Why is Senegal’s Dakar-Diamniadio toll road, which opened on time and on budget in August 2013, so successful? The road has dramatically improved urban mobility around Dakar, reducing commute times between the city and its suburbs from two hours to less than 30 minutes.
Building on this positive experience, in 2014 the Government of Senegal awarded a further concession to extend the motorway to connect it to Dakar’s new Blaise Diagne International Airport. Excluding South Africa, this is the first greenfield road PPP in sub-Saharan Africa. What lessons can we draw?
- Political commitment. The Government of Senegal set the project as a priority. The first driver on the road was the President – who paid the toll. But commitment alone isn’t enough; it needs to be turned into action by government agencies. An intra-agency coordinating committee was set up. The National Agency for the Promotion of Investments (APIX) oversaw the preparation of the concession. The Public Private Infrastructure Advisory Facility (PPIAF) supported APIX with technical assistance, including the design of a framework for the oversight of the project.
- Consensus-building and stakeholder engagement. Part of PPIAF’s US$250,000 grant to the Government of Senegal helped to pay for seminars with stakeholder groups to discuss structuring options for the road and socio-economic drivers of the willingness to pay. The final structure chosen involved a relatively low toll, with an upfront contribution by the government to the cost, with the concessionaire taking full construction, operating and traffic risk. The combination of careful outreach to stakeholders, a fairly low toll, significant time savings and a well-maintained road meant that the first toll road in the country was accepted by the population. In addition, the fact that there is a free alternative road helped the Government and other stakeholders point out that motorists could always choose to use the other route.
- Experienced concessionaire with strong commitment to Senegal. The concessionaire, the Eiffage Group is one of Europe’s leading construction and toll road operating companies, with a long history of involvement in, and commitment to, Senegal. Eiffage, through the special purpose company set up to construct and operate for 30 years the road, SENAC S.A., ensured that the road was constructed and is being operated to a high standard, on time and within budget.
- Strong involvement of development institutions in both public and private financing. The public sector component, financed by the Government of Senegal, the African Development Bank, the Agence Francaise de Developpement and the World Bank, covered right-of-way clearance, urban restructuring and re-settlement of households – up to 30,000 people – affected by the road. On the private side, IFC served as the lead arranger and global coordinator for this landmark €230 million toll road project, committing €22.5 million in long-term debt facilities. In all, the total private equity and debt raised by the concessionaire amounted to €100 million. The amount of the debt financing package was €65 million, of which €45 million was mobilized from the Western African Development Bank (BOAD), the African Development Bank and CBAO, one of the main Senegalese commercial banks.
- Clear, visible benefits. Commuters are saving three hours a day. The road is safer and the quality of the ride is higher. There is economic development sprouting all around the road. Small farmer businesses have been developed with women associations alongside the road. For those who do not wish to use the new highway, the previous road remains as a free – and now more fluid – alternative.
Just as it has been since the toll road started operating, traffic was running smoothly. The operations center was humming efficiently. Everyone – without any exceptions –pays the low toll. An electronic tolling system is gaining ground, reducing waiting times further for many commuters. This is a genuine partnership, at work, making everyone’s life better.
PPIAF makes small grants like this all over Africa, and in other regions, to help governments build capacity and regulatory frameworks, to bring in private investors and financiers to provide better infrastructure services.
What else goes into a successful PPP project? Sign up for our free online course, "Public-Private Partnerships (PPP): How can PPPs help deliver better services?", which begins June 1.