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Investment Policy Blog

Public Private Partnership (PPP): the words most certainly have a rhyme to it unless you say it too quickly and end up twisting your tongue. Implement PPPs too hastily and lawsuits, disgruntled government officials and resentful local constituents may result. The history of PPPs in Ghana is an interesting one as it has taken a more cautious approach over the past decade, possibly due its own sour experiences and cautionary tales from other countries on the continent.

The Ghanaian government developed in 2011 a National Policy on PPP where it acknowledged that given its limited budget resources, the country’s huge deficit in infrastructure could not be met by the public sector through budget allocations. The Government’s policy was therefore to encourage the use of PPPs as a means of leveraging public resources with private sector resources and expertise in order to close the infrastructure gap and deliver efficient public infrastructure and services.

The objective of this policy is certainly a common expectation of most governments in PPP projects. However, optimising the benefits of PPPs to all parties through maintaining an equitable balance between private partner interests and public expectations (those of Government and the local populace) proves extremely difficult.

In Ghana, PPPs have often been public affairs with grand launches and sod-cutting ceremonies. They have been integrated into political campaigns and national development policy documents. These PPPs have been executed largely in the sectors of railway development, port expansion, sanitation, housing and utilities. On the whole, the experience on both sides of the PPP divide have been somewhat checkered. Arguably the thorniest issues have arisen when the private partner’s benefit/remuneration were derived wholly or partly from service tariffs or user charges.

This has mostly occurred in PPPs related to the provision of utilities such as water and electricity where they have performed dismally or struggled to stay afloat. There have been pickets, agitations by civil society groups and labour unrests surrounding the operations of such PPPs. The issues largely stem from differing expectations of the performance of these projects by the parties involved, the price setting of the utilities and treatment of the local workforce.

Lessons have apparently been learnt and steps have been undertaken to strengthen the regulatory and policy framework of PPPs in Ghana as they continue to play an increasing role in Ghana’s infrastructural development. The Minister of Finance recently publicly called for an increase in PPPs in development projects as Ghana would need approximately US$10 million annually to develop the infrastructure sector.

A strong plus in Ghana’s favour is the development of a PPP Bill which is to be laid before Parliament shortly. The Bill provides the legal framework for the development, implementation and regulation of PPPs. Here, priority areas for PPP initiatives are identified with an emphasis on the need to ensure value for money, proper risk allocation, accountability and competitiveness in the procurement process.

The angst of local constituents and the uncertainties of prospective private partners should be mitigated with the additional provisions in the Bill on transparency, promotion of local content, technology transfer and compliance with environmental, climate and social safeguards.

Will the passage of this Bill provide in practice (not only on paper) the necessary regulatory environment for the efficient rollout and implementation of PPPs? Will there be an uptake in local and foreign private partner interest in PPPs? The devil, as they say, is always in the details.

At the very least concrete steps are being taken locally towards promoting PPP as a viable and profitable venture for all relevant parties. Ghanaians and the international community are watching intently to see how it all plays out...

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