PPIAF injects new life into Senegal's PPPs agenda with an improved legal framework and project pipeline
Senegal has a roadmap, the “Plan Sénégal Émergent,” to achieve middle-income status by 2035. But to get there—and overcome the economic setbacks from COVID-19—Senegal needs more investment in key infrastructure sectors such as energy, water and sanitation, roads and transportation, education, and health. The financing needed is significant for this West African nation of 16.8 million people, with an infrastructure gap equivalent to 3 percent of its $25 billion GDP. However, the PPP program stalled under Senegal’s 2014 public-private partnership (PPP) framework and was in need of modernization and revitalization.
The government of Senegal encountered several challenges in implementing the 2014 PPP framework, including a lack of clear government leadership on PPPs, a fragmented legal framework, and institutions with overlapping mandates. Additionally, weaknesses in PPP project selection processes together with insufficient resources allocated for project preparation prevented the identification and development of quality projects. Recognizing these issues, the Ministry of Economy, Planning and Cooperation (MEPC) assumed leadership of the PPP agenda to reform the PPP program. The government decided to amend the 2014 PPP law and modernize it as well as developing a robust pipeline of bankable projects.
A precursor to success: strong commitment on both sides
Over the course of more than 10 years of supporting numerous countries to deploy successful PPPs, the World Bank has found that client commitment is essential. Specifically, a strong political champion from within the government is needed. For this engagement, Senegal identified the MEPC as the lead institution. It created the Directorate for Finance and PPPs (DFPPP) to provide strategic leadership and it subsequently established the National Support Unit for Public-Private Partnerships (UNAPPP) to support the implementation of the PPP agenda and advise contracting authorities. Throughout the process, the government provided strong cooperation across the different government entities that was essential to move the agenda forward.
PPIAF supported the MEPC in finalizing the PPP law, preparing the decree, and developing the PPP pipeline, which ultimately led to the implementation of key milestones of the World Bank First Equitable and Resilient Recovery in Senegal Development Policy Operation (DPO) conducted jointly with the International Monetary Fund (IMF) that aims to enable equitable growth and sustainably increase resilience of households, firms and fiscal accounts. PPIAF support is also integrated into key World Bank Group operations such as the $125 million Jobs, Economic Transformation & Recovery Program, which received significant input from the IFC and was approved in May 2021. This operation includes a PPP component to further operationalize the PPP Unit and the FAPPP and a PPP fund for project preparation that will be designed under PPIAF technical assistance.
The World Bank’s Country Partnership Framework 2020–2024 places a strong emphasis on private sector development and PPPs. Under PPIAF’s PPP institution building program, the World Bank’s Infrastructure Finance, PPPs & Guarantees (IPG) group has been supporting Senegal through the MEPC on the implementation of a successful PPP ecosystem, including a next generation PPP framework.
PPIAF programmatic support for Senegal is being implemented in three phases:
- Setting the strategic direction for the PPP program in Senegal (2019–2022).
- Implementation of detailed institutional design and piloting the new PPP framework through first-mover projects identified under phase I (2022–2023).
- Scaling up and fully operationalizing the key institutional structures for the PPP framework (2023–2025).
Under Phase 1, PPIAF worked on two parallel tracks to set the strategic direction for the PPP program under a revised legal framework and to identify potential projects. PPIAF provided guidance and recommendations that were drawn from international best practices on institutional design, key policies, and legal coherence and completeness. PPIAF outlined the institutional and funding mechanisms and systems for project identification, preparation, and procurement through which PPPs could be implemented.
The first rounds of support on the legal and institutional front wrapped up over the publication of the new PPP law published in the Official Gazette on March 2, 2021, with its implementing decree signed in October 2022. The law clarified PPP processes and strengthened mechanisms for the efficient development of high-quality PPP projects. The law harmonizes the system of public procurement and expands the scope beyond public payment contracts to include both partnership contracts for public payment as well as contracts for payment by users. The new law introduced provisions regarding the scope, procurement, and implementation of PPPs. In addition to attracting international providers, it also encourages greater participation of national operators in Senegal’s PPPs.
Under the new framework, PPIAF provided capacity building and supported the identification of a robust pipeline of PPP projects in seven sectors, including transport, agriculture, and the social sector, all of which are in line with the World Bank’s Country Partnership Framework 2020–2024. PPIAF then helped the government prioritize PPP projects in line with the country’s development and COVID-19 economic recovery strategies such as the Adjusted and Accelerated Priority Action Plan 2—PAP2A (2021–2023) that were in the most advanced stages of design and could be straightforward to implement. The exercise helped to identify a short list of potential early-mover PPP projects. While these are at different stages of maturation, the DFPPP unit is working to present five potential first movers to the market in the second half of 2022. Further, PPIAF helped establish an action plan for taking those projects forward.
Under Phase II, launched in July 2022, PPIAF will ensure the proper implementation of the PPP framework by supporting detailed institutional design, piloting the new framework for the first-mover projects, and developing tools and guidance materials to support the PPP framework. PPIAF will also support the development of an operating manual for the UNAPPP and the implementation of the PPP support fund (FAPPP). PPIAF will provide capacity building and raise the awareness of stakeholders. The project will strengthen the management of fiscal commitments and contingent liabilities arising from PPPs. Further, as the UNAPPP unit develops procedures for the preparation of infrastructure PPP’s, PPIAF will support the government to identify climate risks and climate-smart investment opportunities.
Under Phase III, which will commence in 2023, PPIAF will support the full operationalization of the key institutional structures for the PPP framework, including funding the proposed PPP support fund.
PPIAF and the DFPPP unit have been working closely, resulting in even greater progress than in prior efforts: “It has been more than just technical assistance. It's a partnership in tune with the ambitions of Senegal's PPP unit,” said Amadou Bassirou Ba, a Senior Project Officer with the DFPPP.
PPPs can help close a large gap in financing, attract more private investment, and accelerate the implementation of Senegal’s roadmap to economic and social development. The support that PPIAF is providing to Senegal through the PPP institution building program will help promote sustainable economic development through the presentation of quality PPPs to the market, which will ultimately improve the quality of life for for the Senegalese.