ACCELERATED INDUSTRIAL DEVELOPMENT OF AFRICA (AIDA)

1. ACCELERATED INDUSTRIAL DEVELOPMENT OF AFRICA (AIDA) PROMOTING PUBLIC PRIVATE PARTNERSHIPS (PPP) APPROACH IN AFRICA: ASSESSMENT FOR THE ROLE OF GOVERNMENTS AND THE PRIVATE SECTOR IN SME DEVELOPMENT Presented by: DR. OSEI BOEH-OCANSEY DIRECTOR-GENERAL PRIVATE ENTERPRISE FOUNDATION - GHANA

2. Background • Under a democratic political system which followed promulgation of Fourth Republican Constitution of Ghana in 1992, the partnership between public sector and private sector has been enhanced

3. Background (Cont’d) • Public partnership with the private sector was articulated in Article 36 (2) (b) of the 1992 Constitution • “The State shall, in particular, take all necessary steps to establish a sound and healthy economy whose underlying principles shall include affording ample opportunity for individual initiative and creativity in economic activities and fostering an enabling environment for a pronounced role of the private sector in the economy.”

4. Background (Cont’d) • Guidelines for partnerships exist in many different policies, documents and institutions eg. Private Sector Development Strategy I and II, National Trade Policy, etc. • In 2004, Ghana developed PPP policy guidelines. This was never operationalised. • Ghana is now developing a comprehensive policy and legislative framework for partnerships

5. Background (Cont’d) • PPP started with liberalization of the economy • Privatization is not PPP • Collaboration in Promotion Branding/Growth Strategy/Investment • Collaboration in R&D Innovation • Continuous improvement/productivity • Firm – Industry – Country Competitiveness

6. WEF Global Competitiveness Ranking

7. Ranking by WEF Global Competitiveness Index (Cont’d) • Zambia • Cape Verde • Uganda • Madagascar • Malawi • Swaziland • Nigeria • Lesotho • Cote d’Ivoire

8. PPP Approach • Approach to PPP in Ghana begins with Public-Private Dialogue (PPD) with either party initiating the approach • Both public and private sectors have shown commitment to this process • Public connotes • Central Gov’t: Executive – Legislature – Judiciary and their MDAs • Local Gov’t: MMDAs/Provincial • REC: ECOWAS/ECCAS/SADC/COMESA • AUC

9. Public Private Dialogue • The Private Enterprise Foundation (PEF) was founded in 1994 to provide a platform to discuss issues of concern to private sector associations • Since the establishment of PEF as a national centre for policy advocacy and promotion of the private sector, many other Trade and Business Associations (TBAs) have also taken up policy advocacy and dialogue

10. Public Private Dialogue (Cont’d) • Launch of Business Sector Advocacy Challenge (BUSAC) Fund in Ghana in 2004, funded by DANIDA, USAID and DFID and other programs by DPs stimulated a remarkable increase in policy advocacy actions of many business associations • It is on record that more than a 1000 policy advocacy actions have been initiated by 360 beneficiaries (2005-2010) totaling US$8.5 million

11. Public Private Dialogue (Cont’d) • PEF has been engaged in programmes by researching into policies and using the outcomes as tools for evidence-based advocacy campaign. • As part of its mandate, the Foundation engages Government through policy advocacy and dialogue.

12. Public Private Dialogue (Cont’d) • A number of such activities have taken place among which are the following: • Dialogue with Government on the need to establish an Agricultural Development Fund. (MOFA and MOFEP) • Annual Retreat with Parliamentary Select-Committee on Trade, Industry and Tourism and private sector practitioners to discuss pertinent issues of concern to the private sector. • Inputs into Government’s Economic Policy and Budget Statements (MOFEP) and the medium-term Growth and Poverty Reduction Strategy. (NDPC) • Private Sector Development Strategy (PSDS) I & II

13. Case Study – Services Export Strategy • PEF works to strengthen the capacity of trade and business associations • The Foundation also identifies growth poles of the economy which can be taken advantage of by SMEs • Through these two functions, PEF identified services export as a potential growth pole for the economy

14. Services Export Strategy (Cont’d) • PEF in collaboration with GEPC and SPEED Ghana organised three retreats on Services Export for stakeholders • Health and Education • Finance and ICT • Trade, Construction and Tourism Cf. Trinidad & Tobago, St. Lucia, Barbados EU-ACP cde, Pro-Invest; ITC/WTO/UNCTAD

15. Services Export Strategy (Cont’d) • The general recommendation from the stakeholder meetings was the development of Services Export Strategy • As part of consultations with government towards 2007 Budget, PEF proposed to promote the export of professional and technical services by SMEs to the West Africa sub-region and beyond

16. Services Export Strategy (Cont’d) • This was included in the 2007 Budget Statement and Economic Policy under Global Services Delivery • PEF and other stakeholders are currently working on the formation of a Coalition of Service Industries with collaboration from International Lawyers and Economists Against Poverty (ILEAP)-Canada and Ghana Association of Consultants.

17. Case Study 2 – Salt Sector Strategy • In 2002, PEF identified the salt sector as a potential growth pole for the economy • It is estimated that Ghana has about 500km coastal front with total production potential of 2.2 million MT per year, >US$1bn, [cf. NTE $1.2bn, Total Exports $6bn] • Actual production is estimated at 250,000 metric tonnes per year, of which about 62,000 MT is exported annually (2007)

18. Salt Sector Strategy (Cont’d) Destination of export: Niger 24MT, Cote d’Ivoire 14MT, Burkina Faso 20MT, Togo 2MT, Benin, Gabon, etc.Nigeria imports from Australia, Brazil. • However, the most productive area as far as salt production is concerned (a13,000ha Songhor Lagoon basin – 1.44 million metric tonnes per year) was bedevilled with land acquisition issues • The Foundation took the initiative and facilitated the settlement of the land disputes between the Traditional Council and the land owning clans

19. Salt Sector Strategy (Cont’d) • The result of PEF’s initiative was the incorporation of a Foundation for the majority landowners TCF, a company limited by guarantee and a Salt Development Company (ASDC Limited); a joint venture Special Purpose Vehicle of TCF for investment with international and local companies • TCF (expanded) will serve interests of all landowners (clans)

20. Salt Sector Strategy (Cont’d) • In 2006, PEF, GEPC and the National Development Planning Commission (NDPC) undertook policy research and presented findings at the ITC Executive Forum in Berlin, Germany • Ghana’s paper was titled: “Export Development, Poverty Reduction and Land Issues: A Case Study of Salt Production for Export in the Dangme East District of Ghana”

21. Salt Sector Strategy (Cont’d) • Further work and technical assistance from the Commonwealth Secretariat (CFTC) resulted in the preparation of the document “Strategy for Ghana’s Salt Sector” which was launched in November 2009 • The Salt Sector Strategy document outlined an implementation plan for the successful execution of the strategy

22. Salt Sector Strategy (Cont’d) • PEF working with GEPC, Ministry of Trade and Industry (MOTI) and Ghana Investment Promotion Centre (GIPC) has convened meetings to discuss follow-up activities towards achieving the goals of the implementation plan. Steering Cmtee. • As at now, EOI received from a short list of companies from 1) USA 2)China 3)SA

23. Observations about Case Studies • Assessing the role of the Private Sector • Which Private Sector? • International – LMEs, MNC, Foreign and Joint Venture • Local – MSMEs and Informal • Over 80 percent but 87 percent employment • Fragmented/Segregated Continuum of enterprises. Missing middle MEs. SPX disfunction • Rise above narrow interests • Private sector must speak with one voice

24. Observations about Case Studies (Cont’d) • Assessing the role of the Private Sector • Due to the weak capacity of the domestic private sector, it is not able to go ahead with funding the projects • Dialogue aspect • Project aspect • Private sector has to be proactive • Address misconceptions of private sector

25. Observations about Case Studies (Cont’d) • Assessing the role of Government • Short ‘termism’ of partisan government • 4-5 year election cycles • Funding pot to assist projects • Government must have a defined role and responsibility • Need for a PPP Framework • Address apprehensions of public sector

26. Major Issues • Government not oriented to assist the indigenous private sector to succeed • There is no post start-up assistance • Acquired culture places more emphasis on theory than practical ability • As academics end actions with paper publication • Government ends action with declaration in policy or legislative document • Private sector action sets up enterprises • Economic units of production or service provision

27. Major Issues (Cont’d) • Local private sector grows by imitation – Weak R&D • Trust between public/private sectors • Gatekeeper to access gov’t services • Culture of dependence on public sector • Address rent-seeking posture • Patron-client relationship • Special incentives and protection to compensate for market failures and investment climate weakness

28. Major Issues (Cont’d) • Credibility • Transparency of actions - APRM Corporate Governance component • Public/private sectors to share same vision with mutual accountability

29. Elements of PPP Policy and Legislative Framework • Key Objectives • Leverage public assets and funds with private sector resources to accelerate investments in infrastructure and services • Protect interests of stakeholders • Set up efficient and transparent arrangements for identification, structuring and competitive tendering of PPP projects • Provide framework for developing efficient risk sharing mechanisms

30. Elements of PPP Policy and Legislative Framework (Cont’d) • Guiding Principles • Value for money • Risk allocation • Affordability • Clear objectives and output requirements • Local content and technology transfer • Safeguarding public interest and consumer rights • Stakeholder consultation process

31. Elements of PPP Policy and Legislative Framework (Cont’d) • Institutional roles and responsibilities • Government of Ghana shall establish institutional arrangements for the successful implementation of PPP • Ministry of Finance and Economic Planning • National Development Planning Commission • MDAs/MMDAs • Public Procurement Authority • Cabinet • Parliament • Attorney General’s Department

32. Elements of PPP Policy and Legislative Framework (Cont’d) • Legal and Regulatory • The PPP legal and regulatory frameworks are to be guided by relevant principles including environmental safeguards, predictability and transparency • Risk Sharing and Management Framework • The party best placed to manage the project

33. Elements of PPP Policy and Legislative Framework (Cont’d) • PPP Process • A systematic and transparent process is recommended for the PPP Process • Project Identification, needs and options analysis • Initial viability analysis and pre-feasibility • Feasibility studies and full appraisal • Procurement process • Contract management • Government of Ghana shall spell out the approval process and applicable thresholds

34. Elements of PPP Policy and Legislative Framework (Cont’d) • Process for Unsolicited proposals • Shall be entertained only in exceptional cases • Limited to projects that demonstrate genuine and substantial innovation and are supportive of public policy • Subject to value for money, technical, financial and economic assessment

35. Elements of PPP Policy and Legislative Framework (Cont’d) • Review • Core responsibility of structures managing the development and implementation of PPP • Reviews shall be prepared in an open and transparent manner within an appropriate time frame • APRM NPoA

36. CONCLUSION 29 Sept. 2010 Meeting with Constitutional Review Commission Private Sector Leaders made submissions indicating dissatisfaction with current state of PP Partnership Asked for better structured , legally compelling working relationship, less dependent on public sector decisions and guidance Independent constitutionally mandated H L Commission responsible for PP Partnership affairs

37. But Observations (2002 – 8) from Ghana Investors Advisory Council (GIAC) chaired by President suggest • Performance dependent critically on personality of the President of the Republic and • Level of Economic and Political sophistication of the country.

38. THANK YOU PRIVATE ENTERPRISE FOUNDATION www.pefghana.org info@pefghana.org