Development of Policy, Legal, and Insitutional Framework for - ppiaf

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
program flourish under an enabling legislation that is so far down the hierarchy of legal
instruments, as compared with a new law? What will potential investors think when they see
that the program is based on regulations and not law? A regulation can be changed at will at
any time, with little or no consultation with the law committees of the Ministry of Justice and
Parliament. The PFMA specifically allows the Minister responsible for finance to pass
regulations pursuant to the Act. By implication it also allows the Minster to repeal or change
such regulations at will. Maybe something more is needed to send a signal of stability and
support to the market.
In the countries in which PPP has flourished under regulations alone, there is a political and
economic culture that is naturally receptive to PPP activity. In some countries, e.g. the United
States, the culture is so naturally accepting of PPP that there is no national coordinating body or
legislation. But can one say the same of Malawi? Probably not, so we have provided a draft
PPP Act in the Appendices to this Report for Government to consider if it decides such an Act is
needed. In other countries, national PPP legislation has been enacted for one or more of the
following reasons:
The legal capacity of the various “spheres” of government to contract with the private
sector for long-term service provision is inadequate and/or unclear;
The political culture will not tolerate any vertical, hierarchical, decision-making
structure so a national law is needed to underscore government’s commitment to the
PPP process, and provide guidance as to how one should do PPP, but does not impose
strict decision-making systems involving centralized approval; or
Government considers the need to maintain strict control over the PPP process to be too
important to relegate to PPP regulations, so a national umbrella law is passed to impose
such control at the highest level.
Existing Capacity to Contract with Private Sector
In this consultancy, we have carefully examined the capacity of the various “spheres” of
government to contract with the private sector for the long-term provision of services. We do
not see any constraints to such activity sufficient to require a national umbrella act to fill the
gaps or correct the inconsistencies, which are minimal and can be rectified through internal
adjustments rather than a national initiative. National gap-filling laws of this type are being
used in Eastern Europe (the national concession laws) to provide a solution to major
inadequacies in the contracting authority legal framework. Malawi does not have that degree of
inadequacy. On the contrary, the legal framework for such contracting authority is relatively
well developed.
So the first scenario presented above in our checklist for national legislation does not apply to
Malawi. The second scenario does not apply either, as we have already shown in our
examination of the PPP regulations scenario. We see no indication of substantive resistance to a
central decision-making body, as long as that body is seen as facilitative and not just another
layer of bureaucracy.
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 17