Q&A OTHER JURISDICTIONS
PPPs: the key to Africa’s infrastructure needs?
Souleymane Keita, is an investment director at Harith General Partners, spoke to the IFLR1000 about the key trends in infrastructure investment, arguing that a greater acceptance of private sector participation would unlock the region’s potential
What are the most interesting developments from the infrastructure projects perspective at the moment across Sub-Saharan Africa? One of the most interesting developments has been the implementation of a PPP framework and PPP units in some leading African countries, for example in countries like Kenya, in East Africa or the Ivory Coast, in West Africa. The most important thing is the acknowledgement of PPP struc- tures by political leaders and governments, as the key for these projects is, first and foremost, that ministers and the decision makers in parliament are aware that this is a means for them to attract capital. In the past, this has not always been the case.
We are also seeing that the legal landscape is evolving, for example in
West Africa where they have adopted one set of legal rules for the entire region: OHADA. There is something else as well that we don’t pay much attention to and that is that the whole region is becoming more demo- cratic. Once you have political stability and you don’t have people willing to do whatever pleases them, you can start attracting capital, as good gov- ernance is at the heart of successful implementation of infrastructure de- velopment. People feel safer and don’t think that at any given time every five years they could lose everything.
What effect can a proper PPP framework have? To give an example, one of the last transactions we closed in the Ivory Coast, in Abidjan, was a toll bridge. The government accepted to provide a minimum revenue guarantee; it accepted all the environmental issues and accepted that a resettlement programme will have to be done properly according to World Bank standards. The fact is that the government has
acknowledged this and has given some type of subvention to ensure that the toll is not too expensive for the users, which was a big risk in the proj- ect. This was the first time we saw this, whereby a government does ac- knowledge the fact that they are not a rich government but that they need to give a subvention so that the project carries out for the good of people. How did we do this? Typically, projects, which have procured this Guar- antee, will be in a beneficial position to bring down the overall cost of the project thereby making it more attractive to other investors. Negotiating these types of deals takes time and it took us four years but we got there.
To some it may appear easier to simply approach a single government
minister and get their personal approval without any guarantees and for- mal backing from the government but with a PPP structure you can come in and say: this is the structure, we intend to raise $300 million, this is how much it will cost you and if you want the project to be affordable
ENERGY & INFRASTRUCTURE | SUB SAHARAN AFRICA 2013 77 “
Good governance is at the heart of successful implementation of infrastructure development
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