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

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
I. EXECUTIVE SUMMARY
Over the past several months, the IP3 team has conducted extensive field research, interviews,
and reviews of existing reports in order to formulate a comprehensive plan for Government to
create a policy, legal, and institutional framework for PPP. At the end of this research and
analysis period, the team prepared a draft Cabinet Paper, for the Minister of Finance to present
to Cabinet, proposing specific actions that could be undertaken by Government in order to
establish such PPP frameworks. This Final Report serves as both an update of our previous
reports and recommendations and an Action Plan for implementing the nascent PPP Program
in Malawi.
Malawi, along with numerous other countries, has been conducting Privatization in an effort to
shift the burden of service delivery onto the private sector. This has been done by transferring
the ownership and control of public enterprises to the private sector, with the objective of
having services performed by those public enterprises subsequently performed by private
enterprises, thereby relieving Government of the costs associated with owning and operating
public enterprises.
Legal Framework and Options for PPP: New Legislation Desirable in the Long Run but not
Necessary in the Short-Run
The Public Enterprise (Privitisation) Act provides the legal mandate for such privatization
activities. However, the scope of the Act is limited to such transfers of ownership and control
(privatization) to the private sector, including concessions. The question has arisen: “how can
the private sector participate in the delivery of services to consumers, when such services are
not to be delivered through the use of existing public assets?” Another way to phrase the
question is: “what will be the legal basis of a transaction in which the private sector is invited to
participate in the delivery of services (that would otherwise have been provided by the public
sector) if there are no existing public assets to sell in order to enable the service delivery?”
If the service delivery contemplated involves the use of new assets, there is no provision for
such a transaction in the Public Enterprise Act, in its present form. However, there is a
provision for issuing “concessions” to the private sector, and that provision provides a legal
foundation to bridge the existing legislation with what we propose to be its new successor, a
PPP Act. Such an Act would address the long term issues that will likely emerge as Malawi’s
PPP program matures, harmonize existing legislation with key PPP practices and procedures,
and modernize and clarify the process by which PPP projects are selected, tendered, negotiated,
awarded, and monitored.
However, PPP activities and transactions need not be delayed until a PPP Act is established. In
fact, PPP can advance using existing legal instruments as long as “Implementing Rules and
Regulation” as well as PPP “guidelines and procedures” are enacted so that line agencies, the
private sector, and the public understand the rules of the game governing an effective PPP
process.
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 1