PPP law could have prevented the stalemate at Burera Garment Factory
RE: "Garment plant lies idle over disagreement between Burera District and shareholder" (The New Times, January 8).
This story makes a sad read, owing to the lost potential of such an important investment.
1000 jobs and almost half a million clothes per month in Burera had the capacity to turn the district’s fortunes in a drastic way.
Analysing the story, it appears that this is a case of a public private partnership (PPP) gone bad.
The Rwanda PPP law that was approved in May 2016 puts in place an institutional framework of a steering committee that is consulted and approves any venture of that nature.
The steering committee that is made up of the Ministers of Finance and Infrastructure, CEO-RDB and head of contracting authority, makes the final decision and approve a PPP project.
The contracting authority (in this case Burera District) role includes undertaking or analyzing the project feasibility study if submitted by an interested investor, carry out the PPP procurement activities, enter into contract with the PPP partner, prepare a plan for PPP contract management, while RDB is the lead negotiator in PPP contracts and give advice on PPP matters.
PPP projects can be competitively sourced (solicit bids) or directly contracted.
The law, however, restricts the condition to direct contracting only to when there is an emergency, a case of monopoly, matters related to national security, and where there is little private sector interest in areas the government considers to be a top priority, like the case of the national fiber optic network 10 years ago.
From the Burera story, it’s not clear if this PPP with Noguchi Holdings was done before or after the PPP law, but no matter, it appears there were some key gaps that need to be addressed in the light of the PPP legal framework.
There seem to be lack or poor project feasibility study. This would have helped to identify the funding issues that seem to be a contention.
Solid revenue and cost estimations are key factors of PPP projects. A key aspect covered under feasibility study is the issue of risk assessment and how to mitigate the risks.