Macro-economic climate Hinders PPPs progress
Public Private Partnership Commission (PPPC) says few Malawians are taking up opportunities for public private partnership (PPP) projects, a situation it says could be attributed to the high cost of doing business.
In an exclusive interview in Blantyre last week, PPPC chief executive officer Patrick Kabambe said they have many PPP projects in the pipeline, which will attract the interest of many Malawian investors.
He said: “One of the challenges we have is that we still want to see more Malawians participate. We are not happy to see few Malawians participating, taking up these opportunities and investing in business opportunities.
“The challenges are to do with the general macro-economic situation. Cost of borrowing money on the local market is still high, but we hope that with strides
government is making to reduce the cost of inflation and interest rates, things will get better.”
Kabambe further said most of the investments at the moment are jointly local and international because of the element of macro-economic situation.
Some of the PPP projects in the pipeline include establishment of diagnostic centres, renal dialysis units in central hospitals, development and management of eco-tourist facilities at Mwabvi Wildlife Reserve, Kasungu National Park and Lake Malawi National Park.
Said Kabambe: “We have already advertised lodges in some of the national parks and game reserves.
“We believe this could be an area of interest for Malawian investors and indeed, in the submission we have received, we
have noticed that a lot of Malawians have applied.”
PPP is 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 which is linked to performance.
Word Bank figures show that Malawi has one of the lowest ratios of PPPs among the low-income countries (LICs), averaging 0.07 percent of the gross domestic product (GDP) against the region’s average of 0.41 percent.
Figures show that private investment and financing of infrastructure in other countries ranges from zero to one percent of GDP.
This is against the global average of about 0.5 percent of GDP for PPPs in the past two decades.
In an e-mail response, National Working Group on Trade Policy chairperson Fredrick Changaya said that lack of capacity to manage the PPP transactions contributes to the low ratios in the country.
“While it is a quick way of raising finance and bringing major projects to life than would government ministries, departments and agencies with limited budgets, PPP approaches do not eliminate corruption.
“In the end, the efficiency which private sector is meant to bring is compromised. However, the speed with which transformative projects can be brought through PPPs is far too good than the weakness cited.”
Minister of Finance Felix Mlusu said government is committed to improving the business environment for PPPs to thrive.
He said: “While we create a conducive environment for private sector involvement in the development of the country through appropriate legislation and suitable macroeconomic conditions, we welcome private sector active participation in the various projects.
