Regulations for PPPs “need[s] to be improved in most African countries,” says Fezoua in Johannesburg. GE wants to play “a much stronger role” in building African PPPs in 2021, he adds.
Africa is entering what Fezoua expects to be its biggest recession in 25 years. He points to the fiscal strain on governments from COVID-19 and their difficulty in accessing global financial markets as highlighting the urgency for PPP. The danger, he says, is that economic progress made in sub-Saharan Africa over the last five to ten years will be wiped out.
He argues that the challenge for Africa is to find a way to execute a greenfield hospital development through an international investment consortium.
Such a development, he says, would cost hundreds of millions of dollars in debt and equity. PPP partnerships are “efficient way to attract limited resources” from investors.
- More inclusive early-stage collaboration between consortiums including governments, private investors and technology companies such as GE is needed, he adds.
- Blended finance, where development funding is combined with commercial lending, is a “critical necessity, the tool that can help mobilise PPPs,” says Fezoua.
- Fezoua names India and Turkey as countries where GE has been involved in successful PPPs. He is encouraged that the European Bank for Reconstruction Development (EBRD), which has helped finance PPPs in Turkey, is now paying more attention to healthcare in Africa.
- PPPs, he argues, will take on greater political significance in Africa as populations realise that governments won’t be able to finance healthcare through the budget alone.
- Governments are becoming much more open to the idea of PPPs, says Fezoua. He expects to see “impetus” towards such projects in Africa over the next five years.
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Much depends on the currency terms of the partnership. In Turkey, a slump of the value of the lira since 2018 pushed up costs and delayed infrastructure projects. In 2019, Turkey’s government abandoned the PPP model for building city hospitals, which in future will be built from the state budget.
Procurement practise will be another hurdle. According to a World Bank report on the quality of regulatory frameworks for PPPs, best practice in procurement is less likely to be followed in low and low-middle income countries. Sub-Saharan Africa shows the greatest variance in the scores awarded for the PPP procurement phase.
- The lower a country’s income, the lower its scores for PPP procurement, found the World Bank.
- Yet it is precisely lower income countries which have the greatest need for health and power infrastructure.
- Only two out of 10 countries surveyed in Sub-Saharan Africa use a digital procurement system.
During lockdown periods, GE’s scale and local presence meant that it could keep infrastructure running through in-country supply chains, Fezoua says.
- GE’s managers in Africa are 90% Africans, Fezoua says, and most of them working in their own country or sub-region.
- The pandemic has also accelerated the use of digital tools. GE’s “remote-fix” capability for healthcare and power installations has improved during the pandemic, adds Fezoua.
GE has also been able to use Artificial Intelligence (AI) to allow faster standardised diagnoses from X-Rays.
That efficiency is crucial in a continent which still faces endemic tuberculosis and Ebola while being able to muster only 3% of the world total of healthcare professionals, says Fezoua.
Sharing the currency risk will be a key part of selling PPPs to African governments.
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