Local governments are critical players in public-private partnerships, but many lack the skills necessary to successfully negotiate and close deals — a problem that Tanzania has recognized and is working to remedy.
Tanzania, with World Bank support, recently trained a group of about 20 government employees, from lawyers to engineers, who are now certified PPP specialists.
The group of 20, most of whom work in the Ministry of Energy and Minerals, spent six weeks in Washington, D.C. learning the ins and outs of PPPs at a specialized training course at the Institute for Public-Private Partnerships, also known as IP3. Armed with this knowledge, they are expected to help the country negotiate better deals with big companies, especially in the energy sector.
Tanzania has discovered massive resources for gas and that has drawn significant interest from multinational corporations. In order to best capitalize on that discovery, the government needs to engage those companies, yet it has had very few employees with the capacity to do so, according to Liberata Mulamula, Tanzania’s ambassador to the United States.
“We are always shortchanged because of not knowing,” she said, adding that historically the inability to understand the fine print and know what to look for has hurt the interests of both her country and others on the continent.
“This training was tailored, custom made, to help engineers, lawyers, financial analysts to have the necessary tools and skills to be able to negotiate, to be able to conclude credible agreements,” Mulamula said.
In addition, participants will also have the confidence to sit at those negotiation tables, which may mean better deals in the future from power purchase agreements to the next Millenium Challenge Corporation compact, she said.
Knowledgable officials will help Tanzania bring in additional private sector capital and, along with existing regulations such as a corporate social responsibility requirement designed to ensure the inclusion of local communities, work to direct some of the new wealth to the poor, Mulamula said.
Tanzania is not alone in needing increased government capacity in public-private partnerships. Many countries find a lack of skills or expertise to be a key constraint to further engagement with the private sector.
“As we look around the world, there is a lot of talk about PPPs, but governments are struggling to actually implement PPPs to the extent that they desire and indeed to the extent that the private investors are ready to credit,” said Laurence Carter, the senior director of the public-private partnerships group at the World Bank.
PPPs are a critical tool in helping develop trust, understanding and long-term relationships between governments and the private sector, which will play an important role in achieving the future sustainable development goals, he said. In many cases deals don’t materialize because of a lack of trust or understanding between the parties.
“We think where there is clear leadership — political leadership in particular — and you combine that with improved capacity, then you can get better contractual relationships that lead to better outcomes for people,” Carter said.
And there is still a lot of room for growth and improvement. In 2013, the number and value of PPPs in the poorest countries, those that receive funds through the International Development Association, was very low — fewer than 20 private investment projects if telecommunications companies are excluded.
In order to help create more successful PPPs, the World Bank is supporting capacity building to individual countries like Tanzania, but it is also developing a broader PPP certification program and exam, similar to the Chartered Financial Analyst model, in an effort to dramatically scale access to training and skilled officials.
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