Namibia’s call for Public-Private-Partnership potential

Building Together

Namibia's infrastructure needs far exceed what government coffers can supply. Public-private partnerships (PPPs) are meant to fill the gap. Calle Schlettwein, the finance minister, has championed such arrangements as essential to stimulating investment and generating economic benefits that would otherwise remain out of reach.

The model has become a global mainstay for infrastructure development, allowing governments to harness private capital and expertise. For most African countries, the state has traditionally been the main provider of public services. But since the 1980s, sweeping social, political and economic reforms have made clear that governments cannot meet growing demand alone. The public sector's role has evolved from direct provision to facilitation of private-led growth.

From policy to practice

With public funds under severe strain, Namibia has made steady progress on its PPP agenda. In September 2015 the Ministry of Trade and Industry forged a comprehensive PPP policy. This was followed by the development of PPP legislation and the establishment of a PPP committee and dedicated unit within the Ministry of Finance, equipped to draft agreements, oversee construction and manage projects with long time horizons.

Priority sectors include energy, where privately financed renewable projects in wind, solar and biomass are already operational; railways, with potential investments in rolling stock and track upgrades; and affordable housing. These areas are seen as ideal for leveraging PPPs to achieve social objectives while tapping alternative sources of finance and reducing reliance on the national budget.

"We need to acknowledge that through PPPs we channel relatively expensive private capital for projects that serve the public at large, where affordability will be an important consideration," Mr Schlettwein said. According to the policy document, PPP projects "will serve as an engine for achieving social and economic objectives such as job creation, pro-poor development, inequality reduction and the development of SMEs."

The concept involves substantial transfer of project life-cycle risks to the private sector. Government institutions shift from managing inputs to managing outcomes, based on contractual arrangements, risk transfer and outcome-based financial rewards. Benefits are expected to accrue from improved service quality and construction standards, as PPPs draw on the best available skills and resources. The approach should reduce infrastructure expenditure and generate efficiencies through specialist expertise and knowledge transfer.

"Through PPPs we can leverage private-sector finances to meet the development needs of our economy," said Natangue Ithete, deputy finance minister, at a conference in Windhoek last November. "Public funds freed by private investments in infrastructure sectors are then available for other priority areas on our development agenda."

The policy applies to central government, regional and local authorities, and state-owned enterprises through their line ministries.

Framework and implementation

Both the current National Development Plan and the Harambee Prosperity Plan emphasise the importance of the PPP framework in delivering infrastructure. The Ministry of Finance is the key implementer, while the PPP Committee provides oversight in preparation, procurement and contract awarding. The PPP Unit serves as the committee's secretariat, scrutinising the feasibility of projects and procurement processes. The committee reviews and approves projects at key stages throughout their life cycle.

The forms of PPP arrangements envisaged are diverse: service contracts, lease contracts, build-lease-transfer (BLT) and build-own-lease-transfer (BOLT) contracts, among others. The PPP policy is also expected to align with the New Equitable Economic Empowerment Framework.

Over the past year the PPP Directorate has held consultations with ministries, public enterprises and other stakeholders to build capacity and provide training for public officials. The unit is set to expand to multiple divisions run by deputy directors. "The ultimate aim of the public-private partnership policy is to bring a flow of credible, well-prepared PPP projects to market to enhance Namibia's development," said Saurabh Suneja, director of public-private partnerships at the Ministry of Finance.

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