Local capacity lacking for PPPs

Government must urgently build the capacities of local businesses if they are to profit from the Public Private Partnership (PPP) policy that has been adopted to address the infrastructural needs of the country.

The PPP model was adopted in 2011 as a means to leverage private sector funds to address the country’s growing infrastructure deficit that requires sustained annual spending of about US$1.5 billion up to 2020.

However, local companies and investors are said to be ill-prepared to take full advantage of the opportunities it presents.

Michael Cobblah, a Director of Cnergy Global Holdings, an international consulting and advisory firm, speaking to the B&FT about the upcoming first Global PPP Conference in Accra on Monday, said: “The problem is that Ghanaians are not aware of the opportunities available. Being able to know the opportunities alone is equity for you. You may not have the money, but you can arrange things that a foreigner will find difficult to do, like acquisition of land.

“I think that we have not positioned ourselves well and have not marketed our own people. We do not like our own to succeed. Going forward, government must ensure that citizens are empowered in whatever form or shape. These things have been done before; we are not going to be the first people to do it – that is the only way we can build wealth in the country.

“People know that Africa is the next investment frontier. If we position ourselves well and people are bringing money and there’s a local content law, they will follow the rules because they will know we are serious.”

The Minister of State in charge of PPPs, Rashid Pelpuo, while acknowledging that the current PPP policy has been welcomed by all and sundry, said local businesses tend to be out-muscled by big foreign firms in the provision of PPP projects due to the huge capital requirements.

“The PPP arrangements in Ghana have been put in place to solve the huge challenge facing government as a result of our inability to use our meagre budget resources to finance big infrastructure projects. More and more it is becoming very clear that public funding alone in the yearly budget cannot finance the huge infrastructure deficit we have.

“The challenge is that the huge capital requirements demand lots of investments. So even though the local private sector has welcomed this idea, they are finding it difficult to mobilise resources to do it. What some of them are doing is to partner some of the external private sector to come up with proposals to do some of these things,” he said.

Ghana’s infrastructure deficit covers roads, energy, water, aviation, housing, and ICT. Cabinet in 2011 approved the first national policy on PPP, with the Ministry of Finance as the nerve centre for implementing the policy. A proposed PPP law to create a legislative framework for the policy is still being discussed and yet to be enacted.

Mr. Cobblah said: “Even though we came up with the PPP framework a couple of years back and the law is being put together, there has been very little interaction. The Finance Ministry has identified priority projects which a lot of people don’t know about.

“What Cnergy decided to do, together with the Ministry of Finance, is to create a platform where we bring all the players involved in PPP financing – insurance companies, investors, business people looking for opportunity and all other stakeholders – to one forum. The idea is to ensure that we create that platform for interaction so that those who have done it before share their experiences and then they take people in the ministries, departments and agencies through the process.”

The conference comes off at the Movenpick Ambassador Hotel, Accra, from August 18-21, 2014.

There will be break-away sessions to give participants the opportunity to learn how to successfully executive a PPP in various areas.

The President, John Mahama, is expected to deliver the keynote address, while the Finance Minister, Seth Terpker, will present priority areas identified by government for which it seeks private capital.

Other speakers attending the conference are Dr. Kangsoo Kim, Director, Public and Private Infrastructure Management Centre (PIMAC), Korea; Kogan Pillay, Head, SADC PPP Network (3P Network); Marcel Van Den Broek, of Vandeneroek Consulting; and Dr. Alexander Budzier, of Oxford University.