Public-Private Partnership (PPP) is receiving a lot of attention from development practitioners as the best way to achieve development.
Accordingly, as Ethiopia is embracing a new economic reform, the government’s willingness to widen up the economy so that the private sector involves more is a lavish opportunity for PPP to thrive. It is undeniable fact that the state-led growth in Ethiopia has brought about rapid economic growth. But there is still the case of inefficiency and dissipation in public enterprises as has been witnessed in the cases of corruption and maladministration revealed recently following the political and economic reforms undertaken in the country.
While scholars and policymakers widely recognize the role the state plays in fostering economic development – as several Newly Industrialized Countries (NICs) in East Asia achieved tremendous success stories in terms of economic growth and transformation by adopting the developmental state model where the state played an interventionist role in the economy to stimulate growth- it is equality undeniable fact that the private sector in these countries have also played a central role in realizing the economic miracle.
With these success stories in mind, the Ethiopian government’s position has for long been for the state to have a vital role in promoting economic growth. Though the private sector is given a lot of room, the state opted into playing a key role in the economy than leaving everything to be decided by the market. On the other hand, recognizing the enormous development achievements the state-led model brought about, some prominent international financial institutions have been advocating for ‘a bigger push’ to increase the private sector’s role in the economy, if the growth is to sustain.
Since the start of the reform, the government has also been showing its renewed commitment to encourage the private sector to play a better role in the economy. Among its major actions is it an announcement to fully and partially privately public enterprises. Now, the private sector seems to be in the nick of time to play a decisive role in realizing the industrialization and middle-income ambition within a decade.
And PPP comes as a big opportunity to bring about the desired participation of the private sector to fill demand-supply gaps and improve efficiency. With this view, the country has enacted a new Proclamation last year facilitating Public Private Partnerships (PPP), recognizing that the private sector is essential to support the country’s economic growth and improve the quality of public services, particularly in infrastructure.
The Proclamation sets out the new PPP legislative framework with a view to promoting and implementing privately financed infrastructure projects by enhancing transparency, fairness, value for money and efficiency through the establishment of specific procedures. PPP projects may be for either new or existing facilities and include design, financing, construction, rehabilitation, expansion, modernization, operation, maintenance, administration and/or management.
Generally, the initiatives, including the government’s renewed commitment, have provided a huge opportunity for the country to improve the participation of the private sector in infrastructural development such as roads, railway, energy, telecommunications, and transport, to mention a few, through effective Public-Private Partnership.
The Ethiopian Herald, January 24/2019
