Operation Warp Speed crucial for development
WITH the world in desperate need of hope in the form of a vaccine against Covid-19, a Private-Public Partnership answers the call.
Operation Warp Speed, a Public-Private Partnership between the US government and the private sector, is a USD 12.4 billion programme that resulted in the unprecedented feat of research and rapid development of two Covid-19 vaccines which were approved under FDA emergency authorisation.
Public-Private Partnerships (PPPs) play a crucial role in the development of a wide array of projects that benefit citizens globally. Examples of these projects include: vaccine development; high-speed rural internet connectivity; R&D for an Alzheimer’s cures; critical infrastructure development, including bridges, hydroelectric dams, ports and roadways. PPP’s have a proven track record in delivering optimal value, quality, and speed to completion.
Infrastructure development is one of the key enablers for sustainable economic growth. The construction of transport systems and networks such as roads, rail, border facilities, airports and bridges, water systems, energy facilities, communication systems, health facilities and utilities contribute to the productive activities that support economic development of countries.
Studies by the World Bank found that the poor state of infrastructure in many parts of Africa reduced national economic growth by 2 percent every year and cut business productivity by as much as 40 percent making Africa the region with the lowest productivity levels in the world. According to the World Bank, Sub Saharan African countries rank at the bottom of all developing regions in virtually all dimensions of infrastructure development.
The African Development Bank states that a well-industrialised economy is expected to have adequate infrastructure that will impact positively on the industrial sector of the economy which is the engine of economic growth therefore the deficit in infrastructure poses a serious challenge to industrialisation as industries can only survive in an economy with good infrastructure.
Public Private Partnerships have been found to be an effective solution that can address some of the challenges caused by inadequate infrastructure. PPPs build back by getting private capital to develop infrastructure while creating fiscal room for governments to address other demands. The African Development Bank estimated Africa’s
infrastructure financing needs at up to $170 billion a year by 2025, with an estimated financing gap of up to $68 to $108 billion a year. PPPs were observed as the key element in narrowing this gap by crowding in private sector investment in infrastructure.
Despite the significance of PPPs in driving economic development, statistics by the African Development Bank show that only five countries accounted for more than 50 percent of all successful PPP activity in Africa from 2008 to 2018. The countries included South Africa, Morocco, Nigeria, Egypt and Ghana. Several other countries including Zimbabwe had PPPs in the pipeline.
The World Bank has defined the Public Private Partnership (PPP) as a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility and remuneration is linked to performance. It involves a substantial transfer of risk to the Private Sector.
Public-Private Partnerships are a mechanism for Government to procure and implement public infrastructure and/or services using the resources and expertise of the private sector.
Where governments are facing ageing or lack of infrastructure and require more efficient services, a partnership with the private sector can help foster new solutions and bring finance.
Zimbabwe has seen an increase over the past few years in PPPs and
the development of PPP policies and frameworks. PPP investor friendly policies and agencies such as ZIDA (Zimbabwe Investment Development Agency) have been implemented to attract potential investors. A few projects that have been implemented in Zimbabwe through PPPs include the Beitbridge Bulawayo Railway, the New Limpopo Bridge, the Newlands By-Pass, the Plumtree- Mutare Highway and most recently the US$300 million Beitbridge Border Post Modernisation project.
The Beitbridge Border Post Modernisation Project is one of the biggest and brilliantly structured PPP models that have been done in Zimbabwe and is currently under construction phase. The project has been named the Global Deal of The Year for Optimisation and Rehabilitations and it was ranked amongst the top 11 investment deals in the world in the year 2020 by the Global Trade Review.
Zimbabwe can learn a few lessons and adopt models from countries that have successfully implemented PPP models for various sectors including energy, water, health and transport.
According to the fairobserver.com, France dominated the European PPP market in 2011, accounting for more than 62 percent of the overall market value. France is said to have developed one of the most modern, innovative motorway networks in Europe due to PPP structures and it is said to be the global leader in private sector investments in the water sector.
The concession model by the French for the water sector is increasingly
being adopted by developing countries seeking to meet the demands brought about by urbanisation.
South Africa is one of leading African countries in the implementation of PPP projects. More than 50 percent of the projects are investments in the energy sector.
According to the PPPKnowledgeLab. org, more than US$5000 million is currently invested towards electricity supply projects.
There are several types of PPPs. These include Service Contract, Management Contract, Lease, Concession and Privatisation.
The types differ on the tenure mainly due to the nature of the project associated with each type of PPP. The private sector funds the research and implementation of the project and recovers the investment made from fees or payments by consumers.
PPPs can be classified in different categories for project financing which include BOT (Build-Operate-Transfer), BOOT (Build-Own-Operate-Transfer) and BOO (Build- Own- Operate). What is common on all structures is that the private sectors bear all the costs and most of the risk in the implementation of the project.
Governments benefit considerably from PPP structures through acceleration of various projects against budget constraints, facilitating skills and technology transfer from the private sector as well as fast tracking transformation and service delivery whilst the private sector bears the risk and obligations of the entire project success.