Africa to model public-private partnerships on India’s success

AfDB said yesterday that it had signed an agreement with India’s government to adopt model agreements and legal documents associated with PPPs in that country to use in African nations.

The AfDB said: “India is one of the developing countries to have successfully received large-scale investment to the tune of $300 billion in infrastructure under the PPP model. With more than 1,000 PPP projects, India is said to have perfected the PPP model, which could arguably provide a solution to Africa’s infrastructural deficit.”

According to the AfDB, “for more PPPs to emerge in Africa, countries need to improve the business environment” and overcome “serious constraints” that exist in many countries,  including inadequate legal and regulatory frameworks for PPPs, lack of technical skills to manage PPP programmes and projects and “unfavourable investor perceptions” of country risk.

In its ‘Private Sector Development Strategy’ blueprint for 2013-2017 (44-page/1.22 MB PDF), the AfDB said it would create a “high-level private sector development steering committee”. The bank said the committee would play a “key role in transforming the organisation, whose activities have been dominated by public sector interventions, to one increasingly focused on seeking private sector solutions and promoting public-private partnerships”.

The blueprint said that while the bulk of bank lending is to governments, it has directly and indirectly supported private sector operations in Africa since the end of the 1980s. Private investment operations “have increased nearly tenfold since 2000”, from $250 million in 2005 to $2bn in 2012, the report said.

Former president of the Federation of Indian Chambers of Commerce and Industry (FICCI) R.V Kanoria told last week’s ‘Africa-India Partnership Day’ in Rwanda, organised by the Export Import (EXIM) Bank of India and the FICCI, that adopting India’s PPP model would reflect increasing investment from that country in Africa. Kanoria said: “Indian investments in Africa have increased 14-fold in the past year and we are hoping that by next year it will rise to $100bn.”

In March, the EXIM Bank of India said it planned to boost investment in Africa by encouraging more companies across the continent to use lines of credit to fund “transformational change”.

A report published in 2012 by FCCI and Ernst & Young, ‘Accelerating PPP in India’ (48-page/3.71 MB PDF), said significant growth in the number of PPPs in the past 15 years had made India “one of the leading PPP markets in the world”. As a result, “a proper PPP eco-system comprising institution, developers, financiers, equity providers, policies and procedures has emerged”, the report said.

The report said PPPs are expected to bring in about 50% of the projected $1 trillion of infrastructure spend in India up to 2017, encouraged by further government efforts to “streamline PPP processes”.