International Journal of Pure and Applied Mathematics

Volume 118 No. 20 2018, 909-922

ISSN: 1314-3395 (on-line version)
url: http://www.ijpam.eu
Special Issue
ijpam.eu

Accelerating Development in Ethiopia – The PPP Way: Lessons from India

Dr. Sk.Shahid Saheb
Assistant Professor, Department of Public Financial Management
Institute of Tax and Customs Administration
Ethiopian Civil Service University, Addis Ababa, Ethiopia

Dr. Gnanaprakasam Chinnappan

Associate Professor, Department of Public Financial Management
Institute of Tax and Customs Administration
Ethiopian Civil Service University, Addis Ababa, Ethiopia

V. Arunkumar
Assistant professor, Department of Training & Placement,
SASTRA Deemed University, Thanjavur, Tamilnadu, India

Abstract
Ethiopian Government continues to spend on large infrastructural projects – hydro-power
facilities, telecoms and road and rail networks – which form part of the highly ambitious five-
year Growth and Transformation Plan. However, there are genuine concerns that the high level
of public spending – the third highest in the world – are crowding out the private sector and
contributing to macroeconomic difficulties including foreign exchange shortages, increasing
external debt and inflation. Even the IMF has urged the government to reconsider the scale of
infrastructure investment. Literature review suggests that the combined effects of new public
management and good governance with globalization playing a catalytic role have resulted in
change in the focus from administration to management, limiting the role of the government
from provider to facilitator and coordinator. Experiments in new models of administration,
wherein the advantages of public administration and the efficiencies of the private management
would be combined, are being tried. One such relatively new model is Public-Private Partnership
(PPP), which offers a blend of the coercive power of the state, large clientele base of the public
administration together with the managerial efficiency of private (business) administration.
Although, there is a great deal of talk about how the private sector could work with African
governments to fill the huge infrastructural gap, very little in terms of regulation is actually
happening. India on the contrary has institutionalized the idea of PPP almost twenty years ago
and has also gained substantially in terms of improved economic growth and infrastructural
development. This paper focuses on the need to expand the idea of PPP for accelerated
development of Africa, in general, and Ethiopia, in particular. In Ethiopia, PPPs are in infancy
stage and presently occur in an institutional vacuum. It is, therefore, proposed that a dedicated
institutional capacity, on the lines of India be created for Ethiopia.

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International Journal of Pure and Applied Mathematics Special Issue

Keywords: PPP, India, Ethiopia

I. INTRODUCTION
The evolution of public administration saw emergence of a number of issues and one of this
was the public private dichotomy. The scholars and practitioners of the discipline were of the
view that the spheres of public organization were different from that of their business counter
parts. The private firms practicing principles of management were thought to be unsuitable for
the people at large. But with an increasing gap in the demand and supply of public utilities,
alternatives were sought. The trio of Liberation, Privatization and Globalization (LPG)
compelled the countries to opt for change. Consequently, a new model of public sector
management christened as new public management1 emerged. Public Private Partnership (PPP)
is the outcome. Most countries across the globe welcomed the idea. A few developed countries
like UK and USA, as early as 1980s. A few developing countries like India in the 1990s. Again a
few among them have stated encashing the PPP concept and a few others have given a serious
thought but yet to make tangible start .
India has witnessed a high economic growth in the last few years. However, lately it has been
facing strong headwinds with growth rate declining from 9 plus to around 7%. Many reasons
have been attributed to the slowdown in the economy and lack of adequate and quality
infrastructure is undoubtedly one of them. Both federal and provincial governments have been
taking number of measures with varied success. Public Private Partnership format, with its mixed
success across the globe, has been acknowledged as an essential tool for focused private sector
investments in economic and social infrastructure projects. 2
The Ethiopian economy has shown an average 10% growth rate between 2003-04 and 2009-
10.3 The country has implemented two major macroeconomic programmes as the third one is
near completion. The programmes are 1) Sustainable Development and Poverty Reduction
Programme (SDPRP) form 2002-03 to 2004-05, 2) the Plan for Accelerated and Sustainable
Development to End Poverty (PASDEP) from 2005-06 to 2009-10 and 3) Growth and
Transformation Plan (GTP) from 2010-11 to 2014-15. The country has also implemented
different major public investment projects. The number and type of projects are extraordinary,
and significant achievements have been recorded. However, considerable weaknesses have also
been observed. This paper seeks to identify some of these weaknesses and proceeds to suggest
that PPP may accelerate its development process.
Researchers and academicians have mostly presented the South Korean model of PPP for
Ethiopia to follow. In this paper the authors present the Indian model of PPP as another option

1
Hussain M.Ali, Good Governance through e-Governance: Reflections from Andhra Pradesh and Kerala, VL Media Solutions, New Delhi,2013
p.5
2
Agarwal, A. Krishna, Accelerating Public Private partnerships in India, FICCI and Ernst and young, New Delhi,2012

3
Ministry of Finance and Economic Development of Ethiopia (MoFED) 2011, Annual Report on Macroeconomic development, 2002EC
(2009/10) as quoted by (13)

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for Ethiopia, more particularly in the areas of legal framework and institutional mechanism. The
urge for inclusive accelerated growth at an accelerated pace is common for both the countries.
This paper is primarily based on secondary data, mostly on the empirical research works
carried out by eminent scholars. Remaining part of this paper is organized as: Section II is on
Public- Private Partnership. Section III is on PPP in India. Section IV is scenario in Ethiopia and
section V is conclusion and suggestions.

II. PUBLIC PRIVATE PARTNERSHIP

Under the impact of powerful domestic and international forces and new conceptualizations
of administrative reality public administration today is more concerned about explaining
diversity, complexity and interactivity. Globalization and opening up of the economy is a reality
now. The earlier role of exclusivity is no longer being accorded to the state and government. In a
complex state-society relational situation, the focus has been shifting more and more toward
society. Networking with other organizations, rather than exclusivity of government, is what is
happening in the practicing world of governance4. Experiments in new models of administration,
wherein the advantages of public administration and the efficiencies of private management
would be combined are being tried. One such new model is Public Private Partnership (PPP)
which offers a blend of the coercive power of the state, large cliental base of the public
administration together with the managerial efficiency of the private (business) administration.
The concept of PPP refers to a legal, formal agreement for collaboration between a public
authority, i.e., a government department, or a public sector enterprise at central or state or local
level on the one hand, and a private entity in the market, on the other, for some purpose either
supply of a particular public service or improvement of urban conditions, on agreed terms and
conditions. The private sector partner can take any one of the forms an industrial/business
enterprise, venture, company, firm or a NGO or a foreign government a company or
multinational corporation, a consortium5.
It may be mentioned that PPP does not reduce responsibility and accountability of the
government. The government remains accountable in service, quality, price certainty and cost
effectiveness; in fact the role of the government gets redefined as one of facilitator, and enabler,
while private sector plays the role of financier, builder and operator of service. under PPP
approach the skills, expertise and experience of both public and private sector get combined to
deliver higher standard of service to the consumers. The public sector contributes assurance in
terms of stable governance, citizens’ support, financing and also assumes social, environmental
and political risks. The private sector brings along operational effectiveness, innovative
technologies, managerial effectiveness, and access to additional finance and generally bears
construction, commercial and operational risk of the project.

4
Bhattacharya, Mohit, New Horizons of Public Administration, Jawahar publishers and Distributors, New Delhi, 2007 P.rii

5
Bava, Noorjahan, Public Private Partnership in Public service and Development: A conceptual and Empirical framework, India journal of Public
Administration, Vol. LIV, No.3 July-September, 2008 P.Go3.

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According to Paolok Urio PPP may be integrated in the development strategy to build a
society that improves the attainment of the four values, namely-efficiency, equity, sustainability
and security. Further, he has identified three interrelated factors/levels which facilitate PPP
implementation in development, namely: strategic, contextual and operational. Strategic factors
has two components a) polity (political system) -- political will of incumbent political leadership
and b) public administration -- prevalence of transparency and accountability. Contextual
elements, include, among others, nature of development policy (tilt towards PPP).
Operational level include: a) the legal and institutional framework and b) dedicated PPP
agency/institution.6

III. PPP IN INDIA

The government of India (GoI) has been focusing in the development of enabling tools and
activities to encourage private sector investment in the country through PPP to bridge the
financing gaps in the provision of public assets and services.
The extent to which the GoI envisages a significant role to PPP in improving the level and
quality of economic and social infrastructure services is increasingly evident from the growing
reliance on the PPP model in the recent past.

Evolution
The first example of PPP in India is that of great Indian Peninsular and Railway company
(1853) followed by the Bombay Tramway Company’s tramway services in Mumbai (1874).
However, post-1991 saw more development due to more liberal economic policies). During
1991-2004 86 PPP projects worth INR 340 billion were awarded. Most of the projects were in
bridges and roads sector. After 2006, due to favorable reforms and innovative PPP structures,
number of PPPs rose to 758 costing INR 3,833 billion (as a July 2011).
Roads comprised maximum of 53.9 %, followed by urban development 20.1%, ports 8.0%.,
energy 7.6% and tourism 6.6%. Four other sectors together had 4.5% share.7

6
For a detailed study see, Urio, Paolok, ed. Public Private Partnerships: Success and Failure Factors for In-Transition Countries, Lanham, and
University Press of America.
7
Accelerating Public Private Partnerships in India, FICCI and Ernst and young, New Delhi, 2012

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Figure:1 Composition of PPP Projects

Source: PPP India data base FICCI –Ernst and young report 2012 Accelerating PPP in India,
India PPP Summit ,2012)

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India’s Infrastructure and PPP8

In India the gap between the demand and supply of infrastructure is rapidly increasing
mainly due to inadequate investment of governments both at the national and sub national level
over the long period of time owing to the present skyrocketing demand caused by globalization,
urbanization and population growth. India’s total infrastructure investment requirements was
about INR4000 to 4500 billion (US$ 115 to 130 billion) (1996-2000) and about INR7500 billion
(US$ 215 billion) for 2001-02 to 2005-06 (Rakesh Mohan 1996). Further, Planning Commission
estimated for Eleventh Plan (2007-12) US$ 512 billion and Twelfth Plan (2012-17) US$ 1000
billion. This infrastructure investment requirement accounts for 8 to 9 per cent of GDP per
annum.
Till late 1990s governments both at centre and state levels have played a major role in the
infrastructural development due to the natural monopoly characteristics of infrastructure projects.
Conventional methods of infrastructure provision include complete public sector provision and it
largely focuses on social welfare aspect and thus offers the advantage of inclusive provision of
infrastructure. However, India is currently under infrastructure inadequacy stress due to
inadequate public investment leading to infrastructure bottlenecks in the process of development.
In addition there are issues such as time and cost overruns of the projects, poor maintenance,
capital inadequacy, archaic labour laws and technological constraints acting as major obstacles to
this conventional method of provision of infrastructure services. Economic reforms launched in
the decade of 1990s are creating conducive environment for private sector participation.
The rapid growth in the private sector investment form a 20 percent level of the total
infrastructure investment in the Tenth Plan (2007-12) to 30% reveals evidence for and positive
response of the private sector. This is further expected to increase to 50% of total infrastructure
investment in the Twelfth Plan (2012-17). Infrastructure investment as percentage of GDP for
the period of 2002 to 2017 is presented fin Figure1. The investment in infrastructure in the
country before this reference period was extremely small.

9
8.41 8.38
7.62 7.95 Total
7.36 6.84 6.9 7.21 7.4
5.66 5.2 5.43 5.99 6.32 Private
4.68 4.22 4.96 Public
4.39 4.27
4.86 4.6 4.41 4.57 4.51
4.85 4.31 4.33 4.64 4.92
3.73 2.49 2.64 2.86 3.23 3.67 4.15 4.04
0.81 0.88 1.11 1.36 1.4 2.05 2.24
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Figure 1Infrastructure Investment as Percentage of GDP

8
Nagesha, G. and Gayitri, K., A research note in Public – Private Partnership of India’s Infrastructure Development, Journal of Infrastructure
Development, 6,2 (2014): P P 112 and 113.

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Source: Adapted from Nagesh G and Gayithrik, a Research Note on the PPP of India’s
Infrastructure Development, based on compilation from various plan documents, Journal of
Infrastructure Development 6,(2)(2014):111-129, Sage publications.

Major Policy and Institutional Initiatives taken:

Government has pronounced many measures including PPP policies to promote PPPs in the
country both at the central and state levels. Some of the important measures are: PPP cells are set
up both at central and state levels, which are expected to streamline the various infrastructure
projects. Government has also instituted India Infrastructure Finance Corporation Limited
(IIFCL) for innovative and cost effective provision of financial support. Further, government
announced Viability Gap Funding (VGF) scheme for economically unviable but socially
desirable projects. High powered committees like Cabinet Committee on Infrastructure (CCI)
and Public-Private Partnership Appraisal Committee (PPPAC) for quick decision making and
project approvals are constituted to further fortify the growth of PPPs in the country. Model
concession agreements for hassle free transparent long-term contracts, publishing of various
sector-wise standard documents by the planning commission and other initiatives are also put in
place.
Draft National PPP Policy9
In the light of growing PPP trends and policy/institutional intervention, the GoI feels it is
imperative to have in place a broad policy framework. Following the Finance Minister’s budget
2011-12 speech to come up with a comprehensive policy, the Ministry of Finance drafted a
National PPP policy for soliciting suggestions. The draft National PPP Policy proposes to focus
on assisting Central and state Government agencies and private investors by:
 Undertaking PPP projects through streamlined processes and principles
 Ensuring adoption of value for money approach through optimization of risk-return
allocation in project structuring.
 Developing governance structures to facilitate competitiveness, fairness and
transparency.
 Attaining apt public oversight and monitoring of PPP projects.
Prominent features of the proposed National PPP policy:
Critical Interventions:
 The GoI plans to formalize PPPs as preferred implementation models based on the
existence of strong track record for those models. It has laid down strong procedures to
procure a PPP project. In order to instill transparency in PPP, it will publish separate
mandatory disclosures and fair practices, set up dedicated dispute resolution mechanism,
develop new market-based products (e.g., pre-bid rating), and explore possibilities of
setting up web-based PPP market place.

9
www.ppindia.com, Draft National PPP Policy Ministry of Finale, Government of India, New Delhi (Accessed May 1, 2015).

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The PPP Process:

 The PPP Process should comprise four phases as given in figure 3
Development stage Procurement state PPP Contract management
PPP Consists of project preparation Consists of and monitoring stage
(including technical feasibility procurement and Consists of project
Identification stage consists of
and financial viability analysis). project award implementation and
strategic planning, project
Project structuring, preparation monitoring over the life of PPP
prefeasibility analysis, value for
of contractual documents and project
Money analysis, PPP suitability
obtaining of project clearances
checks, and internal clearances
and approval
to proceed with PPP
development

Figure 3: PPP Process Source: Adapted from Accelerating Public Private partnerships in India,
FICCI and Ernst and Young, New Delhi, 2012

MIS and Institutional Structure:

 The GoI is likely to establish Management Information System (MIS) for
continuous monitoring of the performance of PPP projects.
 The development of a sustainable PPP program requires a strong and well
defined institutional structure:
o Supporting the creation of nodal agencies such as PPP Cells at the state of
sector level.
o Laying down of appraisal mechanism for PPP projects by the PPP Appraisal
Committee (PPPAC).
Creating Enabling Environment for PPPs:
 GoI has a progressive financial support system for PPP projects. Some of the
key initiatives include India Infrastructure Project Development Fund (IIPDF),
Viability Gap Funding (VGF), resources for annuities/ availability-based payments,
long tenor lending, re-financing facility, infrastructure debt funds, etc. the GoI will
provide legislative and policy support to develop equality, debt, hybrid structure and
appropriate credit enhancement structures.
 The GoI will undertake capacity building interventions to develop
organizational and individual capacities for identification, procurement and managing
PPPs.
 The PPP Cell in Department of Economic Affairs will have professionals who
provide competencies and technical support to the ministries and other authorities
developing PPPs.
Summation
The preceding lines illustrate the supportive role played by the government
which has a positive impact in the growth of PPPs. It also suggests that the government is not
content with what it has already done to encourage PPPs, but has a strong urge to make things
more favorable. More importantly, there is a political will equally supported by the public
administration – Continuous efforts towards good governance including transparency (Right to
Information Act) and accountability. The development policy does incorporates PPP. The legal
and institutional framework together with a dedicated PPP agency is in place and efforts are
being made to further strengthen them.

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IV SCENARIO IN ETHIOPIA
Demand for public services in the Sub-Saharan African countries is increasing continuously due
to the improvement in governance and (increasing) awareness in the region. However, poverty,
lack of basic infrastructure and industrial development and continuously hindering the ability of
the nations to meet this demand. This is exacerbated by a lack of transparency, lack of legal and
financial frameworks, and poor capacity in managerial and technical expertise.10Ethiopia, one of
the sub-Saharan African economies, has fast population growth and high public service demand.
Many countries across the world, including African, are opting for PPP arrangements to
minimize the gaps, between demand and supply, at an accelerated pace. The contextual
background needed to understand the nature and complexity of PPP in Ethiopia is discussed
under three sub-heads, namely: a) Privatizing Public Sector Undertakings,
b) Governance of Public Investment Projects and c) Public-Private Partnership.
a) “Privatizing Public-Sector Undertakings”11
Privatization is a complex programme that needs a through preparation and a comprehensive
plan for accurate processing and implementation. For governments in many developing
countries, privatization is considered not only a transformation of Public Sector Undertakings
(PSUs) into private ones, limited to a structural adjustment programme , but also a transition
form socialist command economy to markert-oriented economy.

Ethiopia began the privatization programme in 1991. The country established an agency called
the EPA in 1994, as the lead agency in carrying out the process of privatization of PSUs
(Proclamation No.87/1994) . It yielded $433.7 million during 1994/95 – 2003/04. Of the total
proceeds, 88.07% were collected during the first phase(1994/95-1998/99) and 11.93% in the
second phase (1999/00 – 2003/04). The size and pace contributed negatively, and brought the
privatization programme to stand still.

Another law was enacted (proclamation No.146/96)12 to provide guidelines for implementing
privatization, particularly on the objectives of the programme, pre-privatization activity etc. Until
this enactment privatization was based on trial and error process. Gap of four years to come out
with a corrective measure did not do much good. As much of the momentum was already lost.
Research suggests that the autonomy of the ―Agency|‖ was not to the optimum and the personnel
lacked experience and training. Further, certain policy issues that needed to be resolved before
privatizations, for example, acceptable level of foreign participation, were missing and
eventually the buyers response was far from satisfactory. Competitive market and business

10
Gidado, K., A model for PFI implementation is Sub Saharan Africa – Nigeria as a Case Study. Proceedings of the third international world of
construction project management conference, 2010, pp. 110-120 as quoted by Shiferaw T. Asmamaw, Klakegg, J.ole and Haavaldsen , Tor in
Governance of Public investment projects in Ethiopia, Project management Journal, August 2012, Published online wiley online library.

11
Selvam, Jesiah., Transformative issues in privatizing public sector undertakings: a case study of Ethiopia, International Journal of Regulation
and Governance 8(1): PP1-30

12
Proclamation No. 146/1998: A proclamation to provide for the Privatization of Public enterprises, Negarit Gazetta of FDRE, Addis Ababa, 29th
December 1998.

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environment, an appropriate and obstacle-free legal framework, an independent agency,

systematic and transparent procedures were wanting and therefore privatization of public sector
undertakings did not go to the way it was desired to be.
Public Investment Projects13

In Ethiopia, private sector services are not developed enough to satisfy the needs and the
demand for public services. To meet these high demands of the public, the Ethiopian government
has been planning and implementing public investment projects. However, different studies at
the Ministry of Finance and Economic Development (MoFED, Government of Ethiopia)
indicated the lack of system to check the links between the project objectives and the
government strategies and wastage of resources and redundancy of projects,14To minimize the
wastage of resources and to eliminate redundant projects MoFED has tried to revise the system
and adopted tools to appraise, monitor and evaluate public investment projects. Moreover, these
public investment projects are criticized for not being the priority of the public and for not
generating enough additional government resources to cover their running and maintenance
costs.

The empirical research study concluded that the society’s priorities were ―unknown,
misunderstood or ignored‖ as the most important problem leading to lack of relevance in major
public investments of Ethiopia. The study further identified lack of commitment to the project
from key stakeholders, as the most important problem for a lack of sustainability in public
investment projects of Ethiopia.
This apart, the majority of the projects in different sectors have objectives consistent with the
development strategy of the country. However, the objectives of these projects are stated
ambitiously, and the achievements are believed to be below the initial plan. For instance, for the
Growth and Transformation Plan (GTP)—The Government designs a highly ambitious plan.
Several public investment projects are planned as part of this strategy, but these projects are
highly dependent on foreign capital (loan and development aid). The projects exceed the
countries technical and financial capacities.
According to the research study, MoFED which is theoretically responsible for appraisal projects
and evaluation of project concepts appears powerless to control the project preparations and
development process. The ministry has a shortage of experts and there is lack of coordination
between its different units. The link between MoFED and the sectors is also week, as the
majority of projects are selected and evaluated by the sectors themselves. The study observes
that the governance of public investment projects lacks (desirable) effectiveness.

13
Shiferaw T. Asmamaw, Klakegg, J.ole and Haavaldsen , Tor in Governance of Public investment projects in Ethiopia, Project management
Journal, August 2012, Published online wiley online library.

14
Ministry of Finance and Economic Development of Ethiopia [MoFED], system of development projects preparation, approval and evaluation,
Addis Ababa, Ethiopia

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c) Public-Private Partnership15
Three interrelated factors/levels which facilitate PPP implementation, as identified by Urio
(2010) and as discussed in the section entitled ―Public-Private Partnership‖, are discussed in the
following lines in the Ethiopian context.
i) Strategic Level Conditions: A few policy documents and development plans and relevant
proclamations indicate that the government is willing to involve private and civil society sectors
in development projects. For instance, the Growth and Transformation Plan document clearly
states that the private and civil society sectors are expected to work with government in
partnership in telecommunication and health sectors (MoFED 2006 p 121-144). Moreover, the
Investment Proclamation No.769/2012, Article 6/9 stipulates the possibility of ―investments to
be undertaken with the government‖. According to this law, the Ethiopian Investment and Public
Enterprise Supervising Agency and Ministry of Industry are given the mandate to receive
investment proposals from any interested private investor intending to invest jointly with the
government and designate a public enterprise to invest as partner in the joint projects,
respectively. These references do suggest that there is a political will. However, the international
support or influence on PPP adoption is not impressive.
ii) Contextual Level Conditions: The country’s geographic location and availability of mineral
resources are believed to be suitable for PPP expansion and development. Further, the
infrastructural development and expansion trend in the country, particularly the ongoing
hydroelectric dam construction, railways and road construction for transportation and telecom
expansion for communication facilities can together be conducive contextual conditions for PPP
in Ethiopia. However, PPP is not taken as a development strategy.
iii)Operational Level Conditions: Legal Framework: Three documents which are important
in the PPP context, namely:
Investment Proclamation No. 280/2002, Investment Proclamation No.769/2012 and privatization
of public enterprises amendment proclamation 182/1999 find no mention of PPP. However,
definition of PPP is found in the Ethiopian Federal Government Procurement and Property
Administration Proclamation No.649/2009 [Article 2 (27)]16
Institutional Framework: The institutional arrangement prevalent to accommodate a proposal
proactively initiated by a potential partner who is interested to engage in PPP with government is
through Public Enterprise Supervising Agency and Ministry of Industry. Beyond this
arrangement, there is no PPP dedicated public organization/ agency with a mandate to regulate,
manage and oversee the implementation of PPP in Ethiopia.

15
Tadesse, Teshome , Potentials of PPP for Development in Ethiopia: Assessing Policy, Legal and Institutional Framework and Favorable
Factors, Doctoral Thesis, School of Graduate Studies, Ethiopian Civil Service University, Addis Ababa, Ethiopia 2014.

16
Proclamation No. 649/2009 Procurement and property Administration, FDRE, A.A.

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Research Survey Observations:

 Ethiopia should a have policy in which PPP is considered one of the development
strategies.
 There is positive attitude towards the willingness and capacity of the private and civil
society sectors to get involved in PPP projects.
 The country should have a PPP dedicated legal framework with specific laws, regulations
and procedures for PPP implementation in the development process.
Based on his doctoral research survey, Tafesse (2014) has identified 26 potential favorable
investment project areas to be open for PPP in Ethiopian development process. These include:
Road construction, hydroelectric dam construction, training and consultancy service, urban waste
management service, higher education, telecommunication service, heavy industrial service,
sugarcane plantation and sugar factory, tourism, mining, airports and railways.
V CONCLUSION AND SUGGESTIONS

To sum up, Ethiopia’s plan to privatize public sector undertakings did not give the desired results.
This is partly due to non-availability of clearly laid out legal framework and institutional mechanism
and partly due to absence of investment culture and stock market. There are also some short-
comings, in the governance of public investment projects, more particularly pertaining to prioritizing
the needs and compliance with the administrative structures. As such, the option available to private
the existing public sector undertakings, and to attract additional private capital together with its
managerial expertise is the PPP way. However, PPP also has its own limitations, some of which
overlap with those identified with the privatization of public sector undertakings, such as absence of
legal framework and institutional mechanism. Further, PPP, like public investment projects, need to
have detailed, realistic (not ambitious) and prioritize projects with well defined administrative
structures.

Suggestions given in the following lines are largely based on the aforementioned limitations.
Certain ideas have been borrowed from the Indian context. It is because India has been actively
pursuing the PPP model since more than two decades. Ethiopia may follow this pattern, without
going through the exercise of reinventing the wheel.
1. Government may ensure a competitive market and business environment. The culture of
investments in stocks may be inculcated by establishing stock market and incidental
administrative mechanisms and legal framework, in a holistic manner.
2. Create single window, independent structure with systematic and transparent procedures.
3. There is need of specific information policy wherein all bid documents, feasibility reports and
current status of PPP projects are published on a dedicated portal.
4. There is need for capacity building at all the three levels of governance to take the responsibility
of creating awareness, and wherever required , the services of technical and financial
consultant(s) for training of the staff may be taken
5. To develop PPP projects, the services of professional consultants may be taken. Generally, the
consultant’s fee is a small proportion of the project cost and value addition from a good
consultant could be much higher.
6. PPP projects may be prepared in a detail manner by the concerned development authority with
effective distribution of responsibility, costs and risks.
7. For selection of private partner, the focus may not restricted to highest financial bids. The
authorities may evolve a policy on selection methods to take into consideration multiple factors.

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8. A comprehensive National Policy on PPP is needed. A PPP policy may be drafted and put on
public domain to seek suggestions.
9. Issues concerning privatization of public sector undertakings, improvements in governance of
public investment and PPP can’t be addressed in isolation. They require a holistic approach with
far reaching direct and indirect consequences to be taken into account. As such, there may,
perhaps, be a need to overhaul the administrative structures which may require the expertise of
professional consultants.

References
1.Agarwal, A. Krishna, Accelerating Public Private partnerships in India, FICCI and Ernst and
young, New Delhi,2012
2.Bava, Noorjahan, Public Private Partnership in Public service and Development: A conceptual and
Empirical framework, India journal of Public Administration, Vol. LIV, No.3 July-September, 2008
P.Go3.
3.Factors for In-Transition Countries, Lanham, and University Press of America.
Accelerating Public Private Partnerships in India, FICCI and Ernst and young, New Delhi, 2012
4.Gidado, K., A model for PFI implementation is Sub Saharan Africa – Nigeria as a Case Study.
Proceedings of the third international world of construction project management conference, 2010,
pp. 110-120 as quoted by Shiferaw T. Asmamaw, Klakegg, J.ole and Haavaldsen , Tor in
Governance of Public investment projects in Ethiopia, Project management Journal, August 2012,
Published online wiley online library.
5.Infrastructure Development, Journal of Infrastructure Development, 6,2 (2014): P P 112 and
113.For a detailed study see, Urio, Paolok, ed. Public Private Partnerships: Success and Failure
6.Ministry of Finance and Economic Development of Ethiopia [MoFED], system of development
projects preparation, approval and evaluation, Addis Ababa, Ethiopia.
7.Nagesha, G. and Gayitri, K., A research note in Public – Private Partnership of India’s
Hussain M.Ali, Good Governance through e-Governance: Reflections from Andhra Pradesh and
Kerala, VL Media Solutions, New Delhi,2013 p.5
8.Proclamation No. 146/1998: A proclamation to provide for the Privatization of Public enterprises,
Negarit Gazetta of FDRE, Addis Ababa, 29th December 1998.
9.Tadesse, Teshome , Potentials of PPP for Development in Ethiopia: Assessing Policy, Legal and
Institutional Framework and Favorable Factors, Doctoral Thesis, School of Graduate Studies,
Ethiopian Civil Service University, Addis Ababa, Ethiopia 2014.
10.Shiferaw T. Asmamaw, Klakegg, J.ole and Haavaldsen , Tor in Governance of Public investment
projects in Ethiopia, Project management Journal, August 2012, Published online wiley online
library.
11.Selvam, Jesiah., Transformative issues in privatizing public sector undertakings: a case study of
Ethiopia, International Journal of Regulation and Governance 8(1): PP1-30

Annual Reports

1.Ministry of Finance and Economic Development of Ethiopia (MoFED) 2011, Annual Report on
Macroeconomic development, 2002EC (2009/10) as quoted by (13)
2.Proclamation No. 649/2009 Procurement and property Administration, FDRE, A.A.

Website
1.www.ppindia.com, Draft National PPP Policy Ministry of Finale, Government of India, New Delhi
(Accessed May 1, 2015).

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