Worldwide: Legal Insight: Overview Of PPP Laws/Frameworks In Selected African Jurisdictions

Last Updated: January 26 2017
Article by Neil Cuthbert and Udayan Mukherjee

Uganda

In July 2014, Uganda joined the list of African countries that have implemented Public Private Partnership or "PPP" laws, by passing the Public Private Partnership Bill 2012 (Uganda PPP Law). As in many African countries, improving Uganda's infrastructure is seen as a key step in unlocking its economic potential. To address this, Uganda has identified a robust pipeline of road, power and social infrastructure projects which offer significant opportunities to both sponsors and lenders.

The Uganda PPP Law adopts a simple approach. It focuses on establishing the framework for a successful PPP programme – it is not over prescriptive and allows for various structures. This should provide comfort to both potential lenders and sponsors seeking a degree of certainty over process.

The Uganda PPP Law charges the Ministry of Finance with setting up a central PPP unit which will be a useful source of information and to address "deal breaking" issues which can arise where the public sector lacks the requisite expertise. Its remit includes providing guidance and assistance in the development of projects. It will "assess projects for [PPPs] to confirm that they are affordable and that financial commitments are manageable in terms of the debt management policy and that they are within the Government policies". This may be useful for potential investors concerned about affordability or viability. Its role also extends to advising Government on PPPs and training public sector staff on PPPs.

The Uganda PPP Law sets out a detailed procurement cycle process. It also sets out rules on evaluation, disqualification and oversight. In addition, PPP agreements above a threshold monetary value must be approved by the Cabinet. The Uganda PPP Law also sets out what a PPP agreement must cover. This comprises a list of clauses and risk allocations that an investor or lender would expect to see in any PPP agreement to ensure "bankability". It does not prescribe the drafting of these terms, but the Government may issue more detailed guidance on contractual terms in the future.

The Uganda PPP Law, now separated from general procurement requirements, provides for both competitive (open or restrictive) and non-competitive bidding methods. The latter could involve direct procurement by the Government or (subject to satisfying specified criteria) unsolicited bids from sponsors. However, even where an unsolicited bid is accepted, the proposal remains subject to a competitive bidding process in which "all interested parties" may participate.

Any procurement must be fair, equitable, transparent and competitive, an important and familiar principle in PPP. The successful bid must be "the most economically advantageous, or [have] the lowest price". The key requirement of the Uganda PPP Law is that the proposed project "fulfils the objectives of the National Development Plan".

Tanzania

Although the PPP model has been utilised in Tanzania for many years in areas such as healthcare, education and water, a lack of a clear legal PPP framework in the country prevented the propulsion of a much needed PPP programme. In 2009 the Prime Minister issued a National Public Private Partnership Policy which culminated in the introduction of the Public Private Partnership Act No. 18 of 2010 (Tanzania PPP Law). The following year, the Public Private Partnership Regulations were published pursuant to the Tanzania PPP Law. In 2014 certain amendments were made to the Tanzania PPP Law by way of the PPP Amendment Act 2014 (2014 Amendments).

At the heart of the Tanzania PPP Law is the establishment of key Government agencies. These included:

  • The PPP Centre (which replaced the PPP Co-ordination Unit after the 2014 Amendments) – the PPP Centre is the first port of call for the vetting of PPP projects. It is charged with assessing potential PPP projects, procuring the approval of the Ministry of Finance and then submitting the project to the PPP Technical Committee once approved by the Ministry of Finance.
  • The PPP Technical Committee (which replaced the PPP Finance Unit after the 2014 Amendments) – this committee is made up of representatives from both the public and private sectors and is charged with approving PPP proposals submitted to it by the PPP Centre.
  • Contracting Authority – which would be the authority which contracts with the private sector (for example, as the counterparty to concession agreements).

A key feature of the Tanzania PPP Law which can be considered unique is the concept of providing for "solicited bids" and "unsolicited bids". The former relates to PPP projects where the Government has initiated the project, whereas the latter relates to projects initiated or proposed by the private sector.

The 2014 Amendments also provided for a new facilitation fund to be set up to further encourage PPP projects in the country. The key objective of the fund is to assist with launching PPP projects which are considered viable and necessary, but which may lack the necessary resources to launch.

Kenya

The Public Private Partnership Act No. 15 of 2013 (Kenya PPP Law) came into effect on 8 February 2013. It establishes the PPP Committee, the PPP Unit and the PPP Nodes, which play very similar roles as the PPP Centre, PPP Technical Committee and Contracting Authority respectively in Tanzania.

In line with the regime established in Tanzania, the Kenya PPP Law also provides for the private sector to propose/initiate projects and for the Public Private Partnership Project Facilitation Fund.

The Kenya PPP Law provides clear guidance that any project must clearly be needs tested, i.e., is a PPP the best model under which the relevant service can be provided? In addition, it sets out a clear regime pursuant to which PPP projects must be modelled. A PPP cannot be launched without a comprehensive feasibility study being tendered and a strict procurement process being adhered to. It is also required that the benefits of the project be publicised through an electronic media platform.

Nigeria

Nigeria's foray into the world of PPP regulation began with the Infrastructure Concession Regulatory Commission (Establishment) Act in 2005 (Nigeria PPP Law). Note that the Nigeria PPP Law is a Federal law – individual states are permitted to establish their own PPP laws and a number of them have done so. We focus here only on the Federal level.

The Nigeria PPP Law establishes the Infrastructure Concession Regulatory Commission (ICRC). The ICRC is the mainstay governmental entity in relation to PPPs and maintains overall responsibility of being the key liaison partner to the Federal Executive Council which is the body empowered with approving PPP projects in the country. The ICRC is charged with developing PPP guidelines and procedures and generally assisting with the successful implantation and facilitation of PPPs in Nigeria.

With a booming population and a thirst for new infrastructure and services to match, there were high hopes that the Nigeria PPP Law would be a launchpad for an extensive roll-out of PPP projects in the country. There have been a number of successful closures of PPPs in the country; however, the programme is firmly considered as being under development and far from a refined process. Political instability with frequent changes in Government and/or changes in heads of the relevant Ministries and, the overenthusiastic embracing of PPPs at the cost of properly understanding areas such as risk allocation have meant that PPPs are treated with some scepticism.

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