Reinforcing the Public-Private Partnership (PPP) in financing, development, administration, and ownership of projects is a means to supplement and speed up the ongoing economic reforms in the country, claim experts.
The Public-Private Partnership also called ‘Triple P’, is a contracting agreement between any government body (public sector) and the private firm or individual (private sector) eligible for the handling the development, administration, finance, and ownership of infrastructural projects, business enterprises and public services.
On March 2018, Ethiopia has enacted a new proclamation to facilitate PPP by recognizing the fact that the private sector is essential to support the country’s economic growth and improve the quality of public services, particularly infrastructure.
It stated that: “The main purpose of the partnership is to support economic growth, to facilitate the implementation of privately financed projects, to enhance transparency, fairness, value for money, efficiency and long-term sustainability, to improve quality of public service activity and to maintain macroeconomic stability by reducing public debt.”
The Proclamation also indicated that PPP Directorate General would be established under the Minister of Finance and Economic Cooperation. The modality of partnerships based on the involvement of the private sector in the control of assets and ownership includes; the traditional public sector procurement model (turnkey model), operations or management cataracts, leasing (franchise), mixedcapital partnerships (joint venture), concessions, private finance initiative, and privatization.
Experts stress that though the introduction of the PPP into the Ethiopian context is too late, it will definitely improve economic efficiency, and the capacity to execute policies and projects. Restricted powers and resources of governments (the public sector), the inherent complexity of development challenges, accelerated globalization and the rising powers with multifaceted problems which require partnerships at the global, regional and local level are the rationales to PPP.
Ethiopia, as a country in a transition period, needs to prioritize and realize PPP for better economic performance and to speed up economic transformation, claims Fasil Tadesse, Economics lecturer at Unity University. This is mainly due to the fact that the nature of the private sector puts it in a better position to become more efficient and provide better services and better service delivery brings customer satisfaction; Fasil says adding this has not been the case as the management culture of Ethiopia’s public sector is substandard.
The partnership might be as extensive as privatizing infrastructure and services, or it might simply involve applying management or financing techniques from the private sector, Fasil says adding that Ethiopian government’s recent decision to fully or partially privatize the giant public enterprises such as Ethio telecom, energy, and banking sectors is an encouraging move that strengthens.
Ethiopian Civil Service University Public Policy Professor, Dr. Laxmi Narayan Dash for his part says that it is estimated that the private sector has provided 1.4 trillion USD for public infrastructure projects in developing countries from 1990-2008. For Ethiopia, to fully harness the potential of PPPs as a strategy for accelerating the development process, the government has to initiate certain reforms to make the environment conducive for such investments, Dr. Dash further adds.
The proclamation expressly excluded the sectors such as; oil, mines, minerals, rights of air space for privatization or sale of public infrastructure or public enterprises. However, after the recent economic and political reforms in the country, these sectors are now open to be fully or partially privatized. This calls for amending the proclamation. “Establishing an institutional framework that is led by a public agency as practiced in other countries is also necessary to further reinforce PPP,” he advised.
The customs and revenue law, in the country, has to be treated equally in a way that can promote private sector participation in the country, according to Fasil. The Investment Proclamation 769/2012 which confers the power to approve or disapprove any proposal submitted by any private investor intending to engage with the government, is another legal document that could strengthen PPP.
Considering the economic boom the country experienced, legal framework and a renewed commitment by the government to up the private sector’s role in the economy, it can be said that Ethiopia has a bright future in adopting PPP to further stimulate economic growth.
The Ethiopian Herald, January 24/2019
BY HAFTU GEBREZGABIHER
