Corporate and Government Partnering (PPPs and other formats) for Societal Impact by Alex A. Okoh from The Kingdom Summit 2017.

1. 2017
Alex A. Okoh
Corporate and Government Partnering
(PPPs and other formats) for Societal
Impact

2. Outline
• Introduction
• Infrastructure in Nigeria
• The Public Private Partnership Model
• Potential Societal Impact of PPPs
• Conclusion
#tks17

3. Introduction
• Infrastructure and Urban development in Sub-
Saharan Africa (SSA) remain slow paced compared
to the level of deficit across the continent.
• In Nigeria in particular, while both public and private
participation in investments are on the rise, years of
poor domestic savings necessitates significant
infrastructure spending from all stakeholders, which
should be supportive of job creation and GDP
performance over the medium to longer term.
#tks17

4. Infrastructure in Nigeria
#tks17
 According to the Nigerian Industrial Revolution Plan, Nigeria currently
has an infrastructure deficit estimated at $100bn per year. This dearth
in infrastructure has in turn limited human capital development, urban
development and economic growth.
 Research on more developed economies shows that infrastructure
investment of 1% of government funds would result in an equivalent
increase in Gross Domestic Product (GDP), highlighting the correlation
between infrastructure development and economic growth.

5. Infrastructure in Nigeria
#tks17
The value of infrastructure development cannot be overemphasised. A
report from the Infrastructure Concession Regulatory Commission
(ICRC) showed the following required investment in the Oil and Gas,
Power and Transportation sectors:
Some other sectors that require investments include; housing and
highways, ports, airports, dams, bridges and tunnels, water and
telecommunication.
”The total amount of
funds required to
provide quality
infrastructure in
Nigeria over the next
six years is about
$100 billion per year”
- ICRC
SECTOR AMOUNT
Oil and Gas $60 billion
Power $20 billion
Transportation $35 billion

6. The Public Private Partnership
Model
#tks17
Public–Private Partnership (PPP) : a contractual
relationship between public (governments) and private
entities (companies, foundations, academic institutions or
citizens) in the context of infrastructure and other services
for a considerable period of time (fixed period or perpetuity).
This model affords the private sector the opportunity to play
a vital role in financing, building and operating infrastructure.

7. The Public Private Partnership
Model
#tks17
PPP Fundamentals;
 Shared risks; Involves sharing and transferring of risks and rewards between
public sector and the partners.
 Shared goals: Attempts to utilise multi-sectoral and multi-disciplinary
expertise to structure, finance and deliver desired policy outcomes that are in
public interest.
 Shared resources: It aims to leverage private sector expertise and capital to
obtain efficiency gains in service delivery and asset creation.
 Shared benefits: Profits are shared between parties. However, under the
typical PPP model, the Governments ultimately retains control of
assets/businesses.

8. PPP Options
• Service Contracts: Public sector employ private
sector to assist in running certain services.
• Management Contracts: Private sector takes over
management of part/all of a service.
• Leases: Private sector builds a facility and operates
it for a given period.
• Concessions: Public sector passes full responsibility
for operations and investment to the private sector.
#tks17

9. PPP in Nigeria
#tks17
 Nigeria has gradually shifted towards creating a conducive,
transparent, and competitive environment for foreign investments.
As such, we have seen significant offshore and local interest in
partnering with the Government (both at federal and state levels).
 While there is yet significant room for improvements, recent moves
by the government such as the planed concessioning of the federal
airports are indicative of a gradual shift towards more private
involvement, and a radical improvement in infrastructure networks.

10. PPP in Nigeria
#tks17
• Multilateral Investors
• Institutional Investors
• Commercial Banks
• Federal Governments,
• State Governments
• Municipal Governments
• MDAs
PPP

11. Accelerating PPP Investments
in Nigeria
#tks17
Given that Infrastructure development will play a critical role in promoting
economic growth, an enabling environment must be created to capture
investor interest:
Fair and
Transparent
bidding
process
Standardized
Structures
Contract
Enforceability
Strong Project
Economics
Capable
Transaction
team
Political Will/
Commitment
Investors are likely to
participate if the process
meets the following
criteria

12. Accelerating PPP Investments
in Nigeria
#tks17
While the PPP landscape in Nigeria is in the evolutionary phase, Nigeria
offers investors a vast range of opportunities :
Attractive
Returns
Strong Growth
Prospects
Preferred
African
Investment
Destination
Largest African
Economy

13. #tks17
Potential Societal Impacts of PPPs
#tks17
• Infrastructure development will
play a critical role in:
– Promoting economic growth,
– Improving standard of living,
– Poverty reduction,
– Enhancing productivity
– Improving competitiveness in the
country.
• There is a direct correlation
between infrastructural
investment and economic growth
and development, adoption of the
PPP model will facilitate much
needed investment and open up
the economy which is critical for
small businesses and overall
social well being
• Given Nigeria’s recent
experiences and the current
state of its finances, the PPP
option is one to pursue in order
to foster economic growth and
social development
• A shift in focus from debt
financing to PPP (the nation’s
debt service to revenue stood at
c.40% in H1 2017) to meet its
capex will put less pressure on
the government’s finances.

14. #tks17
Potential Societal Impacts of
the PPPs
• Less pressure on government
finances will lead to a re-
allocation of government
resources to other key sectors
of the economy that are
socially imperative:
– such as healthcare, education,
etc. and encourage the private
sector to be the engine room of
economic growth and
development, leading to
operational efficiencies in the
projects that are being run via the
PPP model and job creation
opportunities.
#tks17

15. Conclusion
In order to continually attract PPP investments, different stakeholders
are working together to attain specific improvements in the operating
environment.
Key objectives include:
 Creating appropriate financing vehicles to enable the federal, states and local
governments in the country achieve the objective of infrastructure development.
 Delivering an enabling institutional/regulatory environment with set guidelines
for PPP coordination, capacity building, legal issues etc.
 Designing appropriate project delivery models (project structure, financing
structure, appropriate mix of debt - senior debt, subordinated debt , equity,
etc.) for the different PPP transactions to be undertaken.
#tks17

16. 2017
Alex A. Okoh
Corporate and Government Partnering
(PPPs and other formats) for Societal
Impact