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

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
transaction to be “viability gap funding” and those decisions are made directly by Treasury, a
variety of targeted managed funds, and the new India Infrastructure Finance Corporation
(IIFC). There are also well-established private sector financial organizations similar in design to
the IIFC, such as Infrastructure Leasing and Finance Company (IL&FC) that make the same
kinds of decisions a PPP Unit would make (affordability, etc.) but for market reasons not policy
reasons.
In Malaysia, we find again a very active and entrepreneurial economy with a highly developed
private sector (very different from Malawi, where the private sector is still in development stage
and the economy has been traditionally dominated by Government) and business has been joint
venturing with all levels of government for many years. Although the PPP Centre is technically
housed in the Ministry of Economic Planning, it is evolving into a transaction-support unit
staffed with professionals who could easily qualify for positions in private investment banks.
Most of the technical work, however, is done by consultants so the Unit itself does not have a
heavy payroll burden. Political support for the Centre and the PPP Program comes from the
Prima Minister, who at the end of 2006 began compiling a list of hundreds of officially endorsed
PPP projects that would be coordinated by the PPP Centre but largely implemented by
consultants.
In the United States, business and government have become so inter-twined that some assert
the President is more of a corporate executive than a head of state. Nearly all of the municipal
airports are run under PPP arrangements with municipal governments. Toll roads dominate
the major routes in many parts of the country, operated by private companies pursuant to
concession contracts. One of the more successful PPP operations in the world is managed by
the Ports Authority of New York and New Jersey, which is so private-sector oriented they
manage billions of dollars of assets with only a few dozen management –level employees,
because virtually everything is contracted to the private sector. The legal framework is
completely developed in the key areas of Procurement, Contracts, Uniform Commercial Code,
Civil Procedure, and Corporation Law, so there are no gaps that a national PPP program would
need to fill. Even Government itself is taking e-Gov initiatives designed to make government
efficient and responsive like the private sector, so there is no need to reform government to
make it a better PPP partner.
At this juncture, the reader may be thinking “none of this sounds at all like Malawi” and indeed
that is our point regarding this option. The option scores well because it can be implemented
quickly and easily, and indeed a good amount of PPP activity is already underway in Malawi,
so standards and guidelines could have an immediate beneficial impact. But this option fails
when compared to the highest-scoring options within the other two categories, discussed
below, because Malawi needs a clear mandate from the top, with associated strong policy and
legal support, to overcome the long tradition of government intervention in the economy and
move into joint ventures with the private sector. For this reason, we now eliminate this option
from further consideration.
In Category II, the highest-scoring option was the one below:
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 34