private sector’s role in cities regeneration drive, by noël chalamanda

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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. In this presentation I argue that it is time for regeneration in terms of meaningful infrastructure that takes into account today’s needs and will remain relevant for some decades. 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. Elsewhere, PPP strategies have been successfully utilized and adapted to the needs of different sectors of the economy and to different cities. Could Public Private Partnerships (PPP) offer a solution to this problem in Malawi?

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  • 1. Governments have a social and political responsibility of providingbasic services to its nation and citizens. Financial constraints affect this responsibility. City Councils are mandated to look into infrastructure developmentand service deliver within their jurisdiction. There is a dearth of infrastructure and systems failure in essentialservice delivery.

2. Our cities are riddled with Poor road infrastructure. Rugged pavement or no pavements, no street lights. Ineffective emergency services. Poor waste collection or disposal management. Lack of public facilities like amusement parks, car parks, Lack of office and lodging space etc. 3. budget deficits and the inefficient management of large infrastructureprojects and delivery of services within the public sector are endemic. the resources available to governments are routinely squanderedwithout accountability cost of projects to attend to the problems and the traditionalprocurement method of governments funding infrastructure projectsthrough fiscal budgets is increasingly considered unviable. 4. There is a rise of PPPs in developing economies as a means of crowdingin investment and expertise from the private sector Urbanization and fiscal decentralization have shifted much of theresponsibility for infrastructure and utility investment to localgovernments Conceptually, PPPs are an instrument to respond to market failures whileminimizing public sector short-comings as a service provider 5. Countries most successful in attracting finance from the private sectorhave established prioritized programs of investment opportunities political support, a proper legal and regulatory structure, a procurementframework that can be understood by both procurers and bidders, and acredible project timetable are an essential part of successful PPP. 6. An agreement between two or more entities to go into business orinvest. An activity undertaken by government and business to provide publicservices that either entity finds impossible or less economical to performon its own. A PPP arrange a trade-off between the participants in order to poolresources and certain abilities in a development project that the partnerscould not have carried out alone. a contract in which a Contracting Authority partners with a Partner tobuild, expand, improve, or develop infrastructure or service in which theContracting Authority and private sector partner contribute one or more ofknow-how, financial support, facilities, logistical support, operationalmanagement, investment or other input required for the successfuldeployment of a product or service, and for which the private sectorpartner is compensated in accordance with a pre-agreed plan, typically inrelation to the risk assumed and the value of the result to be achieved PPA 7. To provide for partnerships between the public sector and private sector for thesupply of infrastructure and delivery of services as means of contributing towardssustaining economic growth, social development and infrastructuredevelopment; To provide for the development and implementation of public private partnershiparrangements for the delivery of infrastructure and services; To provide for private sector participation in state-owned enterprises,commercial entities and commercial assets. 8. PPPAs aim to Deliver public infrastructure and therefore access to services ; Give better value for procurement of infrastructure and publicexpenditure by the Government through efficient and optimal riskidentification and transfer to the private sector; leverage on private sector financing, management, technical know-howand technological innovation for delivery of efficient and affordableinfrastructure and services; to encourage participation by resource owners in public privatepartnerships and provide assurance for private interests in thosepartnerships; 9. to encourage competitive and efficient markets for the provision ofinfrastructure and services. minimize the fiscal burden of providing infrastructure development andservice delivery through the public treasury and thereby allowingresources to be freed for social services; and to promote private sector contribution towards the attainment ofpositive social indicators associated with optimal access to infrastructureand services. 10. Speedy, efficient and cost effective delivery of projects; Value for money for the taxpayer through optimal risk transfer and riskmanagement; Efficiencies from integrating design and construction of publicinfrastructure with financing, operation and maintenance/upgrading 11. Creation of added value through synergies between public authoritiesand private sector companies, in particular, through the integration andcross transfer of public and private sector skills, knowledge and expertise Alleviation of capacity constraints and bottlenecks in the economythrough higher productivity of labour and capital resources in thedelivery of projects Competition and greater construction capacity (including theparticipation of overseas firms, especially in joint ventures andpartnering arrangements) 12. Accountability for the provision and delivery of quality public servicesthrough an performance incentive management/regulatory regime Innovation and diversity in the provision of public service; Effective utilisation of state assets to the benefit of all users of publicservices 13. massive downtown urban renewal projects jointly planned andconstructed by the City of Baltimore and the business community. a large-scale urban redevelopment project in central Baltimoresdowntown business district of the late 50s and 60s "Committee for Downtown" promoted a master plan for arresting thecommercial decline of central Baltimore. 14. one of the largest sports facilities infrastructure Public-Private-Partnership (PPP) project in the world. PPP between the Singapore Sports Council and Sports Hub Pte Ltd., aconsortium of private sector partners. The consortium entered into a 25-year contract with the SingaporeSports Council to design, build, finance and operate the Sports Hub. 15. a Public Private Partnership creature is owned by Gauteng Provincial Government,with Bombela Concession Company (Bombela) holding the 20-year Concession to design,build, part-finance and operate the system. Bombela manages the client (Gauteng Provincial Government) interfaces and provides anintegrated solutions approach for this PPP project, led by an experienced executive team,promising passengers a state-of-the- art transport system Three main drivers for the Gautrain Rapid Rail Link: stimulation socio economic development through job creation and the transfer ofskills, as well as the development of women and youth; special development project an urban sprawl management project. a transport project and the project was designed to develop the economy and helpmanage urban development. 16. Another example of a successful road project PPP with a 30year concession period. Involved the rehabilitation including construction of newroad of 198km road Cost R3 billion ($324 million) by 1996 estimates 17. The PPPA is in place. The PPP Commission is in place The Pensions Act is in place (Pension Funds) There has been some decentralisation The Private Sector is prospering and looking for Challenges Why are we slumbering? Slumbering in degenerated cities? As Economists whats our role to trigger regeneration of our cities? 18. An opportunity to turn calamities to opportunities An opportunity to create win win and win situations 19.