PPPs to the Rescue

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With the infrastructure deficit hampering business growth in Nigeria, Raheem Akingbolu writes on the need for governments at all levels to key into public private partnerships to rebuild the economy

The forms public-private partnerships (PPP) in developing countries have taken are legion, ranging from the construction of physical infrastructure, to public administration, to the provision of health and social services. A frequently quoted example of the latter is foreign-owned companies’ partnership with the South African government to provide treatment of HIV/AIDS.) PPPs have provided a principal vehicle for foreign direct investment (FDI) into public utilities and infrastructure in developing countries, with OECD-based multinational enterprises participating in most of the largest PPPs in this area.

Over the years, the World Bank Group has provided support to low and middle income countries in order to develop public-private partnerships (PPPs) through a number of different tools and mechanisms. In addition to the PPPIRC, the World Bank Group also supports a number of knowledge management tools in collaboration with other development partners.

In the last few months, many experts in Nigeria, including the Minister for Power, Works and Housing, Mr. Babatunde Fashola and Lagos State Governor, Akinwumi Ambode, have been advocating the need for effective Public–Private Partnership (PPP), to rebuild Nigeria and strengthen the economy.

Recently in Abuja, the minister reiterated the importance of synergy between the federal government and the private sector in the built industry in the provision of mass housing to Nigerians. He said the federal government must find a way to exploit the Private Sector participation in the industry especially in the area of local content manufacturing of building materials, noting that it would help reduce prices of the materials and subsequently the cost of the houses.

He made this known during an inspection visit to some selected sites and polysterene manufacturing company in Abuja. He said the visit was a follow up to the claims by some sponsors in the built industry during the Affordable Housing Summit held in Abuja earlier in the year that they had all the machineries to partner with the federal government in delivering affordable mass housing to Nigerians.

Also, in continuation of the Lagos State Government’s commitment to urban development and expansion of business opportunities in the state, the state recently expressed its intention to partner with suitable entities on a Public-Private Partnership basis to undertake the development and delivery of a wide range of facilities in the State.

The facilities include residential apartments, shopping/business malls, Recreation parks, Hotels, Theme Parks, Zoos, Car Parks and other facilities that will add to a Modern City Lifestyle.
In a statement signed on by the State Commissioner for Information and Strategy, Mr. Steve Ayorinde, the State Government has conceived the idea in order to provide Lagos with world-class residential, business, recreational and other facilities that will measure up to what is obtainable in other mega cities of the world.

He added that the initiatives would also help in positioning the State as one of the best cities to live and work in the African continent.
The commissioner disclosed that the facilities include former Falomo Shopping Complex, which the state government is seeking proposal under PPP on how the site could be redeveloped into a world-class residential condominium complex with the full complement of lifestyle-enhancing facilities and complete communities Direction Strategy.

In line with this, Lagos State Governor, Mr. Akinwunmi Ambode, recently described the ambitious Eko Atlantic City project as a clear example of successful public private partnership (PPP) to deliver infrastructure in the state.

He said this during the unveiling of the 24 storey high-rise structure, Eko Pearl Tower, within Eko Atlantic City, saying the structure, in all ramifications, represented the new standard for property development in the state.
The governor said his administration was embarking on many urbanisation projects, which, when completed, will deliver a Lagos that will compete favourably with all the mega city-states of the world.

PPP Law
As governor of Lagos State, Fashola signed two bills on the establishment of the Office of Disability Affairs 2010 and the provision of an Office of Public Private Partnership (PPP) 2011 into law, calling for a collaboration of everyone including the media in making the provisions of the new Disability Affairs law achievable. He explained that what is needed is to ensure that through constant engagement with everyone, the provisions of the new law were imbibed by all segments of the society.
But a Lagos based legal practitioner, Mr. Babatunde Ogala, few weeks ago called on government to review laws relating to infrastructural development in the country, arguing that most of the existing laws are outdated.

Ogala said legislative decisions that prevent development and implementations should be amended in order to achieve sustainable legal framework for infrastructure delivery in Nigeria.
the legal practitioner said security, law and order are key items which ensure good delivery of infrastructural projects and a holistic approach to reshaping infrastructure delivery is essential.

Experts’ views
For Public–Private Partnership (PPP), to work for infrastructure delivery in Nigeria, experts who gathered recently in Lagos said there is urgent need for stakeholders to prioritise the review of existing legal framework, address adaptive and social challenges. They also pointed out that effective communication and stakeholder management as well as gender and social inclusion are urgently required.

These experts, including Ogala spoke at a two-day colloquium organised by the Center for Ethics and Sustainable Development (CESD), held at the University of Lagos.
The theme of the forum was; ‘Reshaping the Infrastructure Delivery Landscape for Sustainable Development in Nigeria. Some local and international bodies include; Australia Awards Africa, Access Bank Plc, Globacom Nigeria Limited and Keystone Bank Plc, supported the colloquium.

A PPIP expert and Professor at the University of Queensland Business School, Brisbane, Australia, Neil Paulsen, said communication among all parties must be effectively carried out in order to foster easier and faster infrastructure delivery. He also emphasised the need to identify potential stakeholders and involve developmental institutions to facilitate proper delivery.

“One of the key success points of ensuring effective communication is Consensus-building and Stakeholder Engagement. Again, in all PPP initiatives, there must be clear and visible benefits for all stakeholders. That is why effective communication must be a two-way street in which the stakeholders must be kept abreast of information. Above all, infrastructure projects must make good sense to stakeholders,” Prof. Paulsen said.

While emphasising the importance of feedback mechanisms, the university don singled out tools which provide effective communication to include; information, consultation involvement, collaboration and empowerment. He also pointed out that communication for diverse audiences must be taken into account.

Earlier, the convener of the initiative, Dr. Olajumoke Akiode, who spoke on Gender and Social Inclusion (GESI) in Infrastructure Delivery, emphasised that gender and social inclusion was a collaborative and inclusive means of infrastructure delivery that caters to the concerns and needs of all stakeholders- men, women, the disabled, and other vulnerable groups. A 360 degree way of thinking that leads to better practice and outcomes should foster inclusion and empowerment of women and other vulnerable groups.

Infrastructure delivery is essentially about the people, their concerns, issues and needs should be incorporated into the project design. It is essential that Policy makers, financiers and project designers become GESI aware” Akiode said.
She added that GESI mainstreaming begins with the government and its inclusion in Infrastructure delivery would ensure that policy makers, project designers and other stakeholders wear the “others” shoes.

On his part, Mr. Vince Onyejeli, Associate Director, KPMG Nigeria & West Africa, who spoke on “Traditional and PPIP Procurement Models: Adaptive and Social Challenges”, stated that PPP encompasses the participation and collaboration of all key players in the society. He said funding is a critical issue which needs to be addressed in its entirety. He also emphasized that social challenges responsible for infrastructure deficit include varied interests that defeat the purpose of PPP projects by making them more expensive than traditional procurement, political interference, improper management of stakeholders both those who will be impacted negatively or positively and those who will benefit from the projects

“Weak legal framework is also a problem. For instance, we have an Environmental Impact Assessment (EIA) which does not include the social sides. The existing laws do not put organisations under any obligation to attend to the social impact assessment of projects. The way forward is to adopt the social side of EIA, SEIA.” Onyejei stated.
Speaking on “Capital projects financing alternatives and risk management, Mr. Biodun Otunola, MD/CEO Planet Projects Ltd, said it is essential to look inward and develop a PPP model that can be workable for the Nigerian economy.

Otunola emphasised that moneys recovered from massive debt can be used to develop infrastructure.
“The best method of ensuring the free flow of execution of projects should be utilised in order to attract FDI. And the second option is to de-risk the country; whereby foreign reserves can serve as guarantee for PPP projects.” He said.

Mr. Anayo Nwosu, AGM Corporate Banking, Keystone Bank emphasised the necessity of feasibility studies in determining bankable PPP projects. He identified the steps involved as follows- Project overview, economic feasibility, political and total viability.

With the trend of the various discussions and the relevant pointers to the importance of PPP to social and economic development, it will do the country a lot of good during this recession for stakeholders at all levels of government to redefine their commitment to PPP to rebuild the economy.