Good governance in public private partnerships: lessons to policy-makers

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Public Private Partnership (PPP) model present a novel “participatory” method among the government agencies, private investors, and key stakeholders for the option of funding infrastructural development and delivery of public services in Ghana. This model of projects arranged under PPP is enunciated in principles of good governance.

Partnership works at the administrative level and authorizes co-participation in the decision making which is accomplished by the established operational options of organizations such as joint venture companies or purpose-built organization with a public-private joint ownership (institutional PPP). It may also involve policy-networks as special arrangements for public-private cooperation.

For such partnership to be successful there is the need to comply with good governance in terms of transparency, participatory, accountable, consensus-oriented, responsive (see figure 1). But we realized most PPP projects in Ghana lacks transparency, accountability, equitable and inclusive and thus affected the successful implementation of those projects, a typical example is the Aqua Viten and GWCL arrangement under a PPP Contract management.

Figure 1: Features of good governance

Those arrangements open the access to augmented involvement in the partnership of key stakeholders other than the private investors, such as users, workforce, local agencies in Ghana. The rationale behind a strong governance framework is to promote coordination between the private and public actors and affected stockholders in addition to increase their participation and consequently favors the legitimacy of the PPP and creating the conducive for the successful implantation of the projects in Ghana.

Again the governance framework can also work at the financial level and permits risk (and reward) sharing between public and private parties, which is achieved by financial engagements that may embrace co-financing or co-funding, as well as temporal transfer of public asset ownership to private parties (as in the case of Build-Own-Transfer, Build-Own-Operate Transfer, Sale-and-Lease-Back contracts, etc.).

The governance and organization of PPPs

Presently large numbers of PPP practitioners recognize the significance of good governance principles and not just PPP projects delivering effective and efficient infrastructural development and public services. For the purposes of this article, ‘good governance’ will be defined as (Governance International, 2003):

the implementation by multiple stakeholders of quality of life improvements through agreed principles and processes of working together.

Figure 2: Structure of PPP

This description of governance has prompt implications for how private and public actors in a projects coordinate PPPs execute their various role, namely financiers, sponsors, shareholders, PPP experts influence the implementation of the Project Company (SPV), their objectives and their performance management systems resulting in higher customer (community) satisfaction (see figure 2 for a typical structure of PPP projects).

That is the reason why in any commencement of PPP projects, the governance framework is key to the success rate of the performance of the projects. A key example is the PDS alleged saga in Ghana, the fundamental problem raised by various PPP practitioners were the governance framework for the execution of the PPP projects.

Governance and its effects on performance

An additional outcome of the public governance viewpoint is that implementation outcome should be considered at the level of the partnership, rather than simply at the level of the agency. There are positive indicators that results from a good governance framework. For instance, a good governance framework can build morale, reputation and a legacy for a PPP projects, since the role and responsibilities of the various actors are clearly spelt out in the framework.

Again, this can also lead to higher success rate of the financial performance. Among others also, the framework can provide a practical way to guide decision-making at all levels (see figure 3). In the figure below, we set out some of the results from a governance perspective, which we would expect to see between genuinely collaborative partnerships and those relationships which simply involve the ‘partners’ respecting the contracts to which they are legally committed through a structured governance framework.

Figure 3: Results of a strong Governance Framework

 

But it must also be noted that, just because these ‘good governance’ principles could be executed in PPPs does not, of sequence, mean that the results will be achieved. Indeed, there is an unorthodox conservatory of thought which propose that there needs to be a cautious acclimatization of public governance principles to guarantee; the environment and the culture of the system needs to be considered in addition to the governance framework of the project. For instance, countries govern by Military leader might have different environmental factors as compared to a democratic country.

That is the main reason why in majority of the execution of the PPP projects, apart from the governance principles, key consideration needs to be to be given to the environmental and social factors of the geographical location of the PPP project. Many projects with good governance framework have failed as a result of neglect of the environmental factors prevailing the location of the PPP projects.

Conclusion

Thus, it is significant to appreciate that PPPs are still young vehicles for the infrastructural development and delivery of services. Good governance framework is a key critical success false factor for the successful implementation of PPP project. For the moment, the task by policy makers to experiment with the various governance principles, as with other approaches in financing and managing projects.

So far, the appraisal of PPPs has fundamentally been restricted to concerns of their efficiency, their cost comparative to other existing contrivances of public policy. Future articles can examine good governance framework as a CSF to the successful implementation of PPP projects, especially in the context of Ghana. So studies can examine PPP projects in the water sector, road, aviation, energy and the health sector.

About the Author:

The writer is a Researcher and Public Policy Analyst with considerable knowledge and expertise in Public Private Partnership, Leadership inspiration and Public Policy formulation. He is currently a Senior Management Consultant, Gimpa Consultancy and Innovation Directorate (GCID), the Consulting Division of the Ghana Institute of Management and Public Administration (GIMPA. Contact the Author on 0205012686 / [email protected]

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