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Friedrich-Ebert-Stiftung report on Ghana’s PPP policy lesson for Nigeria, others

Before now, the experiences of many African economies especially Nigeria in the running of Public Private Partnership (PPP) arrangements, had always started well and went soar either midway or towards the end.
This is always seen when one of the parties, either the government or the core investor observed being shortchanged in one way or the other in terms of price variation, inability to breakthrough or introduction of new policy that will alter the original understanding prior to the agreement or the PPP arrangement.
A clear example was the hitherto praised and later criticized PPP arrangement in the delivery of Lekki highway and tolling PPP which was developed by Lekki Concession Company (LCC) in a PPP partnership with the Lagos State government.
But trouble started when the state government began to have a rethink that going by the volume of traffic on the stretch and what the LCC was charging, the private investor is milking the state too much as it is likely to cover and make huge gain within two to three years upon the PPP is to run for 30 years.
Armed with this thinking, the then Governor Babatunde Fashola, annexed the company and paid off the core investors whatever was their stake and wheeled the company to become a department in the state ministry of Transportation which runs contrary to the spirit of PPP. Today, whatever the LCC makes is moved to the state government coffers as the original investors have been paid off.
Still in Lagos State, the experiences of PPP partners working with the Lagos Waste Management Authority (LAWMA) to evacuate solid wastes across the state went soar as the current administration collapsed their understanding and introduced Visionscape Group from Dubai.
The change destabilized all the PPP operators as they become out of job and their investments in buying and maintaining their compactors were rendered useless.
Though there are signs that the incoming Governor, Mr Babajide Sanwo-Olu may recall the LAWMA PPP operators, the sad experiences that first saw them out of job may find it hard to leave their memory.
However, in its recent study on PPP process and arrangements in Ghana, leading development oriented German NGO, Friedrich-Ebert-Stiftung, Ghana (FES) identified weak competitiveness in the PPP process in Ghana, saying local participants prefer the build-operate-transfer and design-build-operate categories of PPP that mostly supplement their infrastructural challenges.
In the FES Research report titled: ‘Public Private Partnerships in Ghana: Interrogating the efficacy of a politically convenient practice,’ the document among other things outlined certain principles as key to successful PPP arrangements including value-for-money analysis, appropriate allocation of risk, affordability, local content and technology transfer, accountability, transparency and competitiveness.
The 25-page report which was launched in Accra established that, there was no proper conceptual framework of PPP arrangements which further creates misunderstanding especially midway into the delivery of services.
It also examined PPP projects within the context of Ghana National PPP Policy document and provided exhaustive guidelines on how to engage in PPP arrangements in the country.
The study focused on market projects at the local level that are central to Assemblies revenue generation drive.
Senior Lecturer at the Political Science Department, University of Ghana, Dr Seidu Alidu, who led in the study, said little effort was exerted to make the option competitive except to wait for the private sector with money and a business proposal to come forward.
According to him, private sector participants were initially motivated to undertake the project because of government’s flagship one district one factory project which would basically rely on the PPP.
“We thought we should be able to build and highlight some of the challenges that is associated with this method of development so that, government will learn lessons from it and move forward,” he said.
According to him, “The report sought to build the capacity of the local officials at the District, Municipal and Metropolitan levels.”
Alidu averred that the capacity of the assemblies were not well developed when it comes to understanding issues of PPP arrangements, because of that they are not able to do proper value for money analysis.
While observing that the absence of competition seriously affects the value-for-money component of PPP projects at the local level, he argued that developing the capacity for local assemblies on PPP was one of the recommendations made by the study.
Besides, he also noted that proper legislation was needed to safeguard indiscrete use of discretion by local authorities.
In general, the FES report stressed that PPP projects should go through normal tender processes to maximize value-for-money, and also advocated for the competition and transparency in the awards of PPP projects. It also called on the government to restore confidence in the private sector and work with it as the engine of growth rather than seeing it as profit-driven exploitative enterprises.