A bright future for PPP in East Africa – Part 1: Market Observations
PPP as a model for infrastructure development
Infrastructure development is a key driver for progress across the African continent: a critical enabler for productivity and sustainable economic growth. Financial constraints on governments can necessitate alternative funding sources. PPPs have therefore gained popularity in Africa. For PPPs to be successful, a clear understanding of the risks and their allocation is required.
Norton Rose Fulbright (NRF) and the Global Infrastructure Hub (GI Hub) held a PPP Risk Allocation Workshop on 5th October 2017 in Dar es Salaam, Tanzania. The workshop was attended by public sector representatives from Ethiopia, Madagascar, Malawi, Tanzania (including Zanzibar), Uganda, and Zambia, as well as the World Bank and DFID.
NRF and GI Hub showcased an online risk allocation tool which they have developed together and which is available at the following link: ppp-risk.gihub.org, which allows users to compare typical risk allocation positions across a number of sectors and between developed and emerging markets.
The representatives from each country also took time to summarise the state of the PPP market in their jurisdiction, and some of the key points to note are set out below.
Completed and upcoming PPP projects
Unsurprisingly, countries with established legal and institutional frameworks have more completed and upcoming PPP projects. Ethiopia is preparing a framework and projects are anticipated in the next six months.
Kenya has relatively well established PPP laws1 and institutions and has undertaken several PPP projects (construction of Lamu Port, Nyali Bridge and the Olkaria Geothermal power plant). Kenya has a good pipeline of PPP projects and has also created a dedicated roads fund with ring-fenced money for payment of roads sector concessionaires.
Madagascar has relatively new PPP laws2. To date, Madagascar has undertaken one airport PPP project but has a pipeline of projects waiting.
Malawi’s PPP laws date to 20113. Malawi has completed several PPP projects. Malawi has transportation, power, student accommodation and tourism projects under consideration.
Tanzania's PPP Act dates back to 20104 and has been amended several times. PPPs in Tanzania are still relatively new and have been small scale. Areas undergoing feasibility studies include market, bus terminal, airport, solar power and solid waste projects.
The PPP Act No. 8 of 2015 is the enabling PPP act of Zanzibar, where the focus is on small projects. The pipeline includes hydrocarbon storage, markets, a bus terminal, tourism, student hostels and low cost housing.
Uganda has the Public Private Partnerships Act, 2015 and has completed projects that include the Umeme electricity distribution concession, the Kalangala Infrastructure Services JV, the Kilembe mines concession, the Kampala Serena Hotel and several hydropower IPPs. Uganda has a good number of upcoming PPP projects, including roads and accommodation.
Zambia’s legal and regulatory framework has been in place since 2008, and interestingly incorporates a procurement process for unsolicited proposals, with three PPP projects having achieved financial close in this way. Completed PPP projects in Zambia also include an intercity bus terminal and mixed-use developments on University of Zambia and Zambian army land in Lusaka. Upcoming projects include a solid waste management project in Lusaka and a 400 km road linking the Copperbelt to the Congo and Tanzania.
In Part 2 of this note we will look at some of the challenges for these project pipelines and how these are being addressed.
The Inside Africa team would like to thank Chloe Taylor, Trainee Solicitor, for her contribution to this blog post.
1 The Public Private Partnership Act, 2014 (No. 15 of 2013) and the Public Private Partnership Regulations, 2014.
2 The Law 2015-039 of December 9, 2015
3 PPP Bill of 2010 and PPP policy framework approved by Cabinet on 18 May 2011
4 The Public Private Partnership Act No. 18 of 2010