Private sector’s role in cities’ revitalisation

National governments have a social and political responsibility of providing basic services to its nation and citizens. Many governments have a reputation for reneging on this responsibility with aplomb. Malawi is no exception. Fact!

The dearth of infrastructure and systems failure in essential service delivery in our cities needs no emphasis. The few roads are poor, potholed or patch-ridden, in need of proper drainage systems, with rugged or no pavements, no street lights or non functional. In some cases, they are impassable or just do not exist where they are most needed. The result is obviously rendering some sections of city residents inaccessible by cars and rendering it extremely difficult to connect with the hubs of economic activity or other such essential services as hospitals.

Ambulance, fire or such other emergency services are ineffective or almost non-existent. Waste management of any kind does not get the necessary attention. Modern technologies in waste management have not taken root yet.

In short, our cities lack the sophistication of a modern city. It is time for regeneration in terms of meaningful infrastructure that takes into account today’s needs and will remain relevant for some decades. This is costly.

While acknowledging the staggering cost of projects aimed at reducing infrastructure deficit, the resources available to governments are routinely squandered without accountability. The result is usually that there is an on-going system of lack of accountability and transparency in economies not robust enough for public sector to single-handedly drive development across the board.

Endemic budget deficits and the inefficient management of large infrastructure projects and delivery of services within the public sector are a few of the reasons why the traditional procurement method of governments funding infrastructure projects through fiscal budgets is increasingly considered unviable.

It is here that Public Private Partnerships (PPP) offer one of the tested and proven solution to this problem.

There are a number of definitions of PPP but locally, the Public Private Partnership Commission (PPPC) defines it as “a legally enforceable contract in which a contracting authority partners with a private sector Partner to build, expand, improve, or develop infrastructure or service in which the Contracting authority and private sector partner contribute one or more of know-how, financial support, facilities, logistical support, operational management, investment or other input required for the successful deployment of a product or service, and for which the contracting authority and the private sector partner is compensated in accordance with a pre-agreed plan, typically in relation to the risk assumed and the value of the result to be achieved.

Usually the private entity performs infrastructure service delivery functions that would otherwise have been provided through traditional public sector procurement and assumes the associated risks through a long-term contract (typically ranging from 10 to 50 years). City councils are some of such contracting authorities.

The advantages of these arrangements include quick provision of infrastructure through mobilisation of private sector capital, quick implementation of development project, reduced whole life costs due to private sector efficiency; better allocation of risk, through experience in handling commercial risk by private sectors, more performance incentives, better quality of service, additional revenues generation more robust accountability and transparency systems and better public management.

Practical examples abound. The highly visible downtown redevelopment projects in the US were sponsored by partnerships including Philadelphia, Baltimore, Pittsburgh and New York, among others.

In South Africa a good successful example of the PPP arrangement is the N4 Toll road from Witibank, South Africa to Maputo, Mozambique  whose cost  was R3 billion ($324 million) by 1996 estimates. The project involved the rehabilitation, including construction of new road of 198-kilometre road. Following the success of N4 Toll Road, the Mozambican National Ports and Railway Authority formed a joint venture with British Mersey Docks and Harbour Company for a 15-year concession to finance, rehabilitate, operate and upgrade the Maputo ports in 2003.

The bane of national development is easily tied to the dearth of infrastructure. PPP strategies have been successfully utilised and adapted to the needs of different sectors of the economy and to different cities. Blantyre should not be an exception.

Depending on the sector, some PPP models are more appropriate than others in achieving its deliverables and in mitigating and sharing risk amongst participants. The right PPP models must be identified and adapted (where required), for the right project.

The infrastructural deficit and inefficient delivery of essential services present an opportunity to the private sector. Our cities could do with a number of high rise car parks to decongest our streets whose already narrow space is halved between street and car parks. We could do with proper bus terminals to bring sanity and order to our city and avert likely catastrophic accidents that may occur due to use of places like gas stations as terminals. Swollen population demands more decent housing. More vehicles on the road demand more extensive and improved road network system. Our pavements would be rid of vendors if we had state of modern spacious markets. More vendors entail the need for more space and newer more modern markets.

Our cities could do with some amusement parks. Our cities lack facilities such as state-of- the-art stadiums, sports centres, theatres to enable our youth develop their athletic and artistic skills. City councils are tasked to ensuring provision of such services as public transport, ambulance services, fire brigade, waste collection etc. All these desirables are achievable through the PPP vehicle.  Have councils as contracting authorities done enough to excite the private sector into investing in these projects?