India can be prime public-private partnership example for Africa

9 November 2020

Source: engineeringnews.co.za

With India having successfully implemented many phases of what is the world’s largest public-private partnership (PPP) programme, it has experience and expertise to transfer to African countries.

Panelists during the last day of the Indo-Africa virtual summit, which was held from November 4 to 6, agreed that Africa had a massive infrastructure gap and that Covid-19 had widened it further, but there remained much potential in making projects bankable and taking ideas to assets.

India has been rolling out its PPP programme for the last decade, with close to 1 500 PPP projects in various stages of implementation. According to the World Bank, India is among the leading countries in terms of PPP readiness.

According to India Merchants Chambers’ international business committee chairperson Dinesh Joshi, India was equipped with the best bandwidth, expertise and capital to collaborate with African leaders to undertake large infrastructure projects.

In terms of digital infrastructure and narrowing the digital divide in Africa, Larsen & Toubro Infrastructure Development CEO Shailesh Pathak said India had achieved great strides in this regard, and the same success story could be applied to Africa.

He explained that, five years ago, the whole of India’s 1.3-billion population had a unique identify number – linked to a person’s iris and fingerprint – which could be used to open a bank account, which was in turn linked to a cell phone number.

The next step was the country creating a unified payment interface, which allowed transfers from any bank to another in India. In October, India recorded two-billion of these transactions in the preceding three years, outpacing debit and credit card transactions.

“This is something we call public digital infrastructure and it can be replicated in Africa.”

Meanwhile, African Finance Corporation (AFC) executive director Sanjeev Gupta said the corporation’s role had not been so much to wait for projects as to develop them in Africa.

He noted that one of Africa’s biggest challenges was that, while the infrastructure gap kept widening, the number of bankable projects were decreasing.

Gupta believed AFC had a role to play in taking the construction risk to create bankable structures and then to distribute its value.

“African governments cannot be expected, and are indeed in no position at all, to take early-stage project risk, although they should be. This risk arguably resides better with the private sector, to better realise commercial aspirations,” he stated.

A major difference between India and Africa’s development was that a unified rail system served as a bedrock for a lot of India’s development, said Gupta, adding that various ununified systems in Africa posed practical challenges, whereas India had the benefit of being one country with one set of challenges.

Gupta continued that India had a high amount of savings that sat in cash and found its way to infrastructure bonds. Although the African market was one with huge potential, it had extremely low levels of discretionary savings.

“We have to keep the continent’s lack of domestic capital and project development capability in mind, and remember that private institutions often have to play the role of the public sector that is otherwise lacking.”

An example of where a PPP in Africa has been successfully pulled off is the Gautrain public rail system.

Gautrain Management Agency CEO William Dachs said while India’s PPP programme had been scaled up and was being sustained, the PPP agenda in South Africa had been more ad hoc, with some interventions in the power and health sectors as has been needed.

However, he pointed out that he would like to see more PPPs around smart mobility, which the Gautrain is working on at the moment – moving away from a public transport system that is there if people want to use it, and toward a necessary transport mode, offering mobility as a service.

He believed India could lends its expertise to South Africa around ticketless technology, in particular.

African Development Bank (AfDB) private sector infrastructure VP Solomon Quaynor put forward that the bank continued to have its “high five” priorities for Africa, which involved feeding, powering, industrialising, integrating and improving quality of life for Africans.

The bank typically looks to develop projects that deliver on jobs and inclusive economic growth by creating industrial value chains beyond a single project or asset.

Quaynor believed it was essential for development institutions to come up with innovative solutions in making projects bankable.

For example, through AfDB’s Africa50 programme, it looks to infrastructure asset recycling – taking brownfield projects and bringing in strategic operators to recover, optimise and expand on existing operations.

Gupta remained confident that perceived risks in Africa could mostly be mitigated with proper planning. He believed that if a complex India managed to be built through engagement with foreign investors then Africa could manage the same.