• Small States

    • Economic usage of PPPs in small island states: The level of economic usage in the OECS Member States could be judged as low for some types of PPPs. The types of PPP projects may be restricted by the size of the economies. For example an economic concession for an airport in only one small island state would require heavy government subsidies, which could suggest, if it was to be procured as a PPP project, a PPP structure whereby the Government paid an availability fee for the provision of the airport, and not a concession where the concessionaire was remunerated by income generated by the airport. This must be recognized at the outset.
    • The need for alliances with other countries: There may be a need for favourable strategic alliances among the OECS Member States in order for some projects to be successful. Further, the stakeholders must be open to expanding PPP alliances with other neighbouring governments to minimise the reliance on government subsidies to sustain any potential PPP.
    • The need for unified approach and reaching timely consensus: It is important therefore for all governments to sign off on collaborations at the same time or on a timely basis. In small island countries where there is a small population to utilise certain PPPs, a private investor must be able to benefit from cross-subsidisation. Wilting universal government commitment and consensus can cause potentially viable PPP initiatives to fail. This is a typical problem faced on most business fronts in the region and could hinder the success of a PPP project.
    • Effect of low per capita income in small island developing countries on PPP utility: The disparity in per capita income in the OECS Member States and the willingness of the citizens to subject themselves to real commercial rates/costs attributed to the use of a service developed by way of a PPP, may also present a problem. A revenue based PPP will require commercial rates to be charged in order for investments to be viable.
    • Lack of political will: The political capital that incumbent governments will lose from passing on the commercial rate or the cost of heavily subsidising a PPP to the people can delay the implementation of PPP projects or hinder the success of the project. This will only be applicable in revenue based PPPs where the user pays.
    • The Caribbean Valuation of Time and Its Impact on PPP: Time may not equal money for some Caribbean countries as the value of time is perceived to be extremely low. This perception coupled with the low per capita income can mean that citizens/ people will not avail themselves of PPP projects thereby contributing to the failure of the scheme.
    • Wide and Inclusive Government Alliances to Foster Cross-Subsidisation: Certain projects may be perceived as a complete “no go” because of low income and GDP per capita, small populations, low density and uneven population distribution. However the creation of wider networks and alliances allow for cross-subsidisation. Other projects fostered by wide and strong alliances could likely be largely useful and successful in the OECS and in the Eastern Caribbean as a whole.
  • Regional perspective

    There are many advantages to pooling general expertise on PPPs in a central PPP Unit, and indeed in sharing knowledge and experience across COMESA, and the larger continent. Some line ministries (again telecommunications, and energy) may have become quite smart at designing PPPs but where deal flow is slower, transactions have to be designed and advised one at a time, with preparations being very expensive and time-consuming. The most successful PPP Units are often attached, especially in countries with weaker governance, to Ministries of Finance or a strong Planning Ministry where they hold sway, crucially, over financial due diligence in addition to other key functions. Key functions of a PPP Unit include: (i) being a centre of cross-cutting technical, project management and financial expertise; (ii) gathering and disseminating information and performance indicators; (iii) designing and rolling out training to line ministries and sub-national governments as necessary, and so on.

    A regional approach to infrastructure PPPs in COMESA would have significant benefits. 

    • Promoting standardization of national legal and institutional frameworks around good practice guidelines can help larger cross-border projects progress more smoothly, shorten the learning cycle for follower countries, and generate pipelines of PPP projects more quickly.  Leader countries do not lose by helping others catch up - and will often lead to investment opportunities for sponsors and investors from leader countries.
    • Sharing knowledge amongst countries will help standardize national PPP enabling frameworks around established good practice, and stimulate the flow of both larger and smaller PPP projects.  There is a strong incentive to share knowledge on PPPs since sponsors will be inclined to repeat a successful experience.
    • Small and medium scale PPP projects replicate relatively easily across and within across national borders.  They are less complex; quicker implementation will lay a successful track record; more project experience means project design can be improved and adapted more effectively.
    • Investment into PPP projects will be stimulated by a strong regional approach. International investors will be encouraged by upgrading of PPP enabling frameworks around global good practice. Greater emphasis on innovative small and medium size PPPs will stimulate intra-regional investment flows, since smaller PPPs can be better handled by African sponsors and financiers, and local investors who have a successful experience in (e.g.) their own country will look to capitalize by replicating a project in a similar neighbouring country (e.g. in healthcare or small-scale power generation). 
 
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