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Opinion - PPPs can support economic development

2021-12-03  Staff Reporter

Opinion - PPPs can support economic development

After independence, Namibian government pursued state-led economic development strategies based on import substitution, which was considered to be the key to rapid industrialisation and modernisation. Namibia is well placed to implement PPPs given that the necessary legal framework has been created under the Public Private Partnership Act, 2017. 

The government, by involving the private sector in projects will have a partner that is focused on maximising profits from operating and maintaining the infrastructure that has been upgraded or newly constructed which will ensure that there are greater efficiencies throughout the lifecycle of a PPPs. 

A clear model that captures private- and public-sector objectives is required to ensure successful PPPs ventures, considering the industry focus, project investment requirements, ownership agreement and risk level. Development achieved via public–private partnerships is in line with Namibia’s Vision 2030 to raise the living standards of the Namibian people to those of the developed world by 2030. 

The timing is perfect to mobilise the utilisation of the PPPs model and it is now more paramount than ever before to deliver economic growth for the public interest. Innovation can efficiently solve problems faced by society and digital technologies play a key role in driving innovation. By bringing resources and expertise from across geographies together to work on projects, connectivity provides the platform for communication, collaboration and creative problem solving.

There is an ongoing, and yet growing, concern about what we as a country need to do to increase foreign investment in Namibia. Despite the economic challenges we face, investors have their different ambits and are willing to take risks with their money, for the right return. 

So, a key question for us to ask here is how do we create the right return for foreign investors, to shore up our international revenue? Having this kind of working partnership with government can unlock significant levels of foreign investment. The problem is it is predicated on the idea that government offers this support and enables the company or consortium to run independently. 

We need open regulations that enable us to operate this way. If we want to create jobs, there is a lot of opportunity in Namibia to do so, but the existing bureaucratic and unnecessary red tape is getting in the way. Another benefit is that it will also have the effect of generating tax income for the fiscal, deploying technology, up-skilling employees and procurement of goods within the local market. If implemented correctly, PPPs will stimulate more downstream activities in the broader economy. 

Infrastructure investment helps raise economic growth rates, offers new economic opportunities, and facilitates investment in human capital. Public-Private Partnerships (PPPs) can be a tool to get more quality infrastructure services to more people. 

When designed well and implemented in a balanced regulatory environment, PPPs can bring greater efficiency and sustainability to the provision of public services such as energy, transport, telecommunications, water, healthcare, and education. PPPs can also allow for better allocation of risk between public and private entities. Namibia’s Public Private Partnerships mechanism provides a great opportunity to galvanise this energy for the common good. 

The private sector has much to offer in terms of financial resources, people skills and experience as an investment in public infrastructure and services. It is through partnerships that public and private sectors can both achieve their goals to the benefit of everyone in Namibia.

The diverse interests of the public and private sectors can be harnessed for the collective good. This is what Public Private Partnerships are about. The public sector gets better, more cost effective services while the private sector gets new business opportunities. 

Economic growth, job creation and poverty alleviation are such immense challenges that the government cannot meet alone. Furthermore, although the government has implemented a range of infrastructure delivery programmes that have contributed significantly to increased access to services, a large backlog remains. 

Public Private Partnerships can be leveraged as an important mechanism for a solution. Local partners may however have the ability to source cheaper funding than the Namibian Government due to their credit risk and willingness to extend themselves when presented with an opportunity to participate in PPPs.

Furthermore, PPPs can provide a number of specific benefits to the public sector. In particular, they can offer value for money solutions, where the PPPs can attain lower costs, higher levels of service through innovation and reduced risk for the public sector. 

The availability of specific skills needed to prepare, launch, and manage PPPs can represent a major implementation challenge in Namibia. Reaping the benefits of PPPs involves a careful and complex preparation process as final results may take time to materialise after the contract has been signed.  The actual terms of contractual agreements and the changes needed to create an enabling environment will depend on the sector, and often the specific transaction. The steps needed to get there, though, are always the same, constituting a necessary framework for Namibia to succeed with the PPPs.

In conclusion, PPs provide an important tool for government seeking to expand and improve the infrastructure and delivery of social services for the citizens, and can help to boost economic growth and poverty reduction. Implementing successful PPPs ultimately relies on the abilities of the individuals tasked with making them work.

2021-12-03  Staff Reporter

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