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ECONOMYWATCH: PPP offers opportunities for private sector growth

Aug 20, 2014, 10:15 AM | Article By: Osman Kargbo

A draft policy on Public Private Partnership (PPP) was validated last week on 14 August to create an enabling environment to facilitate private sector participation in upgrading, developing and expanding the infrastructure and services in The Gambia.

This laudable developmental programme is being facilitated by the Ministry of Finance in collaboration with the Gambia Chamber of Commerce and Industry (GCCI) and the British High Commission in Banjul.

PPP is defined as one of a range of cooperative ventures between government and the private sector, including private finance initiative, joint ventures and concessions, outsourcing, and the sale of equity stakes in State-owned businesses.

According to Graham Bannock, an author of several books in business and finance including Dictionary of Business, the goal of PPPs has been to extend the perceived quality of private management to the delivery of public services.

The UK Government’s sale of a large stake of its National Air Traffic Control System to a consortium of private airlines is a classic example. Baboucar Saho of GCCI also outlined, at the forum of the Draft Policy on PPP, some success stories of PPPs in the electricity, health insurance and infrastructure sectors of Cameroun, Ghana and Brazil, which all goes to demonstrate that PPP offers unlimited opportunities for growth and development for the private sector and nations around the world.

On the backdrop of this realization, PPP has therefore been brought to the doorsteps of the private sector in The Gambia.

Rightly so it is facilitated through the joint efforts of the GCCI, the Ministry of Finance and Economic Affairs (MOFEA), the Gambia Investment and Export Promotion Agency (GIEPA) and concerned institutions and bodies such as the British High Commission, who assisted in funding the recently held forum on the Draft NationalPolicy on PPP for The Gambia at the Kairaba Beach Hotel in Senegambia.

The well-attended forum brought people from all walks of life, such as senior civil servants, business executives and other high level representatives, who thoroughly discussed salient issues of the policy in the process of validating it.

The Draft National Policy on PPP would make it possible for companies and businesses to invest and create wealth, as well as spur economic growth and development, both for themselves and for the nation.

The national PPP policy, if implemented well, would bring about meaningful partnerships that would serve as the foundation for success and enable the government, top companies and entrepreneurs to make continuous improvements, as stated by the Chief Executive Officer of GCCI, Alieu Secka.

“By sharing with others, one can direct limited resources and capabilities to projects considered most important,” Mr Secka says. “Our common objectives must demonstrate that both sides: ensure public services are delivered in the most economical, effective and efficient manner; create opportunities for private sector growth and to contribute to the overall economic development through the stimulation of competitiveness and initiative; ensure the best interests of the public and the business sector are served through an appropriate allocation of risks and returns between partners.”

From now on, Mr Secka notes, business operators would have a solid policy to cement their partnership of projects with the government.

He states: “We have clearly heard the President/ Government’s call for Vision 2016 as well as the numerous statements that the private sector is the engine of growth in so many proclamations, Vision 2020, PAGE etc.

A key challenge and from my consultancy cap, therefore one of the best opportunities is already at hand. The private sector must seize the momentum to ensure that PPP tackles the No. 1 challenge for the whole Gambia.

“There must be concrete actions by both sides on resolving the energy challenge. Productivity will rise, employment will be created and The Gambia will be more competitive for FDI.”

Mr Secka said the GCCI has taken the path of PPP long ago since it believes in that direction and knows that with PPPS, everyone is a winner.

The GCCI, he notes, has developed and has testimonies of PPP including GIEPA, Gambia Ports Authority, Social Development Fund, the National Enterprise Development Initiative, the recently re-activated National Economic Council, regular engagement with MOFEA, OP (Office of President) and many others.

“All these give us regular channels to present cases for the private sector and we want to acknowledge that we do see some successes,” the GCCI CEO recounts.

With PPPs, everyone wins, he says, adding that governments all over the world have been pushing for PPP because it carries a number of benefits.

“Economists generally agree that, as opposed to the public sector, the private sector has incentives to be operationally and economically efficient,” CEO Secka states.

He continues: “On the other hand, private companies seek to earn profits, which are enhanced through entrepreneurial use of resources. Government savings made through greater efficiency offers more resources at the government’s disposal to fund social services, lower taxes or increase public utility.

“The mix of the state’s structure, assets, and political power, and the private sector’s ability, efficiency, and expertise, often lead to better public goods and services.

“Ultimately, the benefits of PPPs accrue to society. A solid PPP structure also allows for a number of projects to be completed at the same time. PPPs strengthen private sector ability and confidence and stimulate a healthy economic climate. Many mature democracies have reaped PPP benefits in the form of safe infrastructure, more efficient transport services, and improved health and education institutions.

“We must resolve together to lay the foundation for a successful outcome, and The Gambia government together with businesses should use this PPP policy to strive for all parties involved to prosper and profit, and that the public wins.”

PPP offers the only realistic route to the actualization of The Gambia’s full development potential, states Finance Minister Abdoulie Jallow, adding that the government “is determined” to show the light for others to find the way.

He says: “Let me give a brief insight into the massive investment required to meet the infrastructural challenges of The Gambia. For the implementation of PAGE, it is projected that it will cost GMD25.77 billion to implement.

The government is committed to contribute 35% of this bill with the private sector and donors expected to fill the remaining gap of 65%. A crucial challenge we must undertake in the medium to long-term is the upgrading and modernization of infrastructure (Pillar II of PAGE) to create jobs and uplift the quality of life of our populace.”

The Minister’s statement is subscribed to by the Chief Executive Officer of GIEPA, Fatou M. Jallow, who says it is common knowledge that PPP initiatives undertaken without creating the conducive environment for investing in such projects could result in low uptake and high perceived risks, both of which can be detrimental to investor confidence.

She adds: “The creation of the PPP Unit under MOFEA and the development of the draft policy… is a clear demonstration of the government’s commitment to create the enabling environment and put in place the requisite strategic framework to encourage and attract private sector investors and operators to play a greater role in financing infrastructure projects and services in The Gambia.”

Priority areas for investment

The government intends to use PPPs to meet priority infrastructure and service needs, states the Draft National Policy on PPP.

Priority sectors for investment focus mainly on the national Infrastructure – the fixed assets, networks, and facilities needed for the operation of the society and economy.

The policy states the following as major priority areas for investment: electricity sector; ferry services; water supply, solid waste management, sewerage, sanitation, etc.; road sector; air and seaports: telecommunication sector; health sector; agriculture-related projects; urban services such as street lightening and urban roads; sports such as stadia and other facilities; and government infrastructure and networks.

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