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Senegal shifts its thinking: Context is everything

Oumar Diallo's picture
Editor's note: this is the second in a two-part series. Click here to read the first part, "Senegal shifts its thinking: Rural water delivery moves to private operators."
 
Photo: flickr/Julien Harnels

In the rural water sector in Senegal, as with many parts of the world that have experienced tremendous changes, context is everything. Rarely does one single act spur a shift at the government level; many elements combine to prompt a change in approach.

The PPP team in Senegal was privileged to be able to develop a brand-new system for rural water delivery in Senegal (see previous post here), but our activity was just one contributing factor in a much larger national and even international effort. The political context in Senegal, along with sustained attention to the Millennium Development Goals (MDGs), created the right atmosphere for this PPP.   
 
Here are five important elements that came together to make Senegal’s paradigm-shifting PPP possible:
  1. Government officials’ forward-thinking views. Coming up with an original plan for the delivery of rural water depended on zoning changes. Our group’s internal study showed that dividing the country into three zones would make it possible to cluster services. Government’s willingness to consider clustering pipe systems across 14 regions was critical, because it made support from the private sector a viable option.

One question, eight experts, part one: Isabel Rial

Isabel Rial's picture

Some public-private partnerships (PPPs) fail. That’s a fact. But when the lessons these failures impart are integrated into future projects, missteps have the potential to innovate — energizing the learning cycle and setting the stage for long-term success. To gain a better understanding of how innovation in PPPs builds on genuine learning, we reached out to PPP infrastructure experts around the world, posing the same question to each. Their honest answers redefine what works — and provide new insights into the PPP process.

This is the question we posed: How can mistakes be absorbed into the learning process, and when can failure function as a step toward a PPP’s long-term success?

Our first response in this eight-part series comes from the International Monetary Fund's Isabel Rial.

For centuries, PPPs have been used by governments as an alternative to traditional public procurement for the provision of public infrastructure, although results have been mixed. If properly managed, PPPs can deliver substantial benefits in terms of mobilizing private financial resources and know-how, promoting efficient use of public funds and improving service quality.

Yet in practice, PPPs have not always performed better than traditional public provision of infrastructure. The reasons for this vary across countries.

Good decisions, successful PPPs!

Marcos Siqueira's picture

When considering public-private partnerships (PPPs), the million- (or even billion-) dollar question is: What is the single most relevant factor that drives PPP projects to failure?

Photo: flickr/Milton Jung
As a governmental officer, managing PPP transactions for many years, and later as a consultant on the private side of transactions, I have led more than 40 PPP initiatives. Many succeeded and are delivering Value for Money for users and taxpayers. However, several others failed along the way, and contracts never got signed. What surprises me is that failure came even to some technically perfect projects.

Every successful PPP with which I’ve been involved shared one important factor: effective governance in the project level, from the identification of the project, all the way to the tender process.

By governance I mean the set of processes that allows decisions to be made by the right people, with access to the right information, at the right time, so the project can meet the requirements defined by the project’s stakeholders.

Senegal shifts its thinking: Rural water delivery moves to private operators

Oumar Diallo's picture
Photo: Wikimedia Commons
Overnight success takes years, as the saying goes – and that’s certainly the case for the delivery of water to rural regions of Senegal. On July 2, 2015, the Government of Senegal celebrated the signing of its first lease (affermage) contract in the rural water sector, the result of a partnership that marks a significant and promising shift in rural water management for the country. This success in Senegal was years in the making, dating back about 15 years to the start of Senegal’s reform process.

Though Senegal’s situation is unique, insights and lessons from the project can inform and strengthen other rural water PPPs as well.
 
What changed, and why it matters 
In Senegal’s earlier period of reform, government officials looked to community-based management for 1,500 rural water piped systems to serve the 7.5 million people in need of water services across 14 rural regions. (Senegal is divided into three large geographic zones – North, South and Central – with ongoing transactions in smaller areas like Gorom Lampsar and Notto-Diosmone-Palmarin, known as GL-NDP, and the Senegal River region.) At that time, officials thought this would be the best way to eventually scale up management of the rural water system. By 2010, though, discussions between the World Bank Group and the Government of Senegal pushed reform forward by including more private sector management, which also aimed to increase sustainability of the system. 

PPP-powered access to water — and much more

Melvin Tan's picture
Note: This blog entry was adapted from an original submission for the PPIAF Short Story Contest. It is part of a series highlighting the role of Public-Private Partnerships (PPPs) in projects and other transformative work around the world.

One of the most salient features of a public-private partnership (PPP) arrangement is the flexibility to use out-of-the-box solutions in resolving the many challenges in day-to-day operations. As a result, the PPP setup gives operators the liberty to come up with innovative solutions for more effective and efficient delivery of the most basic services.
 
Location of Laguna Province in the
Philippines. Image: Wikimedia Commons

In the Philippines, Laguna Water — a joint venture company formed as a result of a PPP between the Provincial Government and Manila Water Philippine Ventures formerly known AAA Water Corporation — is benefitting immensely from that flexibility since it took over the operations of the province-run water system in 2009. Although primarily tasked to improve the provision of water and wastewater in the three cities of Biñan, Sta. Rosa and Cabuyao — collectively known as concession area — Laguna Water’s sustainable business model allows it to participate on matters related to community development (including job generation), as well as programs centered on health, safety and environmental protection.
 
As a staunch advocate of sustainability, Laguna Water takes pride in having significantly improved access to piped, clean and affordable water to 62 percent of the population of the concession area— a far cry from the 14 percent when it started its operations in 2009. The joint venture’s PPP framework has been instrumental in putting in place water infrastructure that provides easier access and better services to customers. Today, Laguna Water is the biggest water service provider in the entire province, and is also ahead in its service-level targets on coverage, water quality and water loss reduction. 
 
Here are some details about our PPP-empowered approach.

​Integrating West African economies PPP-wise

François Bergere's picture
Photo: Wikimedia Commons

What do Benin, Niger, Guinea-Bissau, Togo and Mali have in common? Apart from being members of the eight-country strong West African Economic and Monetary Union (UEMOA), they share a common status as low-income countries, faced with huge infrastructure needs and financing challenges.
 
Furthermore, they have decided that one way to address these challenges and sustain their economic growth was to promote public-private partnerships (PPPs) through a regional framework and strategy. This initiative is supported by the Public-Private Infrastructure Advisory Facility (PPIAF) for the World Bank, and Agence Française de Développement (AFD) and Expertise France on the French cooperation side.
 
Which is why — on July 2-3 in the midst of sweltering weather in the leafy  suburbs of Ouagadougou, the capital of Burkina Faso,  which  is also  home to  UEMOA headquarters — 20 or so experts and decision-makers attended a two-day seminar to discuss the framework and strategy. Beyond PPIAF and AFD, regional participants included representatives from the UEMOA Commission, the Regional PPP unit at the West African Development Bank (BOAD), the African Development Bank (AfDB), the African Legal Support Facility (ALSF), the Organization for Harmonization of Business Law in Africa (OHADA), and the Central Bank of West African States (BCEAO).
 
The issues we covered included the need to:

Leveraging the link: Public Investment Management and Public-Private Partnerships

Aijaz Ahmad's picture
Jordan is my second home, as I have worked there, off and on, since the late 1990s. I have watched Amman grow from a relaxed city into a hustling, bustling regional business and financial hub. Even though my Arabic is still rusty, there is no shortage of development partners and government officials ready to talk in our common language — the vocabulary of public investment management (PIM) and public-private partnerships (PPPs).
 
Amman, Jordan. Photo: Wikimedia Commons

Recently I was invited to speak at Public Investment Management (PIM): Best Practices Workshop hosted in Amman, Jordan by the World Bank Group’s regional Governance team, led by Emmanuel Cuvillier. My job there was to show the linkages between public investment planning (PIP) and PPPs. As I prepped for my speaking engagement, I realized how little progress we, the global PPP community, have made in developing an integrated approach for undertaking investment projects.

One obvious reason for this is that PIMs are not fully integrated in the planning functions by most governments. And PPP projects that follow privatization programs have adopted many of the habits of the privatization programs — for example, only work on a list of selected entities, and establish an ad-hoc commission/committee tasked to undertake evaluation and tendering — with the ultimate aim of obtaining private investment.

But there’s an important difference in the case of PPPs. We are not selling assets, we are creating assets. The project does not end when the public and private parties sign the contract, as is the case in privatization; in fact; the project begins at that point, and has to be monitored over many years for performance and delivery. Typically, the project reverts back to the public sector at the end of the PPP agreement term. And finally, unlike the case with privatization, the public sector almost always commits to various kinds of fiscal commitments (real or contingent) in PPPs.

Taming the Terra Incognita of PPPs: The case for data as an exploration tool

Fernanda Ruiz Nunez's picture
Image courtesy of history-map.com
The PPP territory spans the globe, and the debate over its effectiveness as a financing tool to achieve development goals reaches equally far and wide.

​Most recently, the Financing for Development Conference in Addis Ababa, Ethiopia sparked even more discussion about the role of public-private partnerships. The official line, spoken in a multitude of tongues, is that PPPs have an important role to play, and results are dependent on projects being procured, managed and regulated well. But one thing is clear in every language: “results” are based mainly on anecdotal evidence and case studies where attribution remains dubious, and findings cannot be generalized as they depend on the particular characteristics of the specific projects.
 
We can do better. As economists, development professionals, finance experts, and explorers of new and creative solutions to solve the problem of poverty, we must do better. And we will – with better data.
 
Lack of data has constrained the empirical literature on PPPs, in turn constraining our ability to tap the territory of PPPs and its potential to transform markets. After all, what do we really know about the economic impact of PPPs? Our first-ever literature review, underway now (the first draft is available at https://www.pppknowledgelab.org/ppp_document/2384), has laid an initial foundation for knowledge, and we have made the first draft available so that colleagues and interested individuals and organizations can contribute their data.

​Housing the next generation of Kenya’s leaders: A PPP that makes the grade

Evans Kamau's picture
Many university students learn Newton’s third law: for every action, there is an equal and opposite reaction. At one Kenyan university, two very positive actions – narrowing the backlog of students admitted after high school graduation, and a 2002 government bill declaring free primary education for all – led to the nation’s first public-private partnership (PPP), a most unexpected reaction. 
 
Existing student hostel at Kenyatta University

Kenyatta University (KU) has 50,000 students, and because of the national momentum on education, enrollment is expected to increase to 70,000 in the next two years. The only problem with this huge step forward has been housing all of these new students; currently, the university’s 22 hostels house only about 10,000 undergraduate students. KU’s status quo-shattering PPP will result in housing for 10,000 more students, at the same time marking it as the first public institution to deliver a PPP project under Kenya’s Public Private Partnership Act of 2013. 
 
For the 10,000 graduate and undergraduate students who will now be able to live on campus, this PPP earns an “A” for a different reason – it’s the first time these students will have access to regulated, fairly priced accommodations with no commute or accompanying transportation charges to class. And by living on campus, these students can safely study long into the night at the library and other university facilities – which is critical to the intellectual development of this next generation.
 
The right time + the right partner + the right place = the right PPP
Until recently, Kenyan students graduating from high school were typically forced to wait two years before registering at universities, due to backlogs created in the late 1990s as a result of student unrests and lecturer strikes that led to long closures of educational institutions. In the past few years, however, the University Joint Admission Board, working through government, decided to reduce the backlog by one year.  Numbers tell the rest of the story: nationwide, university student enrollments grew from 96,000 to 160,000 in 2015.  In addition, the free primary education introduced in 2002 tripled the number of students in primary schools, which also energized enrollment. Predictably, these two positive developments stressed the capacity of university facilities, and Kenyatta University has been struggling to meet the need for students’ accommodation.

​Is infrastructure in emerging markets a good investment?

Laurence Carter's picture
There’s a lot of discussion about attracting more investors to invest in infrastructure in emerging markets. This will be one of the themes of the Financing for Development Conference next week. Last month the PPI Database’s 2014 full year update showed that total investment in infrastructure commitments in emerging markets for projects with private participation in the energy, transport and water and sanitation sectors increased six percent to US$107.5 billion in 2014, compared to 2013.  
 
But what does the evidence tell us about how good those investments might be for investors?
 
One interesting source comes from a Moody’s study based on the performance of over 5,300 projects. This data represents more than 60 percent of all project finance transactions worldwide over 1983-2013. It is broadly representative of worldwide project finance activity by year, industry sector and regional concentration. The data shows that:

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