To achieve the Malawi Growth and Development Strategy 2 (MGDs), the Government of Malawi (GoM) strives to enhance economic growth by exploiting employment generation with the aim of improving the quality of life for the population. To that end, the GoM has identified the following areas for improvement and expansion:
- Agriculture and food security,
- Energy, Industrial Development, Mining and Tourism,
- Transport Infrastructure and Inland Ports,
- Education, Science and Technology,
- Public Health, Sanitation and Technology,
- Public Health, Sanitation, Malaria and HIV and AIDS Management
- Integrated Rural Development
- Greenbelt irrigation and Water Development
- Child Developmeny, Youth Development and Empowernment
- Climate Change, Natural Resources and Environmental Management
These are the key priority areas to help strengthen the economic growth and development of Malawi and will be achieved through investments, and Public-Private Partnerships (PPPs).
A Public-Private Partnership is a legally enforceable contract between a government agency and a private-sector company to expand, build, develop, or improve infrastructure or service. The parties contribute financial support, know-how, facilities, operational management, logistical support, and other required inputs for the successful execution of a product or service. In the end, the risk assumed, and the value of the results dictate the compensation received by the Private-Sector company
3. Legal and Regulatory Framework
In Malawi, the agency, policy, and law facilitating PPPs are:
- Public-Private Partnership Act, No. 27 of 2011
- Public Private Partnership Commission (PPPC)
- Public Private Partnership Policy Framework
4. Benefits of Public-Private Partnerships
Malawi needs to improve and expand on the key priority areas and traditionally, only specific services from the private sector were used by the government to achieve the same. However, s PPPs extensively utilize the services that the private sector can provide. Therefore, Malawi stands to benefit from PPPs in the acceleration of infrastructure provision, reduced costs, improved quality of service based on payment incentives, technical expertise, and enhanced public management.
5. Current PPP Projects in Malawi
- Modern Bus Terminal through the Blantyre City Council which is inviting investors to invest minibus terminal infrastructure, systems, Professional Car Park Automation and Management Service in Blantyre and Limbe at an investment amount of $2 Million
- Mpatamanga Hydro Power Project through the government which has pre-qualified SN Power and Electricite de France
- Students Accommodation, Hostel construction through the Ministry of Education, Science and Technology in partnership with M&M Consortium, Old Mutual, and Nico Asset Managers
6. PPP Project Cycle
There are five distinct phases provided by the Public Private Partnership Policy Framework
- Project Initiation, Screening and Selection: The PPPC shall conduct needs and options analysis to determine the best solution to provide service/ build infrastructure i.e traditional public procurement or PPP route.
- PPP Feasiblity Analysis and Risk Allocation: An assessment made by the GoM to determine whether the risk, viability, bankability, affordability of the project meets the the GoM criteria. The Monitoring and Evaluation Unit shall provide clearance and approval for the next step of the process.
- PPP Tendering and Procurement : The Ministries and Contracting Authorities will work closely for the successful management of the procurement process.
- PPP Contract signing and Financial closure: Parties sign the PPP Contract, while ensuring that the performance and the technical quality/ service delivery standards are observed.
PPP Post-Award Performance Monitoring: An appraisal will be carried out by the PPPC on the PPP Project to determine the effectiveness and efficiency of the project implementation. The aim is to note distinctive lessons that may be applied in future projects and contribute to future policies
7. Key Principles in the Application of PPPs
To successfully achieve the benefits of PPPs, the Public-Private Partnership Policy has set out necessary key principles that have to be considered for all PPP arrangements:
- Value for money;
- Risk allocation, public interest and consumer rights;
- Local content; and
- Technology transfer, stakeholder consultation and Public procurement.
8. Procedure for Awarding PPP Contracts
- Every government agency with the authorization of the PPPC Malawi shall conduct a feasibility study on a project to consider whether it should be implemented under a PPP agreement.
- Once the PPPC Malawi is satisfied with the feasibility study, it will proceed to carry out a pre-qualification exercise of selecting potential bidders. The PPC Malawi will invite bidders to submit their bids through a public invitation and the bids shall be evaluated by the PPPC Malawi.
- The evaluation of the bids and selection of the preferred bidder shall be made based on an evaluation criterion that will be clearly set out in the public invitation.
- The PPC Malawi shall decide on a preferred bidder with the clearance of the Minister responsible for finance and with the consent of the Minister of the government agency.
- The PPP contract shall either be in a form of a special vehicle incorporated under the Companies Act or a Joint Venture.
9. Unsolicited Bids
- Any unsolicited Bid for the interest of a PPP by a prospective private partner to a government agency shall be referred to the PPPC Malawi.
- The PPPC Malawi and the relevant government agency shall assess the proposed PPP on whether it is acceptable or not.
- If the Bid is considered acceptable, a feasibility study will be conducted
- If the PPPC Malawi is satisfied with the feasibility study, the unsolicited bidder and other bidders will be publicly invited to bid for the PPP in accordance with the procedures laid down in the PPP Act.
- However, if the proposed PPP assessed by the government agency and PPPC Malawi is found to be unacceptable, the unsolicited bidder will be informed accordingly.
10. Funding of PPP Development and Contracts
The PPPC Malawi accepts grants or donations from any source in and outside of Malawi for PPP Development. Subject to the approval of the Minister and the Minister responsible for Finance, the PPPC Malawi shall raise funding for PPP development through loans from any source in or outside of Malawi. In other instances, the Minister Responsible for Finance may make available funds for PPP development from the Consolidated Fund.
PPP’s are great opportunities for the public to contribute to the economic growth of Malawi, and at the same time ensure the improvement of the socio-economic status of the country through innovative ways.