WEST AFRICA: PPIAF Supports the Region’s First PPP Framework

COVID-19 is having a devastating economic impact in West Africa, exacerbated by a lack of investment funding for infrastructure. Governments in the Economic Community of West African States (ECOWAS) are looking for a regional solution to infrastructure development by establishing a regional framework to encourage public-private partnerships (PPPs) with support from PPIAF.

ECOWAS consists of 15 member countries—Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Mali, Liberia, Niger, Nigeria, Senegal, Sierra Leone, and Togo. The World Bank classifies 15 member states as low-income and four as fragile countries.

Infrastructure gaps of ECOWAS economies vary widely. For example, Nigeria, which has the biggest economy in Africa, has an infrastructure investment gap of $221 billion, equivalent to 51.2 percent of GDP. In contrast, Cote d’Ivoire’s infrastructure investment gap stands at $14 billion, equal to 22.8 percent of its GDP.

The region has long suffered from underdeveloped transport infrastructure and poor physical and digital connectivity, hindering intra-regional trade and constraining economic growth. The strategy document, ECOWAS 2050 Vision, outlines the region’s goals of building “a fully integrated community of peoples in a peaceful, prosperous region with strong institutions and respect for fundamental freedoms and working towards inclusive and sustainable development” through the establishment of a free trade area, a common market, and infrastructure development. In this context, the ECOWAS Commission has identified PPPs as a means to close the infrastructure gap and kickstart social and economic development.

The ECOWAS Commission requested World Bank support to assess regional infrastructure priorities and harmonize the PPP framework to realize this goal. Through a standardized diagnostic on infrastructure connectivity constraints, the World Bank’s Infrastructure Sector Assessment Programconcluded that many ECOWAS countries lack fully operational legal and institutional framework to support PPPs. These shortcomings are accentuated by poor coordination at the regional level.

PPIAF’s contribution

With PPIAF support, ECOWAS successfully developed a comprehensive PPP framework. This is a critical step towards establishing a conducive and investor-friendly environment and closing a substantial regional infrastructure gap estimated to be between $20 billion and $36 billion per year.

PPIAF supported ECOWAS in reviewing gaps in existing laws and regulations applicable to PPPs at regional and national levels to allow inter-country projects to be financed by the private sector. PPIAF study revealed the need for ECOWAS member countries to harmonize their national frameworks, especially in regards to the fiscal management of PPPs and emphasized the role of sector regulation and facilitating regional projects. The assessment revealed that one critical impediment preventing the development of regional PPP projects was the limited, structured coordination between country members, exacerbated by the lack of a comprehensive regional PPP policy.

PPIAF supported ECOWAS in developing a PPP framework that applies to regional projects in all infrastructure sectors. ECOWAS also produced guidelines that established the roles and responsibilities for preparing and implementing regional PPP projects within ECOWAS with PPIAF support. This includes guidance in navigating and mitigating legal and institutional challenges for projects crossing country lines.

To round out the intervention, PPIAF provided PPP certification training to officials from the ECOWAS Commission, its agencies, and member states. More than 150 officials are responsible for PPP development within the ECOWAS subregion. Among them were staff from ECOWAS Project Preparation and Development Unit (PPDU) and West African Economic and Monetary Union PPDU,  who were trained to carry out their roles and oversee the implementation of regional PPP projects effectively.

ECOWAS countries agreed to adopt PPIAF’s recommendations to improve and harmonize member countries’ legal and institutional frameworks in line with ECOWAS regional policy and guidelines. The process will culminate in an integrated regional PPP framework for governing PPPs.

A solid foundation for regional PPPs

Over its 25-year horizon (2020–2045), the ECOWAS regional infrastructure masterplan comprises 201 projects in connectivity, digital development, energy (including renewable energy), and transport (air, rail and maritime, shipping), with an estimated investment requirement of $122 billion. Considering the ECOWAS region’s limited public financing capacity, further financial inflows will be required to bridge the infrastructure gap. Today, private participation represents only 5 percent of infrastructure financing within the region. At both domestic and international levels, the private sector is an increasingly important source of infrastructure finance for ECOWAS.

ECOWAS country members approved the framework in a consultation workshop held in September 2021. The framework was presented to the ECOWAS Parliament, Council, and heads of state; the Parliament approved resolutions on regional PPPs and associated guidelines in December 2021. Once in place, the new regional framework will facilitate delivering regional infrastructure and public services in the ECOWAS region. This, in turn, will contribute to growth and development in all member states.

This PPIAF activity ensures that the legal underpinning for that investment exists.