BUSINESS OUTLOOK: Senate, PSF table flaw in the PPP framework

Independent institutions are slowly getting concerned about how government and private institutions are executing their roles and responsibilities.

Independent institutions are slowly getting concerned about how government and private institutions are executing their roles and responsibilities.

There is fear that if there are no corrective measures taken, expeditiously, this may cost Rwanda’s big dream of following Singapore’s footsteps to leapfrog her per capita income from the current $273 (2008 estimate) to $900 by year 2020.
Also, there are looming concerns that most government institutions here do not comprehend why the Private Public partnership (PPP) framework was established. As such, some have even started “fighting” or call it “competition” with the private sector instead of enabling it to grow.
Others have persistently taken it upon themselves and the institutions they head to take harsh decisions against the private investors instead of engaging in dialogue through the numerous Private Public Dialogue (PPD) frameworks like the Rwanda Economic and Social Council (RESC), Tax Issues Forum (TIF), Kigali Investors Forum (KIF) among others.
A standing committee of the senate on political affairs and good governance is on a facts finding mission; going around different public and private institutions at different levels to establish the effectiveness of PPP framework.
On April 29, 2009, the Committee Chairman, Dr. Joseph Karemera and Senator Wellars Gasamagera, who is also a committee member met with top leaders of the Private Sector Federation (PSF), an umbrella body of the business community in Rwanda to discuss the effectiveness PPP.
In attendance were the top officials of the PSF and some leading business figures in the country.
The PSF president and CEO said, on paper, like in the Vision 20202 and EDPRS, there’s total commitment by government to enhance a private sector led economy. 
His Excellency the President of Rwanda is fully behind private sector development in the country to drive the economy. But, various government institutions are not executing their roles and responsibilities well, as such becoming stumbling blocks.
Robert Bayigamba, the PSF president explains that the willingness from the government to establish frameworks like RESC is justification that the government is ready to listen. Unfortunately, such frameworks are still ineffective because some government institutions are not pro private sector development.
The PSF CEO, Emmanuel Hategeka attributes this to mindset. He says,  “although there’s willingness from government, there’s still need for mindset change among Rwandans”.
He explains that over a decade ago the economy was dominated by parastatals. Government used to be the largest investor. Most Rwandans hardly thought they could as well do business. They looked at government as the only employer.
“We are trying hard to change people’s mindset to start pooling resources to do meaningful businesses. In reality private sector is still in its infancy. But it needs good nurturing,” Hategeka said.
The PSF is leveraging on the government privatization program to encourage Rwandans to start owning up investments through initiatives like PIC (Provincial Investment Corporations), Business Development Services (BDS) program and Business Plan Competition (BPC) among others.
An intriguing observation was made at the meeting: a couple of PPP investments across all sectors of the economy are coming up, spearheaded by government institutions but because there are no clear rules of engagement with the private sector, business people are cagey to be partners.
The danger in this is that when such PPP projects fail in future it may be hard to hold individuals or institutions accountable. Besides, monitoring and evaluation (a very important tool in project management) also becomes difficult in the process. Drawing examples from other countries, such investment projects are spearheaded by private sector and government becomes a strategic partner in the short-run and pulls out eventually.
This is how the National Investment Strategy (NIS) should be structured.
“For all PPP investment portfolios there’s need to come up with a policy framework defining roles and responsibilities,” advised Dr. Karemera, who promised that the senate would use its powers to enforce this.
On the other hand, we need to look at the capacity of private firms to partner in such mega PPP projects. The PSF CEO promises that the federation is yet to establish a center for corporate governance to instill principles of good corporate governance among companies to enable them take up such opportunities.

Public sector fighting private sector
There are a number of cases where some public institutions, instead of performing their cardinal role of facilitating or partnering private sector to flourish, they instead went on loggerhead with them acted unfair to them.
For instance following the privatization of the turnery factory at Nyabugogo, Rwanda Environment Management Authority (REMA) closed it a few months later on grounds of lack of a sewage system. One wonders why REMA could not close it when it was still in government hands. Despite pleas by the investor to be allowed time to install a modern sewage plan, the regulator turned a deaf ear.  In the long dragged Kigali City Park case where again REMA closed it on grounds of being established in a wetland, His Excellency the President directed stakeholders to compensate the investors expeditiously to mitigate losses caused due to cancellation of the project.
According to Eugene Nyagahene, a partner in the project, partners lose Rwf1million everyday in terms of bank loan interests and depreciation of equipment on site. The project was closed in 2007, so one can imagine how hefty the loss has accumulated todate. Meanwhile, a committee instituted to iron out this issue is taking ages. 
A high level government decision was made to transfer business registration services in the country to PSF, of course after assessing how more efficient the process shall become….through the federation network of the BDS centers across the country and the modern business registration software. Rwanda Development Board (RDB), an institution falling under the Trade and Industry Ministry (MINICOM) is opposed to this high level decision—wasting people’s time and resources and delaying  the process.
The question is: from where do such institutions take orders? Are they trying to become independent governments? If not, then they ought to learn taking orders coming from their line ministries.
   Senator Gasamagera observes that among all economic initiatives the Committee has visited in the countryside, the ones elaborated jointly between PSF and government are doing well compared to those run solely by government institutions. He cited BDS, PIC and Trade Point program among others.
Joy Ndungutse, CEO, Gahaya links observes that some government institutions compete with private sector and end up duplicating projects of business people and shamefully even fail to deliver results. She mention ed how some government institutions are busy establishing handcraft centers allover the country and Kigali city center…imitating her company initiatives.
“Government is duplicating what private sector is doing and failing on them because they are not business oriented. We need to create a platform that brings together stakeholders to agree on PPP projects,”
Hategeka observed that duplication of roles and responsibilities is a sign of poor planning and lack of sense of direction by some government institutions.
Magerwa is a bonded warehouse with majority government shares. Its management went down to Rusizi, Western Province and constructed a big warehouse in the spirit of bringing their services closer to the business people. But because the investment was not embraced by the private sector, in the area it is vacant, operating at below capacity. It is now referred to as a “white elephant” The Prime Minister recently intervened and tasked MINICOM and PSF to find a solution to the warehouse.
 Part of the problem is that some public institutions which are critical to national economic development are entrusted with people with no feel for business and have never been business people before or even studied business.
Senator Dr Karemera promised that they would use proper channels to propose a national seminar of stakeholders of PPP to iron out pertinent issues. And Senator Gasamagera proposed to PSF to lead the process of coming up with a policy on PPP which can be tabled by stakeholders.

Ends

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