Cameroon: Building a Workable PPP Framework
The Cameroonian government is taking action to strengthen the country’s business climate, improve its competitiveness, and boost economic growth. Cameroon needs significant investment in all infrastructure sectors at both national and regional levels, and it needs the financial and managerial resources of the private sector to make that happen.
While Cameroon is a lower-middle-income country, it faces many infrastructure challenges more typical of poorer countries. The World Economic Forum’s 2019 Global Competitiveness Report ranks Cameroon at 132 out of 141 countries in transport infrastructure, 114 in access to electricity, and 128 in the reliability of water supply. Inequalities between north and south persist, as do inefficiencies in public resource allocation.
World Bank support for infrastructure PPPs in Cameroon
The World Bank Country Partnership Framework with Cameroon recommended a step-by-step approach to infrastructure development through private-public partnerships, or PPPs. Major milestones include strengthening private-sector regulatory frameworks, engaging stakeholders, improving project development, deploying advisory services for PPPs and project finance, and providing appropriate financing.
Cameroon has taken steps in the right direction, such as enacting its PPP law in 2006 and establishing a PPP unit, Le Conseil d'Appui à la Réalisation des Contratsde Partenariat (CARPA). However, the PPP framework was not fully operationalized. Two different regimes apply to PPPs: user-paid “concessions” are overseen by the Public Contracts Support Council, while government-paid PPPs fall under the National Partnership Contracts Support Council. PPPs in the energy sector and telecommunications are governed by sector regulations without reference to the PPP laws.
To effectively use PPPs to procure and finance infrastructure projects and services in the public sector, Cameroon first needed to improve the legal and institutional framework and increase government capacity to develop a bankable PPP portfolio. The Ministry of Finance and Economy requested PPIAF’s assistance to streamline the process.
PPIAF’s role
PPIAF supported a comprehensive review that identified the conflicts and gaps created by the fragmentation of the existing legal and institutional framework. PPIAF proposed a number of actions that would streamline and strengthen the current process, such as clarifying the types of PPPs (government-paid, user-paid, and mixed); introducing thresholds to differentiate the processing of large, high-risk national projects from smaller local projects; and including the Ministry of Finance and Economy in PPP governance to review fiscal commitments and liabilities arising from proposed PPPs.
PPIAF also supported an assessment of the country’s infrastructure project pipeline, which enabled CARPA to identify and develop three projects as PPPs. This work entailed assessing the projects’ viability as PPPs, identifying structuring options, and developing action plans for taking proposed PPP projects to the next stage. CARPA also updated its operating manual to define the process for evaluating projects and conducting preliminary financial and economic analyses.
A significant training component complemented this technical assistance. Government representatives from CARPA, the Ministry of Finance and Economy, transport sector institutions, and other public implementing agencies completed three levels of the PPP Certification Program. Twenty-five participants completed the foundation level course, and 15 pursued training in PPP preparation and execution.
Training was also conducted on the PPP Fiscal Risk Assessment Model (PFRAM). Developed by the IMF and the World Bank, PFRAM is an analytical tool for assessing fiscal costs and risks arising from PPP projects. It is designed to assist governments in assessing the fiscal implications of PPPs and proactively managing these projects. Finally, 10 people from CARPA, the Port of Douala, and the Ministry of Finance and Economy participated in project finance training.
Today, the comprehensive set of manuals and guidelines developed under this initiative are available on CARPA’s website to support government officials undertaking PPPs.
The knowledge and regulatory clarity fostered under the PPIAF support contributes to a solid PPP framework. This, and strong government commitment to implementing the framework, will go a long way in encouraging the private sector to invest in Cameroon’s infrastructure.
“These materials will be our daily bible in executing our work, as they are rich in content and extremely detailed,” said Marcel Blaise Mbella, the Technical Coordinator of CARPA. “We aim for CARPA to be recognized as a high-level center of expertise on PPPs, both nationally and internationally.”