Scaling Up PPPs in the Arab World: Institutional Issues, Trends, Policies, and Legal Frameworks – Part I
Successful public-private partnerships (PPPs) can deliver high-quality services to consumers at lower cost than when those services are provided through public investment. Experience suggests that success is more likely in countries with a well-defined institutional framework and strong organizational capability. This structure includes an explicit PPP policy and legal framework, clear processes for project identification and budget allocation, and sound feasibility studies of potential projects—verified by unbiased and rigorous approval processes.
Trends
Together with rising growth rates and increased funding access for infrastructure investments, growing PPP familiarity and experience are boosting their growth across Arab countries. As shown in the chart below, PPI projects are popping up throughout the Arab world and, similar to global trends, most are through greenfield investments. In greenfield projects, private firms or public-private joint ventures build and operate a new facility for the specified period under contract, such as build, lease, transfer; build-operate-transfer; and build-own-operate arrangements.
PPI Projects in the Arab World, 1990–2012
Source: PPI Database (accessed November 2013); http://ppi.worldbank.org.
PPP Policies and Legal Frameworks
To some extent, different PPP approaches are linked with legal traditions based on either civil or common law. Common law systems, such as those in Qatar, Saudi Arabia, Syria, and the United Arab Emirates, tend to favor sector regulations that are more flexible and leave greater scope for discretion. In contrast, civil law systems—in Algeria, Egypt, Jordan, Morocco, and Tunisia—favor general purpose laws.
The degree to which governments have introduced specific PPP policies and laws also varies. Targeted PPP policies in countries such as the UK and South Africa, for example, clarify the roles of PPPs in national infrastructure plans and help guide PPP program implementation. PPP rationales and goals are defined along with guidance on developing PPPs and identifying sectors where they are encouraged. In Egypt, Jordan, Lebanon, and Syria, PPP laws exist or are in the process of being drafted, whereas in Algeria and Tunisia, PPPs are practiced but there are few specific PPP laws.
Generally, most Arab countries would benefit from consolidating PPP legislation and introducing clear guidance to coordinate implementation. In particular, civil code countries would benefit from laws that express sufficient legal authority for PPPs. To be useful, however, such laws must include clear comprehensive provisions and provide overarching legislative guidance. Where needed, secondary legislation should be implemented without delay to avoid uncertainty and reviewed regularly. In Morocco for example, the existing legal framework supports concessions but there is no comprehensive legal and institutional framework specifically applicable to PPPs, which creates some critical gaps in the process.
Julia Devlin is nonresident senior fellow in the Global Economy and Development program at Brookings Institution. She formerly worked as consultant at the World Bank Group and as a lecturer in economics at the University of Virginia. Her focus is economic development, private sector development, energy and trade in the Middle East and North Africa. She holds a Ph.D. in Economics.
