Exclusive with Rahul Kichlu, on PPP Trends in Ethiopia

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Rahul Kichlu is a Senior Energy Specialist at the World Bank.Currently, Rahul is based in Addis Ababa and leads the World Bank’s energy programme for Ethiopia, Sudan, and South Sudan, as well as the regional integration support program for the East African Power Pool.

The Senior Specialist has shared his ideas with ENA on Public-Private Partnership (PPP) trends in Ethiopia.

Significance of PPP Initiative for Ethiopia

First of all, the government of Ethiopia has led a very successful economic model in the past many decades which was predominantly led by public investment in infrastructure.

It is given double digit growth for many years. However, the government also realized that there are limits for that type of investment and it is not sustainable in the long periods of time.

So what the government trying to do now is to bringing the private sector investment in specific sector of the economy where it does relevant and makes sense as well as providing finical sustainability for continued investment in infrastructure development in Ethiopia.

Not only is it financially sustainable to bringing the private sector foreign direct investment it reduces debt burden on the government treasury, but also it increase competition, it can increase provision of additional choices for the citizen. It can also increase quality of service delivery and provision of services in all parts of Ethiopia to the citizens.

Recent Trends of PPP in Ethiopia

Overall, PPP is a very positive trend that the government is opening up to global market by inviting public private participation that is the first part. In terms of overall trends and approaches that the government is taken, we are very happy that are following international best practices it is based on benchmarking on global experience.

The first step in this whole process was establishment of the PPP proclamation in January of 2018. But, starting from that government has been very focused on establishing predictable legal and regulatory environment for public private participation and this extremely essential for new investors who are coming in the country.

They want to see that the government is serious about taking investment climate reform actions. This about regulations, this is about predictable infrastructures in terms of who are the governance institutions involved, establishment of a PPP directorate general at the ministry of finance, establishment of a PPP board transparent tendering for these projects, so over all, it offers a lot coffered and predictability to foreign investors coming into the country.

In addition to that, the government is also very keen on the priority sectors in the economy that targeting for Private Participation such as energy, such as transport to make those sectors financially viable and these are in parallel actions that are ongoing at the moment.

By making the sectors self-sufficient, so that the investors are coming to those sectors have in addition to the climate predictability, also the opportunity to make sure that their investment is secured and the revenues can be protected.

World Bank’s Supporting the PPP Initiative

From the World Bank side, we have been very much supporting the government public-private partnership initiative as well as the overall economic reform program. This is a multi-facilitative approach where by policy advice, technical assistance, targeted financing and perhaps even guarantees as well.

On the first side in terms of providing support to the overall economic reform program, in October of last year, the World Bank approved a budget support operation which was 1.2 billion dollars to support the economic reform agenda of the government targets in certain areas of the economy.

In addition to that, various sector teams are working with their counter parts to provide as I mentioned technical assistance, policy advice, targeted investment as well as guarantees. 

Within the energy sector for example, we have a joint implementation program within the World Bank group agencies which brings together the IDA which is the public sector of the World Bank Group together with IFC which is the private investment sector of the world Bank group and MIGA which is the political risk insurance part of the world bank group together working with the authorities to develop the market for independent power producers and public-private partnerships to come in to the country through initiatives, like solar initiatives, provide predictable tendering process for solar IPP development in Ethiopia.

Things Necessary for the PPP to Flourish in Ethiopia

These are quite complex initiatives. PPP takes time, effort and energy over the medium to the long periods of time to have successful results. There are many examples around the world where things avail very well but also examples where things are not very well.

So, as part our on ongoing engagement with the government, we would like to see some of those experiences and lessons learned are incorporated in the development of the PPP legal and regulatory infrastructure for promoting Public-Private Partnership in Ethiopia at the same time, it will be very important to continue building the capacity within the authority that are responsible for these programs because this is very new for Ethiopia. 

Expectations

As the end of the day, what we really want to see is maximizing finance for development. Public finance resources are very limited. The more private sectors are coming in, the more investments are happening in Ethiopia the better. It is for the citizens as well as the overall efficiency of the infrastructure sector improves.

Ethiopian News Agency
2023