Why trust is crucial for PPP projects to really bear fruit

Friday October 12 2018

TPSF executive director Godfrey Simbeye speaks

TPSF executive director Godfrey Simbeye speaks during Mwananchi Thought Leadership Forum in Dar es Salaam on Thursday last week. PHOTO | ANTHONY SIAME 

By Ludger Kasumuni @TheCitizenTZ lkasumuni@tz.nationmedia.com

Dar es Salaam. The element of trust between the government and private sector is very crucial if gains in potential investment for industrial development is to be realised, particularly under the Public Private Partnership (PPP) arrangement, members of the private sector have argued.

Speaking at the Mwananchi Thought Leadership Forum last week, the stakeholders expressed their concerns at the seemingly mistrust existing in form of attitudes shown towards the private sector by some government officials.

They pointed out that such attitudes could weaken the PPP investment window and reduce its impact on the much-touted industrialisation drive.

Tanzania Private Sector Foundation (TPSF) executive director Godfrey Simbeye explained that there was a narrow mindset to treat the private sector players as bad partners, those who could not be trusted. “There are many sources of raising capital for investing in various industrial projects, but one obstacle is mistrust between the government and private sector players,” observed Mr Simbeye.

He expressed his disappointment over how some government officials perceived the private sector, often seen during negotiations for a PPP arrangement.

“The attitude for viewing every successful business player as a con man is very bad. We must trust each other in order to build industrial economy,” said the TPSF executive secretary.

According to him, as a result the PPP regulatory framework has not been stable as experience has shown that its laws and regulations have been changing.

“The issue of good governance in running PPP projects is not properly observed,” he said.

In 2010, Parliament enacted the PPA law with clear provision on how such projects could be run without discrimination.

But in 2015 another law was enacted which stipulates that in all PPP projects 10 per cent of preference must be given to nationals.

For his part, the chairman of the Confederation of Tanzania Industries (CTI), Mr Subash Patel, seconded the observation by saying: “Currently we don’t have a win-win attitude for spearheading industrial development.”

In the same forum, Repoa executive director Donald Mmari cautioned that in the absence of trust between the two sides in industrialisation, it is very difficult to attain the set target.

He argued that Tanzania had an opportunity to play a role in the global industrial sector by joining the international value chain. This, he said, can best be done when the public and private sectors enter into partnerships under created out of mutual trust and so produce parts of high value products like in making aircraft and IT products.

“In the course of producing Boeing [sic] there are nine manufacturers engaging in designing, producting, assembling and packaging specific parts of such a huge aircraft,” Dr Mmari said.

However, the deputy permanent secretary in the Ministry of Industry, Trade and Investment, Dr Edwin Mhede, was optimistic that the goal of building a middle income economy and an industrial economy under the push being undertaken by the current stance, would be successful one way or the other.

He insisted on the importance of partnerships between key players within the government and in the private sector.

However, this year’s World Bank data on Private Sector Participation in Infrastructure Investments (PPI) has also confirmed that Tanzania still has very weak private sector participation in infrastructure development, which is a cornerstone for industrial development.

The World Bank has recently listed only two PPP projects which are being implemented including; the TIB Development Bank Office Complex and Dar es Salaam Chalinze High Way set to have six lanes -- aimed at reducing traffic congestion.

According to 2018 World Bank report on PPI, between 2013 and 2017 Tanzania has been overtaken by Mozambique, Rwanda, Uganda, and Somalia in attracting private infrastructure investments.

The same World Bank data show that among these five countries, Mozambique has taken the lead with total investments of $744 million, followed by Rwanda with PPI value of $446 million and Uganda with $129 million, while Somalia was the second from the bottom with attraction of $16 million and Tanzania is at the bottom with attraction of only $6 million during the same period.

What is amazing from such World Bank data is that even Somalia, a country which has been prone to imminent political instability has overtaken Tanzania in the race for attracting PPI.

During the Leadership Thought Forum organised by the Mwananchi Communications Limited with special focus on industrialisation, the more than 500 gathering stimulated the views of many business leaders, who talked about the need to change negative mindset towards private sector for building local entrepreneurship necessary in building industrial economy and middle income country.