Article On PPP For Development Teshome
Article On PPP For Development Teshome
Article On PPP For Development Teshome
3, 143-158
doi: 10.17265/1537-1514/2015.03.003
D DAVID PUBLISHING
This study assessed the policy, legal, and institutional frameworks for public private partnership (PPP)
implementation in development process based on the perspectives of stakeholders in Ethiopia. An exploratory
sequential mixed method was employed. One hundred and twenty-one stakeholders were selected from public,
private, existing PPPs, and development partners, Think Thank and civil society organizations (CSOs) were
participated. The findings revealed that prevalence of specific legal framework for PPP, prevalence of PPP
dedicated public agency, and government guarantee are the most important factors to be put in place to implement
PPP in the development process of the country. An inclusion of PPP as part of the development policy, devising a
specific legal framework and establishing an independent public agency for PPP is the suggestion forwarded by the
stakeholders. The study recommends to incorporate PPP in the existing development policy as one of the
development strategies, to devise PPP strategy of the country and specific legal framework of PPP, and to establish
a federal PPP agency with the full mandate of undertaking PPP related issues under the Prime Minister’s office.
Keywords: public, private, civil society, legal framework, institutional framework, public private partnership (PPP)
Introduction
Government is a traditional provider of public services and an operator of public service delivery
institutions and development projects using resources from public sources, i.e., taxes and levy. However, the
ever-increasing disparity between the capacity of the public sector to generate resources and the public demand
for new facilities has forced governments to look for new funding methods and sources. Public private
partnership (PPP) as a new funding method is an increasingly popular phenomenon and a global trend (Hodge,
2005).
PPP is a long-term contractual arrangement between a public-sector agency and a private-sector
entrepreneur, whereby resources and risks are shared for the purpose of developing a public facility. For the
public sector, the principal aim of a PPP is to achieve value for money (Akintoye, Beck, & Hardcastle, 2003).
In relation to this, Alinaitwe and Robert (2013) elaborated that the public sector can secure value for money in
the public service delivery, while ensuring that the PPP partnering private-sector entities meet their contractual
obligations properly and efficiently. As a consequence, many countries are now contemplating PPP as an
Teshome Tafesse Beyene, Ph.D., assistant professor, Ethiopian Civil Service University (ECSU), Addis Ababa, Ethiopia.
Correspondence concerning this article should be addressed to Teshome Tafesse, P.O. Box: 22811, Code 1000, Addis Ababa,
Ethiopia. E-mail: teshometafesse@gmail.com.
144 DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE
arrangement between public and private sectors to finance, design, build, operate, and maintain public
infrastructure, community facilities, and related development projects.
Though the potential advantage of PPPs in public service delivery and development process is well
understood by most public policy makers and professionals around the globe, the extent in countries around the
world in general and developing countries in particular is quite slow (Teshome, 2014a). Perhaps being unaware
of some of the factors may preclude the enablers of the system from creating conducive environment for PPP
implementation. Particularly developing countries which are striving hard to alleviate poverty and bring about
development should effectively mobilize their resources and use their capacities for the success of their
development goals. In light of this, Ethiopia, as a developing country striving hard to develop, should work
hard to mobilize its available capacities from all sectors to keep forward its development targets. PPP is one of
the best potential mechanisms to mobilize resources (be it of public, private, or civil society) in the form of
collective action towards development and efficient public service delivery (Teshome, 2014a).
Hence, in line with this argument, it is imperative to study what specific factors affect adoption of PPP in
any country planning to adopt PPP for its development. Assessing conditions required for PPP adoption with its
legal and institutional environment are so important to start the new PPP arrangement. In view of this, this
study takes up the task of assessing factors attracting implementation of PPP in development process of
Ethiopia. Moreover, the prevalent condition for PPP including legal and institutional framework was studied.
The study was mainly based on the stakeholders’ perspectives. The researcher tried to associate and compare
the summary perspective of stakeholders with the related best practices and empirical study findings done in
PPP area somewhere around the globe. The study subjects were requested to share their hands on experience
and knowledge regarding what conditions or factors are needed, so as PPP could operate, involve, and expand
in Ethiopian development process. To keep the validity and reliability of the study, the researcher opted to use
study tools employed by other scholars in PPP studies done somewhere else.
Studies by Li, Akintoye, Edwards, and Hardcastle (2005) and Cheung, Chan, and Kajewski (2009) tried to
investigate the attractive factors for adopting PPP in their respective study area. The study of Li et al. (2005)
revealed that the top three attractive factors were “transferring of risk to private sector”, “solving the problem
of public sector budget constraints”, and “non-recourse or limited recourse public funding”. The same study
examined the differences between the public and private sectors respondents’ perceptions on the importance of
the attractive factors and reported that there are no significant differences in perception except for a few factors
that are not among the top three attractive factors (Ismail, 2013).
A similar study done by Cheung et al. (2009) reported that the top three attractive factors for PPP in Hong
Kong include “providing an integrated solution for public services”, “facilitating creative and innovative
approaches”, and “solving the problem of public sector budget restraint”. The top three attractive PPP factors
for Australian respondents were “providing an integrated solution for public services”, “facilitating creative and
innovative approaches”, and “saving time in delivering the project”. The findings of the above studies reveal
that factors perceived by respondents from different countries are not the same. This implies that factors attracting
adoption of PPP may differ on the basis of the specific objective condition of the study area or country.
Therefore, the unique characteristics of PPP in each country influence the PPP attractiveness in the
country (Ismail, 2013). Because of this, the case in Ethiopia can be expected to be different, not only because of
the unique characteristics of the prevalent PPPs, but also because of the undeveloped conditions for PPP
(Teshome, 2014b).
DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE 145
Moreover, the country strategy paper for the years from 2011 to 2015 states that the private sector is
expected to play a major role in GTP implementation. However, clearer strategies for crowding in private
investment need to be articulated, particularly in the context of the current weaknesses in the financial sector
and the business environment (African Development Bank, 2011).
Hence, one can easily understand from this that the Ethiopian government is well aware of the benefit of
involving the private sector and civil society in the form of partnership in the process of development of the
country. However, issues like the importance of dedicated PPP policy, legal, and institutional framework, what
favorable sectors or areas of investment for partnership are there, and what is the potential of PPP in the context
of Ethiopian development process, remain unclear.
Hence, this study assesses factors attracting the implementation of PPP in Ethiopia’s development process,
appropriate policy, legal, and institutional frameworks for PPP implementation in Ethiopia on the basis of the
stakeholders’ perspectives. The methodology and theoretical framework employed in this study are briefly
presented below.
Table 1
List of Factors Attracting Adoption of PPP in Public Service Delivery and Development
Factors Supporting literature
1 Government support in providing guarantee Cheung et al. (2009)
2 Government support in providing loan Cheung et al. (2009)
3 Tax exemption or reduction Cheung et al. (2009)
4 Prevalence of PPP dedicated public agency Qiao, Wang, Tiong, and Chan (2001); Yescombe (2007)
5 Prevalence of PPP specific legal framework Tiong (1996)
6 Government’s willingness to share risks Qiao et al. (2001)
society that improves the attainment of the four values, namely: efficiency, equity, sustainability, and security.
That is to mean, “an economy developing with a level of efficiency compatible with a sustainable pace, human
activities (both private and public) organized and coordinated in a way that preserves the environment and more
particularly scarce and non-renewable natural resources, organized in a way that realizes a balanced society
with a reasonable, acceptable, and improving level of equity and security” (Urio, 2010, p. 52). There are some
conditions expected to be fulfilled, so that PPP could be taken as a part of development strategy of a given
country.
Accordingly, these conditions can be defined in three interrelated levels: strategic, contextual, and
operational, each of them comprising a set of conditions or factors susceptible to having an impact on PPP
(Urio, 2010). But in reality, these three levels are not perfectly separated (not entirely mutually exclusive).
However, the author describes that the importance of dividing the three factors into manageable components is
in view of making the analysis simple and clear, whereas, they are in fact imbedded into a single reality. Figure
1 summarizes the divided components of factors affecting the adoption and implementation of PPP.
Figure 1. Three levels of conditions for PPP adoption as part of the development strategy. Source: Urio (2010).
As it can grasp from the Figure 1, the strategic level conditions comprise two major components: the
polity and public administration. The polity comprises the political will of the leadership, Think Thank, and
NGOs. These are listed under polity, because of their expected access to the political decision-making process.
Transparency and accountability are important factors under public administration.
The contextual level incorporates the conditions within which the strategy is implemented. The following
contextual elements are considered: the state of the development policy, availability and provision of
infrastructures (electric city, transport, and communication facilities), the awareness of partners (private, public,
and civil society) about PPP, impact or support of international development partners, and favorability in terms
of geographical location and natural resource.
148 DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE
The operational level includes the legal and Institutional framework, i.e., the rules governing the economy,
private property, public procurement, contract law (and more specifically rules governing PPP), as well as the
prevalence of PPP dedicated institution. Then, the competencies of partners to engage themselves in PPP
contracts in terms of asset possession, financial capacity, legitimacy to secure loan, skills, and knowledge are
factors considered in this level.
Table 2
Response Rate of the Questionnaire
Distributed Returned
Response.
Sector Sex Sex
Rate %
Female Male Total Female Male Total
Civil society 3 9 12 3 9 12 9.4
Development partners 2 8 10 2 8 10 7.8
PPP 4 9 13 4 9 13 10.2
Private sector 12 31 43 12 29 41 32.3
Public sector 11 32 43 11 28 39 30.7
Think Thank 1 5 6 1 5 6 4.7
Total 33 94 127 33 88 121 95.3
Source: Survey output.
DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE 149
As it is depicted in Table 3, the survey respondents comprised well-educated, experienced, and matured
practitioners from five sectors with direct or indirect influence on PPP implementation, for instance, 63 (52%)
and 35 (30%) of them are MA and BA degree holders, respectively. This constituted about 98 (82%) of the
total sample. The remaining four (3%) and 19 (16%) are Ph.D. and diploma holders, respectively. With regard
to their age, 108 (89%) are between 31-50 years of age, making the sample stratum dominated by matured
people. As shown in Table 4, 68 (56%) and 53 (44%) of the respondents possessed more than 11 years and five
years of work experience, respectively.
Table 3
Survey Respondents by Level of Education and Age Category
Level of education Age in years
Sector
BA DIP MA PhD Total Category Female Male Total
Civil society 4 1 7 1 12 18-30 3 5 8
Dev. partners 3 0 6 1 10 31-40 18 30 48
PPP 2 4 7 0 13 41-50 11 49 60
Private sector 13 7 21 0 41 50 1 4 5
Public sector 11 7 18 0 39 Total 33 88 121
Think Thank 0 0 4 2 6
Total 35 19 63 4 121
Table 4
Factors Attracting PPP Implementation in Public Service Delivery and Development Projects
Variables Obs Mean Std. Dev. R Min Max
Existence of specific PPP law 121 4.818182 0.447214 1 3 5
Existence of PPP dedicated public agency 121 4.636364 0.483046 2 4 5
Government guarantee 121 4.404959 0.996481 3 2 5
Tax exemption or reduction 121 4.371901 0.720327 4 2 5
Government provision of loan 121 4.22314 0.73584 5 2 5
Government willingness to share risk 121 4.190083 0.767182 6 3 5
Source: Survey output.
framework as “strongly agree”. Moreover, 83% of civil society respondents rated the prevalence of legal
framework as most important factor for PPP implementation as “strongly agree”. This finding clearly indicates
that PPP stakeholders in Ethiopia strongly believe that the federal government of Ethiopia has to devise a
specific legal framework for PPP as a prerequisite, so that potential private and civil society partners would
freely involve or engage in public service delivery and development oriented projects with government under
PPP arrangement.
The second most important factor for PPP implementation in Ethiopian, as perceived by most respondents
was “the existence of PPP dedicated public agency”. This factor seems vital in a sense that a mere existence of
PPP specific legal framework, may not serve the purpose, without owning institution to implement the
provision stipulated in it. Put differently, the legal framework with its supporting rules and regulations needs to
be owned by public agency with a full mandate to run and execute, according to norms and provisions
stipulated in it. Unless an institutional arrangement is put in place, the mere existence of rules and regulations
may not serve the purpose.
This finding supports the recommendation of Jamali (2004) suggesting that while PPP can bring added
value to the partners, a sound legal and regulatory framework and complete transparency are essential elements.
Also important is the presence of strong structure at the level of central administration to steer and guide policy
implementation.
Differences in the Perceptions of the Public and Private Sectors’ Respondents on the Importance of
Attractive Factors
Based on the mean score rankings, the results of the public and private sector respondents on the perceived
importance of each factor are almost similar except for differences in three factors. Table 5 shows that all
factors were perceived to be more important by the private sector respondents than those by the public sector
respondents. In this sense, in Ethiopia, PPP seems the main choice of the private sector to be involved in
development projects in collaboration with government and in order to enhance its role in the process of overall
development of the country.
Table 5
Summary of the Independent T-test Results for Attractive Factors
Mean T-test
Attractive factors
Private Public Diff. t Sign.
Government support in providing guarantee 4.414634 4.384615 0.300188 0.1349 0.8930
Government support in providing loan 4.317073 4.051282 2.657911 1.5345 0.1290*
Tax exemption or reduction 4.512195 4.358974 1.532208 0.9203 0.3603*
Prevalence of PPP dedicated public agency 4.487805 4.487179 0.006254 0.0053 0.9958
Prevalence of PPP specific legal framework 4.682927 4.512821 1.701063 1.0055 0.3178*
Government’s willingness to share risks 4.609756 4.512821 0.969356 0.6424 0.5225
Note. * significant at 0.05.
On the bases of the results illustrated in Table 5, it is prudent to conclude that there is a significant
difference in the perception of the public and private respondents in three factors, namely: government support
in providing loan, tax exemption or reduction, and prevalence of PPP specific legal framework. The data in
Table 5 shows a statistically significant difference at 5% significance level.
DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE 151
The private sector respondents perceived the attractive factor: The prevalence of PPP specific legal
framework is significantly more important compared to the public sector respondents. This may be because the
private sector considers it critical to gain confidence in PPP implementation process, such as negotiation,
contract, and execution. Similarly, for the other two factors: tax exemption or reduction and government
support in providing loan, the private sector respondents perceived them as significantly more important
compared to public sector respondents. The private sector respondents believed that the issue of tax exemption
and provision of loan services was among the most important factors motivating or attracting private partners’
engagement in PPP.
The findings of Cheung et al. (2009) also indicate the prevalence of significant difference between the
perceptions of respondents in Hong Kong and Australia. Their comparative study did not consider public and
private sectors separately but overall respondents on the basis of their homelands. Similar, results are reported
by Ismail (2013) on the presence of significant differences between the perceptions of private and public sector
respondents in Malaysia. The latter study further reported that public sector respondents perceived the factors
as more important than the private sector respondents (Ismail, 2013). In contrast, the findings of this study
imply that the private sector respondents in Ethiopia perceived the factors as more important than the public
sector respondents. The private sector respondents in Ethiopia perceived the attracting factors of PPP similar to
that of the UK respondents (Li et al., 2005).
Policy, Legal, and Institutional Frameworks for PPP Implementation
Conditions for PPP adoption. An assessment of conditions for PPP adoption and implementation in
Ethiopia has been carried out using study variables recommended by Urio (2010). These are classified into
three levels: strategic, contextual, and operational levels of conditions. Each of these comprises a set of factors
having an impact on prevalence of PPP. Respondents were asked to indicate their opinion about the prevalence
of conditions by choosing “yes”, “no”, or “do not know” options for each factor listed under the three major
levels of conditions. Moreover, respondents were given the chance to express their point of view freely in the
space provided in the questionnaire. In addition, relevant documents were assessed and interview data was used
to support the findings, as it deemed necessary for some particular factors.
In summary from the strategic level conditions, the prevalence of political will among the polity was
confirmed by both survey respondents and key interviewees. From the contextual level conditions, the
country’s geographic location is believed to be suitable for PPP expansion and development. The infrastructural
development and expansion trend in the country, particularly the ongoing hydroelectric dam construction,
railways, and road construction for transportation and telecom expansion for communication facilities can
together be conducive contextual conditions for PPP expansion in Ethiopia.
The prevalence of constitutional protection for the right to possess private property is notable operational
level condition prevalent in Ethiopia. The asset and financial capacity of local private sector investors as
perceived by respondents also shows the confidence in the availability of capable investors among potential
PPP partners in Ethiopia.
Legal framework of PPP. In order to assess the existing legal framework specific to PPP application in
Ethiopia, the researcher conducted document review, open-ended questionnaire survey, and interviews.
Specific documents reviewed for this question were: Public Enterprises Proclamation (No. 25/1992),
Privatization of Public Enterprises Amendment Proclamation (182/1999), Investment Proclamation (No
152 DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE
investment proposals submitted by any private investor intending to invest jointly with the government; it shall
submit same to the ministry of industry for decision and upon approval, designate a public enterprise to invest
as partner in the joint investment (FDRE, 2012).
This clearly implies that the level of development achieved in the country is demanding new form of
business structure one of which government is supposed to participate as a partner. However, there is a strong
interest for PPP adoption, the existing system of rules and regulation seems inadequate to attract, mobilize, and
implement PPP arrangement in the development of the country. The Commercial Code of the country is not
modified or updated to accommodate such developments. One of the very evidence for this point is that, the
initiation of founding Exchange Commodity Exchange (ECX) with its unique characteristics has brought a
challenge in the legal system.
The respondents were asked to indicate their opinion about the prevalence of PPP dedicated policy in
Ethiopia. The majority of respondents 59 (49%) reported that they do not know whether the existing
development policy is suitable for PPP implementation or not. The qualitative data synthesized from interviews
indicate that the existing policy is highly suitable for private sector development, but not for PPP involvement
in development. The fact that PPP is not incorporated in the development policy as a component, in the form of
development strategy, shows that the existing development policy is not suitable as desired. On one hand, 87
(72%) respondents reported that PPP is not incorporated in the development policy as development strategy.
This response is supported by data obtained from the interviews and document review.
On the other hand, 91 (75%) of the respondents believe that there is no specific law or regulation of PPP
that could attract investors to engage in PPP projects. This finding is in harmony with the data obtained from
interviews and also the document review done in light of the purpose of this study.
Institutional framework of PPP. In order to assess the existing institutional framework of PPP in
Ethiopia, document review, open-ended questionnaire survey and interview were conducted. Specific
documents reviewed for this question were: Privatization of Public Enterprises Amendment Proclamation
(182/1999), Investment Proclamation (No 280/2002), Public Enterprise Supervising Authority Establishment
proclamation (No 412/2004), Ethiopian Federal Government Procurement and Property Administration
Proclamation (No. 649/2009), and Investment Proclamation (No. 769/2012). The review of legal texts detects
conflicting provisions regarding government bodies in charge of PPP related issues. Article 34 of Procurement
and Property Administration Proclamation (No. 649/2009) confers the power to the minster of MOFED to
issue rules and directives of PPP formation and implementation. Whereas Investment Proclamation (No
769/2012) of article 6 (9) confers the power of decision to approve any proposal submitted by any private
investor intending to engage with government to Ministry of Industry. Therefore, review of the relevant
documents shows that there is no PPP dedicated public agency or enterprise with a mandate to regulate, manage,
and oversee the implementation of PPP in Ethiopia.
Interviewees from the private and civil society sectors mentioned that the country lacks an independent
and empowered public agency to run PPP issues in Ethiopia. This gap further exacerbated mistrust among the
potential partners from the private and civil society sectors and the government. Had the agency been available
in the public administration system, it would have pursued developmental promotional activities to bring about
potential partners from all sectors into development agenda, which would have in turn built strong confidence
and trust among all partners.
154 DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE
Whereas interviewees from the public sector argue that there is an enough institutional arrangement to
accommodate potential partnership projects. Therefore, they say, having a special agency for PPP may not be
feasible. They insist that the attention of the public sector should be on building the capacity of private
investors in financial, technical, and ethical terms, so that they can have adequate capacity to work in mega
development projects in collaboration with the government in PPP arrangement. They believe that the current
capacity of the private sector by and large is not enough to work with the government in big development
projects. The interviewee from the private sector admitting the infancy of the private sector argued that the
private sector capacity is now growing to the level of contributing to the ongoing development of the country
comparatively more than the public sector itself. In the recent past, the private and public sectors were both
incapable due to the past socialist oriented command economy. Hence, devising mechanisms such as specific
regulations and institutional frameworks for PPP may help to build the capacity of both sectors.
Suggested Policy, Legal, and Institutional Framework
Type of policy suggested. According to data displayed in Table 6, 95 (79%) respondents suggested a type
of policy that accommodates PPP as part of the development strategy. This suggestion is supported by most of
the interviews from all sectors. This would also provide a legitimate opportunity for all sectors to shoulder and
execute societal and developmental responsibilities with full confidence. Urio (2010) suggested this type of
policy as the best option to utilize the potential of the private sector particularly for developing countries.
Table 6
Summary of Stakeholders’ Suggestion on Type of Policy, Legal, and Institutional Framework of PPP for
Ethiopia
Variables Freq % Interview data Document Data
Type of policy
Most of interviewees Urio (2010) recommended
Accommodates PPP as part of development
95 78.51 support this option is useful this options for developing
strategy
for Ethiopia countries
Allows PPP as it deems necessary but not as
17 14.05 ----
development strategy
Never allow PPP arrangement in public projects 3 9 -------
Type of legal framework
Most of interviewees Getahun (2010) suggested
With specific laws, regulations and procedures
102 84.30 seconded this option for updating the commercial
for PPP
Ethiopian legal context code of Ethiopia
Without specific laws and regulation for PPP 19 15.70 - -
Type institutional framework
Some interviewees from all
Public agency with full mandate for PPP 95 78.51 Yescombe (2007)
sectors support this option
Some interviewees from
PPP units or directorates in concerned
18 14.88 public and CSOs support this Cheung et al. (2009)
public offices
option
Type of legal framework of PPP suggested. According to summary data presented in Table 6, 102 (84%)
stakeholders suggested the type of legal framework with specific laws, regulation, and procedures of PPP.
These suggestions are also supported by most of interviewees. In the same manner, all partners from other
sectors will have an opportunity to engage in PPP with confidence, good will, and sense of public
accountability, knowing that the rules and regulations are functional to protect the interest of the general public
as well as the participants in the partnership system.
DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE 155
Type of institutional framework of PPP suggested. According to the data presented in Table 6, 95(79%)
respondents recommended that the Ethiopian government should establish an institutional framework for PPP
that is led by a public agency with full mandate at federal level. This suggestion is also supported by
interviewees from all sectors. The reasons mentioned by interviewees and some survey respondents through the
open-ended questions are: Having a responsible and accountable public agency with full mandate to plan,
promote, execute, and report issues related to PPP implementation would help to integrate capacities of all
relevant sectors towards the development goals of the nation. Since the capacity of the private sector is ever
increasing, the government as the most important actor and enabler of the development has to create an
effective institutional mechanism to plan, prioritize, optimize, and use the growing potential of the sector in
view of accelerating the general development direction of the country. Some interviewees, who also agree with
notion of having a special and dedicated institution at the center, suggest another model. According to them, a
special office (division, directorate, or department) could be established in the Office of the Prime Minster
(Council of Ministers) to be headed by a professional appointee with the rank of minister to manage and
oversee PPP related issues throughout the country. They say that the designated or appointed minster of PPP
should be accountable to the Prime Minster.
In this regard, all public institutions presumably will have their own structures (PPP units or directorates)
in their respective organizational structure. Heads of the PPP units or directorates may have dual accountability,
to the head of the public institution and as well as to the minster of PPP in the Council of Ministers. Another
option suggested by interviewees was a National Public Agency with full mandate to oversee issues related to
PPP. The leadership will include representatives from the public, private, and civil society sectors. The
directors’ board chairperson of this special agency could be appointed by the government, because of the
traditional role of the government to lead development and provide public services for its constituencies. The
CEO or General Director of the special agency may be hired by open vacancy announcement from the labor
market.
Conclusions
The study examined factors attracting adoption of PPP in public service delivery and development projects
in Ethiopia. The study evaluated the difference in the perception of the two main players in PPP, the public and
the private sectors. Hence, the three main attractive factors for implementing PPP in Ethiopia are prevalence of
PPP specific legal framework, prevalence of PPP dedicated public agency, and government support in
providing guarantee. In terms of the differences in perception between the public and private sector groups, the
independent t-test results indicated that there are significant differences in three attractive factors. Regarding
the perceptive difference between the respondents in the two sectors, the study concludes that the private sector
in Ethiopia is ready to get involved in PPP arrangements, provided that these attractive factors are put in place
by the government. It is also valid to conclude from these findings that the Ethiopian government may consider
offering these three important attractive factors to motivate and engage the private sector in development
oriented PPP projects. Potentially, other attractive factors, such as tax exemption, risk sharing, and loan
provision may also be considered by the government to expedite engagement in PPP projects.
Respondents suggested that Ethiopia should have a policy in which PPP is considered one of the development
strategies as suggested by Urio (2010). Regarding the type of legal framework, respondents suggested
invariably that the country should have a PPP dedicated legal framework with specific laws, regulation, and
156 DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE
procedures for PPP implementation in the development process. Stakeholders also suggested the establishment
of PPP dedicated public agency with full mandate to manage and oversee issues related to PPP.
Generally, the collective suggestions imply that having a policy in which PPP is taken as a development
strategy with its enabling legal environment would encourage potential sectors to collaborate with the
government on mega development projects. With the establishment of a special government agency and the
concomitant laws, regulations, and procedures, PPP projects could be properly executed thereby enhancing the
development potential of the country.
Recommendation
The following steps or actions are recommended to be taken by the Ethiopian government and to harness
the potential advantages of PPP to accelerate the ongoing development process, these are:
(1) incorporate PPP in the existing development policy as one of the development strategies for
development. As a result of this, PPP should be considered as one of the pillars of the forthcoming GTP2;
(2) establish an ad hoc taskforce of experts for PPP with a special task to review the existing sectoral
policies, rules, and regulations and then prepare a draft national PPP strategy;
(3) approve and announce the PPP strategy of the country. Among other points, the strategy shall explain
the objectives of adopting PPP in the process of development, the expected roles of partners, the central role of
the government in safeguarding or protecting the interest of the citizenry in the process of PPP operation. The
basic intentions of the government in introducing PPP in the system etc.;
(4) prepare PPP specific legal framework as per the PPP strategy and conduct stakeholders’ consultation
on the draft legal framework. Among other points, the law should include what areas of investment are going to
be open for PPP, what sort of enabling environment and incentives are devised for PPP, what modalities of PPP
are preferred, applicable laws and regulation, its institutional arrangement, expected requirements for partners
to initiate PPP project proposals (unsolicited projects) or to participate in open bid of PPP projects (solicited)
etc.;
(5) enact the PPP specific legal framework;
(6) prepare PPP standard, procurement procedures, and model contracts;
(7) establish a federal PPP agency under the office of the Prime Minster either of the following options:
Option 1: The current institution—Privatization and Public Enterprises Supervising Agency may be
reorganized with dual mandate, keeping the current mandate and promotion, expansion, and supervising PPP
projects. The new nomenclature shall focus mainly on PPP. The reorganized institution shall be empowered and
made accountable to the Prime Minister’s office. Head of the agency shall have a rank of a minister with proper
academic and professional background related to the given mandate. There should be at least two deputy heads
with a rank of state ministers. The PPP wing would be lead by one of the deputy heads and the privatization
wing by another one.
Option 2: Ethiopian Investment Agency and Ethiopian Privatization and Public Enterprises Supervising
Agency may be amalgamated and reinvigorated. The new institution with a rank of ministry will have three
wings—investment promotion and expansion, privatization and public enterprise supervision, and PPP
promotion, implementation and expansion—to be led by deputies with state minister rank.
Option 3: A PPP Unit could be established under MOFED to be run by a head with state minster rank that
is accountable to the minister of MOFED. This unit should have a special working lateral connection with
DEVELOPMENT PROCESS: STAKEHOLDERS’ PERSPECTIVE 157
Ethiopian Investment Agency and Privatization and Public Enterprises Supervising Agency.
Though further study is recommended, this work provides some insight and important information for the
government and the private sector concerning practical conditions for the implementation of PPP, particularly
in Ethiopia. This may have provided some indications to be considered by other governments of developing
countries in their endeavor to involve their respective third sector partners in development and public service
delivery activities.
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