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UNECA High Level Workshop

UNECA High Level Workshop. PPPs in Sub-Saharan Africa – Addis Ababa, June 2011. Elan Cusiac-Barr IFC Advisory Services in Public Private Partnerships. Contents. Presentation of IFC PPPs – don’t believe the hype Assessment of PPP opportunities in SSA Policy maker’s checklist.

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UNECA High Level Workshop

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  1. UNECA High Level Workshop PPPs in Sub-Saharan Africa – Addis Ababa, June 2011 Elan Cusiac-Barr IFC Advisory Services in Public Private Partnerships

  2. Contents Presentation of IFC PPPs – don’t believe the hype Assessment of PPP opportunities in SSA Policy maker’s checklist

  3. IFC is a member of the World Bank Group

  4. IFC Advisory Services in PPPs - What we do • Lead transaction advisor, mostly to governments • Structuring and implementing public-private partnerships (PPPs) • Coordination with World Bank and other multilaterals, on sector policy, institutional reforms and capacity building • Our staff are transaction specialists • Emphasis on the private provision of public services – increasing the access to and quality of public services • C3P is at the forefront of transaction based advisory services in: • Physical Infrastructure: transport, water, power , telecom • Social Infrastructure: health and education • New sectors: tourism (e.g. hotels), agri-infrastructure (e.g. silos) • Fee based services • Retainer paid by Clients and success fee by winning bidder • We undertake pioneering transactions • Since 1986, over 165 advisory assignments in more than 60 countries

  5. PPPs – don’t believe the hype

  6. Addressing the infrastructure gap PPP/ PFI is a small part of total investment

  7. What is a PPP? • PPP = is not one-size-fits-all • PPP = is not “free” • PPP = is not 100% private finance • PPP = is not “privatization” • PPP = IS risk transfer • PPP = IS politically difficult • PPP = IS complex • PPP = IS beneficial…but certain conditions must be met

  8. PPPs are complex

  9. UK PFI: evidence of benefits

  10. Opportunity to influence PPP project outcome

  11. Core policy considerations To PPP or not to PPP: Stop and Think • Before you leap consider your: • Policy objectives: what are the PPP drivers? • Institutional capabilities: who is the Champion and quality of the procurement governance? • PPP model and risk transfer • Risk = cost and it will never disappear • Private sector finance comes at a cost, the riskier the endeavour the higher the expected return on investment • Financial capabilities: what can you afford? • Legal/regulatory environment: are the relevant laws in place? • Realistic view of country context: investor friendly?

  12. Assessment of the PPP opportunities in SSA

  13. Africa Infrastructure Market Underperforming since 2005 • New infrastructure projects with private participation in Sub-Saharan Africa, by sector, has been in decline since 2005: • 2000 to 2009: • Total investment commitments: $12 bn • SSA accounted for 10% of the activity in developing countries by number of projects and 9% by investment • Nigeria and South Africa, accounted for more than a quarter of total investments in the region • 2009: • Investment commitment: $1.2 bn • Decline of 11% by investment and 27% by no. of projects compared to 2008 Source: World Bank and PPIAF, PPI project database

  14. Yet Africa’s Infrastructure Needs are Substantial Infrastructure density index2 • Africa ranks far behind other emerging markets in terms of infrastructure density • Africa is in dire need of improvements to its infrastructure • There is a marked shortfall in the investment required for the needed improvements to the continent’s infrastructure • Power is in particular need of investment • Significant change is required if investment in Africa’s infrastructure is to reach the required levels • Governments should recognise the need for and encourage private sector involvement • 1 • 0.75 • 0.5 • 0.25 Source: UN Economic Commission for Africa, UBS Research

  15. What portion of Africa’s Infrastructure Needs can be Privately Financed? • Infrastructure spend today: $43 bn • Public sector share: 64% • Private Sector share: 8.6% (excluding telecoms) • Since 2006 private investment in infrastructure has been $7.5–$8 bn p.a. • 43 of 48 countries in Sub-Saharan Africa (SSA) implemented 238 infrastructure projects with private participation (PPI) involving investment commitments of $47.6 bn • Annual funding requirement: $93 bn according to AICD

  16. New infrastructure projects with private participation in Sub-Saharan Africa, by type of PPI, 2005 - 2009

  17. Total investment commitments to infrastructure projects with private participation in SSA, 1990–2009

  18. Total investment commitments to infrastructure projects with private participation in SSA, 1990–2008

  19. Policy maker’s checklist

  20. Policy maker’s checklist • PPP as a procurement option: Stop and Think • Assess the existing legislative and regulatory framework for PPPs • Outline a national infrastructure strategy • Push reforms as necessary through a strong Champion • Consider your resources and commit funds to the initiative • Build transparent procurement guidelines • Dedicated and experienced procurement team in place • Engage stakeholders and build momentum through targeted outreach among stakeholders • Race to the top in the country rankings • …and communicate, communicate, communicate

  21. Thank you • Questions and discussion Elan Cusiac-BarrSenior Investment Officer Telephone: (221) 33 859 71 67E-mail: ecusiacbarr@ifc.org

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