africa the challenge must be taken up in a coordinated manner[7].

As UNECE notices, upstream procedures and processes should be standardised to the extent possible and an enabling environment should be created to lower costs and make PfPPPs capacity building simple and effective especially at the local levels. In addition, guidance should be made easier and less encyclopaedic. Short, precise, and easy to read toolkits should be on the current wish list. Public and private sector players need to increase collaboration. A “code of conduct” may be needed to inspire and increase confidence to both public and private sector players; while standardization, appropriate legal and regulatory frameworks, a zero-tolerance approach to corruption and an independent dispute resolution system would help as it would fully involving all stakeholders in the projects[8] if PPPs are to finally start delivering on the Continent, and elsewhere, with the intent to meet the “real needs” of the people.

Governments in Africa will need to scale up capacity building and institutional development in order to deliver more effective public investments including PfPPPs that are consistent with the UN-SDGs. It is in this regard that international organisations like the African Development Bank and the African Legal Support Facility by leveraging on their relations with other international financial institutions and government counterparts will continue to work to help close the capacity gap in the public sector with respect to the needed knowledge and skill sets.

 

The African Legal Support Facility (the ‘ALSF’) is an independently funded and administered facility hosted by the African Development Bank (the ‘Bank’) that provides support to client countries in Africa in the negotiation of contracts with the private sector, including for PPPs. The ALSF also provides tailored and targeted capacity building workshops for Regional Member Countries of the Bank. The ALSF develops facilitation transaction tools such as PPP sectorial toolkits that allow Governments to be ready to take projects to tender, standard documents and model agreements. The ALSF provides advisory services (including transaction advisory services for the structuring of projects) to Governments through the provision of legal, financial and technical advisors. The ALSF regularly reviews country PPP frameworks and provides expert recommendations for improving such frameworks to promote project implementation. The ALSF proposes PPP Legal Hotlines to provide instant and specialized legal advice to PPP Units, Ministries and contracting authorities’ officials on PPP-related issues. The objective is to give government officials the opportunity to call upon when additional capacity is needed. The ALSF’s support can also take the form of rapid assistance, for instance through desk reviews of the legal & institutional component of feasibility studies or of unsolicited proposals. Finally, the ALSF has developed PPP country profiles that are published on its website and regularly updated.

 


[1] David Baxter: 157 PPP Practitioners from 69 countries share their insights on the status of PPPs in the pandemic epoch. Accessed at https://www.linkedin.com/pulse/157-ppp-practitioners-from-69-countries-share-insights-david-baxter/?trackingId=

[2] David Baxter: 157 PPP Practitioners from 69 countries share their insights on the status of PPPs in the pandemic epoch. Accessed at https://www.linkedin.com/pulse/157-ppp-practitioners-from-69-countries-share-insights-david-baxter/?trackingId=

[3] https://www.un.org/sustainabledevelopment/sustainable-development-goals/

[4] https://www.afdb.org/en/news-and-events/press-releases/africas-infrastructure-financing-reaches-all-time-high-2018-surpassing-100-billion-ica-32728

[5] Source: UNECE International PPP Centre of Excellence, Fourth International PPP Forum accessed at www.unece.org/ppp/forum2019.html

[6] Source: UNECE International PPP Centre of Excellence, Fourth International PPP Forum accessed at www.unece.org/ppp/forum2019.html

[7] Based on the African Legal Support Facility PPP Country Profiles 33 out of 54 African countries have already put in place a PPP Law (or Policy) and a PPP Unit with a further six countries having put in place a PPP Law or Policy only. However, the actual deal flow in Africa has been fairly limited so far. In terms of value, PPP projects in Sub-Saharan Africa during the period 1999 to 2019 were only about 5% of the total PPP investment globally. The PPP market in Africa is also a concentration of deals in a handful of countries with five countries including South Africa, Morocco, Nigeria, Egypt and Ghana accounting for more than 50% of all PPPs in Africa by value.  

[8] Information summarised from UNECE Fourth International PPP Forum, Forum’s Programme, accessed at www.unece.org/ppp/forum2019.html