It is increasingly becoming clear that Public-Private Partnerships is the way to go with regard to building solid, resilient and sustainable economies. According to Investopedia, public-private partnerships involve collaboration between a government agency and a private-sector company that can be used to finance, build and operate projects, such as public transportation networks, parks, and convention centres. Financing a project through a public-private partnership can allow a project to be completed sooner, or make it a possibility in the first place.
Public-private partnerships often involve concessions of tax or other operating revenue, protection from liability, or partial ownership rights over nominally public services and property to private sector, for-profit entities.
Public sector vs private sector
The role of government is to provide the needs of the citizens in several areas: provision of security, food, shelter, education, road, infrastructure, etc. To achieve these, government needs to mobilise enough financial resources. Financial resources come primarily from taxes and services provided by government agencies. A substantial chunk of government revenue comes from the private sector (formal and informal private sectors). SMEs account for about 90 percent of businesses in Ghana, with a contribution of about 60 percent of the country’s GDP. It is, therefore, evident that among the items government should provide for its citizens as listed earlier, creating the enabling business environment for the private sector, is top-most. Once that is achieved, government would rake in more taxes to run its business in all the areas as outlined earlier.
“The government doesn’t run the economy. The economy is run by the private sector. The job of the president is to ensure we [the state] have policies that allow the private sector to grow and prosper.” – Marco Rubio (United States Senator, Florida). This statement by Marco Rubio resonates so well with all economies, including Ghana. Once we agree on what should be done to create wealth, the debate stops there; and the next conversation should be on how it can be achieved. The statement from the US Senator infers that the public and private sector must work together to generate the needed prosperity; the needed policies from the public sector that creates the needed business atmosphere for the private sector to grow. This growth then generates the financial resources needed to support government business in the short, medium and long term.
Areas of focus
Several areas emerge when it comes to public-private partnerships. The Association of Ghana Industries, the leading voice of the private sector, has about 23 sectors; including agribusiness, food, beverage, toiletries and cosmetics, energy, garments, textiles & clothing, oil & gas, etc. Each of these areas present opportunities for partnership between government and the private sector. In Ghana, the concept of public-private partnerships has been experimented under successive governments with some success stories. However, this opportunity has not been fully utilised for economic growth. The fact that actors in the economy are exposed to this idea creates a fertile ground for the private sector to push for more of such arrangements across sectors. A typical example is agriculture.
The number of local investors who are searching for arable land to invest in mechanised agriculture cannot be overemphasised. In a typical public-private partnership, government should be able to provide land banks by going into win-win arrangements with chiefs and private landowners. These land banks could then be handed over to the private sector to engage in mechanised agriculture to support the food basket of the nation. Mechanised agriculture has huge potential to supply agricultural produce for the export market, processing factories locally and regionally. The export of raw materials and value-added products will increase our forex reserves and stabilise the local currency. It also has the potential of creating job opportunities for the teeming youth. In fact, if the design is thought through carefully, the youths in illegal mining operations across the country could be employed by the private sector to work on these farms and paid sustainable living wages.
Mechanism of public-private partnerships
Investopedia postulates four out of several ways such partnerships could be arranged. These are as follows:
Build Operate Transfer (BOT): A government hands over all construction and operations to a private party for a set number of years (often several decades or more). After that period of time, it is transferred to the government.
Build Operate Own (BOO): The same as a BOT, but the private entity is not required to ever transfer the project to the government.
Design-Build (DB): A government contracts with a private party to design and construct a project for a fee. The government retains ownership and may either operate it itself or contract out operations.
Buy Build Operate (BBO): a government sells a pre-existing project that has already been completed and may have been operated by the government for some time to a private party, who will take it over fully. The private party may need to invest in rehabilitating or expanding the project.
In Ghana’s current dispensation, a Build Operate Own (BOO) and a Buy Build Operate (BOO) would be most ideal in order for government to have ample time to concentrate on policies, leaving the private sector to run projects.
Ghana is an agrarian economy largely. The entire food and beverage sector depend on agricultural produce as base raw materials. It is, therefore, imperative that government partners the private sector in all areas of agriculture to make these raw materials available for value addition. The pressure on the Ghanaian cedi will ease if this single sector sees a well-designed and implemented public-private partnership. The private sector, through the Association of Ghana Industries and other sister associations, must engage government in a more intentional manner with a blueprint to make this a reality. Other sectors, such as housing, transport, education and the service sector are areas public-private partnerships would work successfully. The time to act is today, and cannot wait till tomorrow if the economy is to be buoyed back to life, and thrive in the future.
Johnson Opoku-Boateng is the Founder & Lead Consultant, QA CONSULT (Consultants and Trainers in Quality Assurance, Health & Safety, Environmental Management systems, Manufacturing Excellence and Food Safety). He is also a consumer safety advocate and helps businesses with Regulatory Affairs. He can be reached on +233209996002, email: [email protected]; [email protected]