PUBLIC PRIVATE PARTNERSHIPS IN SADC
“Project Facilitation through Capacity Building”
WORLD BANK WORKSHOP ON LARGE PROJECT
FINANCE
MAPUTO, MOZAMBIQUE
7th January, 2008
Activity undertaken with the financial support of the
Government of Canada provided through the Canadian
International Development Agency (CIDA)
Presentation Overview

Introduction to SADC-BA &Project Background

Project Partners

Facilitating Project Development & Implementation

SADC-BA TAF: Mauritius & Malawi

Recommendations for Maximising Economic Return & Social Benefits via PPP
Introduction to SADC-BA & Project
Background
The SADC Banking Association:

Association of 12 National Bankers Associations

Established at the behest of the SADC Committee of Central Bank Governors.

Critical function includes facilitating the creation of an environment conducive for
increased domestic & FDI.
PPP Project Background:

Increased opportunities to draw on private capital to support projects

PPPs are effective “contracts” for attracting investment into infrastructure and
service delivery projects

Absorptive capacity constraints must addressed

Facilitating capacity building is a critical role in the “non-competitive space”.
Forms of PPP contracts
Leasing
Joint
ventures
Management
Contracts
Less Risk
Transfer
Short
contract term
Insignificant
private
capital outlay
Service
Contracts
BOT, BOO
Design, Build,
Operate, Finance &
Concession
contracts
Divestiture
More Risk
Transfer
Long term
contract
Significant
private
capital
outlay
Project Partners
Project Steering Committee members:

RSA: The Banking Association South Africa (Executing Agency)

Canada: CIDA

SADC-Committee for Central Bank Governors

RSA: PPP Unit-RSA National Treasury

Botswana: Public Enterprises and Evaluation Agency (PEEPA)

Tanzania: Tanzania Investment Centre (TIC) & National Construction Council
(NCC)

Mauritius: PPP Unit-Ministry of Finance and Economic Development

Malawi: Privatisation Commission ( Ministry of Finance)

Zambia: PPP Working Group (driven by National Council for Construction)

Lesotho: Office of the Minister of Finance & Lesotho Bankers Association
Facilitating Project Development through
Capacity Building
Capacity building at 3 levels:
1.
Training
On-line, fully accredited courses (subscription from 25 countries, 6 continents):

PPP Skills and Competency Development
PPP concept and rationale; Contractual /legal options; Project appraisal and
feasibility studies; Project finance and investment analysis, Procurement
process; Stakeholder management and public participation; human
resources and labour relations; monitoring and regulation.

2.
Project Officer Management and Leadership Training
Research
Institutional, Regulatory, and Policy Reviews, PPP guidelines, Case studies
3.
Technical Assistance Facility
Support for Planned or Existing Projects:

SLDC Highlands Project Mauritius (development of a new town)

Malawi Railway Concession (Re-drafting & re-negotiation of Contract)
SADC-BA Technical Assistance: ZAR 1.7 million
Activity
Output
Establishing minimum development
norms for project
Minimum built up areas for
preferred development
components
Market Assessment
Assess market demand for
project sub-components of
highlands project, potential
revenue estimates
Financial (Value) Assessment
Assess suitability of private
participation in
development of Highlands
project
Financial Feasibility, Project
Structuring and Bid Framework
Financial feasibility of
project & determination of
reserve price for land,
project structure, bidding
framework
Compiling Project Information
Memorandum
Compilation of important
project details and parts of
feasibility study to be
shared with prospective
bidders
Support the Appointment of a
Transaction Advisor to complete
feasibility process and facilitate
procurement of private developer
RFP released on
31.10.07($USD 3 million).
SLDC Highlands Project in
Mauritius
• 920 hectares of Prime Land
•Development of a new town
•Include Government
Accommodation
•Enhance economic activity through
the Establishment of a knowledge
and urban industry centre
•(US$ 3 billion over 10 years)
SADC-BA TAF: Malawi Railway Concession

Total track length of 797 KM (399 km Nkaya-Zambia Border, ~101 km Nkaya-Nayuchi,
297 km Nkaya-Mozambique Border (South)

Total freight traffic of 240,111 tns in 2004: International traffic 223,034 tns (Imports
134,547, Exports 88,487) Local traffic 17,077 tns

3 PSO routes: Limbe – Makande, Balaka – Nayuci, Limbe - Balaka
SADC-BA TAF: ZAR 1.3 million
Activity: Malawi Railway Concession
Outputs (Recommendations)
Project Economics
•
•
Financial assessment for model
assumptions of revenue and
profitability;
Recommendations for achieving
economic viability i.e. increasing
exemptions, reviewing minimum
payment obligations etc.
Contract Quality
effective provision for force majeure events
Asset Management
Reviewing commercial treatments: Need
for Rehabilitation Programme &
Depreciation Fund
Critical Points Issues not included in the
contract
include clauses i.e. transparent formula for
revenue sharing cross border,
commercial arrangement of new
railway connections, procedures for
entry of new operators maintenance
standards, methods for determining
subsidy obligations.
Recommendations for Achieving Maximum
Economic Returns & Benefits from PPP
1. POLITICAL SUPPORT: to develop projects, eliminate disinterest, manage delays,
spearhead communication.
2. ROBUST CONTRACTS: All Aspects must be covered; conditions should be clearly
articulated with minimal ambiguity
3. STRONG REGULATORY FRAMEWORKS & INDEPENDENT REGULATORS:
compliance, dispute resolution, monitoring use of loan funds and insurance proceeds,
deal with unsolicited bids etc.
4. LOCAL EMPOWERMENT: Need a competent pool of local resources to compliment
international resources and a system to manage resources for identified outcomes.
THANK YOU!
Juliet R. Kairuki
julietk@banking.org.za
+27-82-312-7937 (cell)
+27-11-645-6726 (office)
+27-11-645-6896 (fax)
www.banking.org.za/sadc