During a virtual meeting with ministers and entrepreneurs on September 15, 2020, the African Development Bank decided to promote public-private partnerships (PPP) to revive economies hit by the health crisis. However, experience has shown that PPPs, which are supposed to attract private capital, are a lasting burden on State budgets.

Increasingly criticized in the West, public-private partnerships (PPP) are on the rise in Africa. In 2018, the World Bank listed 460 across the continent. South Africa, Nigeria and Kenya were the pioneers of these contracts which now extend to the West: Ghana, Ivory Coast and Senegal. Touted for their supposed efficiency, they in fact increase public deficits while conferring exorbitant advantages on private companies. With the recession caused by the Covid 19 pandemic, their harmfulness could come to light. "The virus will greatly affect PPPs, their users, the private and public sectors for weeks, months or years (1)", warns Mr. David Baxter, of the International Association of PPP Professionals (WAPPP ).

“These partnerships are signed between a private company and a public body, explains economist Romain Gelin, member of the Research Group for an Alternative Economic Strategy (Gresea). They consist in distributing resources, risks, responsibilities and advantages between these two actors and, in theory, in reducing the budgetary constraint for the State. They often take the form of contracts for the construction, maintenance and operation of public facilities (roads, hospitals, airports, power stations, railways, etc.) for a period of twenty to thirty years. The public user pays rent from the reception of the work and throughout the concession, at the end of which he recovers ownership of the property.

The international financial institutions, the main donors, but also the regional organizations make PPPs the engine of African growth, in particular to quickly achieve the Sustainable Development Goals set by the United Nations. “Over the past fifteen years, explains Mr. Nick Dearden, head of the Global Justice Now network, development funds have been used to encourage the private sector to invest in the poorest countries. Rather than directly helping them create public services or collect taxes from the multinational corporations already working there, the idea has been to use public money to make the environment "more conducive" to the investment of capital. Public-private partnerships have multiplied, doing what they do best: transforming public needs into long-term sources of revenue for their financiers (2)”. The World Bank and its arm for the development of the private sector in the countries of the South, the International Finance Corporation (IFC), are thus campaigning for PPPs with African governments and private investors, with the support of certain United Nations agencies. United States and the European Union . The results of these contracts on the Old Continent, where they were invented in the early 1990s, should however encourage caution. In 2018, a special report by the Court of Auditors of the European Union conducted on twelve PPPs offered a severe analysis: “Most of the projects audited suffered considerable construction delays and presented significant cost overruns (3). »

Hastily negotiated contracts

Despite these warnings, PPPs thrive in Africa on the neoliberal vision of a necessarily bureaucratic and poor managerial state, which must entrust the realization of major projects to the private sector while providing it with the guarantee of long-term financing. "Adorned with the noble purposes of development aid, adaptation to climate change, and now the fourth industrial revolution, PPPs justify a new wave of privatization", analyzes the South African socialist Trevor Ngwane, co-founder, during the 2000s, of the Anti-Privatization Forum, a coalition of associations which then opposed the dismantling of the public water and electricity sector under the presidency of Mr. Thabo Mbeki. According to him, despite the fine speeches, these policies ignore the satisfaction of the needs of the populations. In 2017, Mr. Jim Yong Kim, then President of the World Bank, spilled the beans as follows: "One of the things we would like to do, for example, is find a way for a pension fund in the United Kingdom to invest in road construction in Dar es Salaam, to get a reasonable return on that investment and to do a lot of good in the process (4). »

Presented as a partnership between equal players, PPPs are in fact the result of brutal power relations that are very unfavorable to African states, which sit at the negotiating table weakened by debt and unable to produce expertise rivaling that of the major consulting firms. lawyers mobilized by multinationals. “African governments lack the technical and legal skills to use these partnerships to serve their public finances,” explains Mr. Philip Alston, who until this winter was the United Nations' special rapporteur on extreme poverty and human rights. Two years earlier, he had expressed concern about the “tsunami” of privatizations that PPPs were going to generate (5). A point of view shared by the Senegalese jurist Aliou Saware: “When the private sector, often a multinational, prepares the contract with an African State, it already has a head start. In fact, he can never lose. »

The State is heavily indebted over several decades while the contracts provide for all sorts of loopholes for the private partners, who can, if necessary, evade their obligations. Many of these PPPs are indeed “dry contracts”, signed without a renegotiation clause, and set up in a hurry to meet the short-term objectives of electoral promises. They can provide for all kinds of charges for governments depending on the circumstances, such as paying compensation in the event of a fall in the exchange rate or a sudden drop in profits. The Sankofa Offshore Gas Project, a World Bank -backed PPP in Ghana, has thus turned into a ticking time bomb for Accra. Under a clause established on the mechanism of Take or Pay (literally “take or pay”), the State is forced to buy back 90% of the production, whether it is able to use it or not. Internal demand turned out to be too weak, while the construction of the associated infrastructures, necessary for the extraction of the fuel, was falling behind schedule. Therefore, in 2019, Ghana paid $250 million for unused gas.

Inaugurated with great fanfare in 2016 by Senegalese President Macky Sall, the "Highway of the Future" linking the new Blaise-Diagne International Airport to the capital, Dakar, the first toll road opened in West Africa, is emblematic of these arrangements unfavorable to the contracting government. The design, construction and management were entrusted to Senac SA, the local subsidiary of the French group Eiffage , within the framework of a PPP supported by the IFC: "Senac has invested 70 billion CFA francs [106 million euros ]. The Senegalese state, three times more, underlines Mr. Saware. By the end of the thirty-year concession, Senac will have earned nearly 300 billion CFA francs [457 million euros]. The State will only pocket the value added tax and will have to repay the debt contracted with the donors of development organizations, i.e. more than 200 billion CFA francs [304 million euros], which is spread out until 'in 2059. »

All sectors with high profitability are concerned, whether energy, mobile telephone networks and high-speed Internet cables, roads, ports, railways, airports. But the IFC also recommends the use of PPPs in the social field, for example for the construction or renovation of hospitals, the manufacture and distribution of medicines... "Contrary to popular belief, this new frontier of health is not risky territory for investors, explains, in London, Ms. Anna Marriott, health policy adviser for the British headquarters of Oxfam. The most unequal countries on the continent, be it Kenya, Nigeria, South Africa, also have an urban minority – the upper middle class – willing to pay for quality health care. »

The first studies show, however, that the PPPs concluded in the health field prove to be as dangerous for the States as the others. In Uganda, for example, the construction and management of the Lubowa hospital, on the outskirts of Kampala, was the subject of a PPP awarded without a call for tenders to an Italian-Ugandan consortium. The bill for the works has just turned out to be 130 million dollars higher for public finances than the 250 million dollars promised at the signing of the contract (6). In Lesotho, the Queen Mamohato Memorial Hospital, the only specialized hospital in the country, built, financed and operated since 2011 as part of a PPP, should, according to the IFC, cost three times less than the establishment it replaced. Three years after its opening, in 2014, the 425-bed facility was siphoning off 51% of the national health budget following the explosion of its borrowing and operating costs. While proving very profitable (25% profit) for the private partners of the Tsepong Ltd consortium, led by the South African healthcare giant Netcare, the hospital was preventing Lesotho from meeting the health needs of rural populations. Today, the Queen Mamohato Memorial Hospital takes up only a third of the national health budget. But it has tripled since 2014… Netcare, which will have invested only 4% of the total amount of the project, is accused by the other minority private partners of the consortium of having largely diverted the income generated by the hospital. . Engaged in a legal showdown with the State of Lesotho and the donors, the South African operator threatens: in the event of bankruptcy of the hospital, the mountainous kingdom could be faced with a sovereign debt crisis. In Africa, PPPs are in danger of turning into tax burdens as a new debt crisis looms (7).

"Problems, problems, problems"

“We can of course criticize the way in which countries manage their affairs, summarizes Romain Gelin at Gresea, but it is indeed external causes that force African states to continue to bow to the diktat of the Bretton Woods institutions. Foremost among these exogenous reasons are illicit financial flows and tax havens. While in 2018 the continent received $29.7 billion in official development assistance, it simultaneously lost more than $50 billion in illicit financial flows (8). The continent's public debt stood at $350 billion before the outbreak of the coronavirus, remaining below 60% of gross domestic product (GDP).

As in the early 2000s, initiatives in favor of the relief or cancellation of African debts are once again in the air under the banner of international financial institutions and their neoliberal “conditionalities”. But the strikes and demonstrations that marked the opposition to the structural adjustment plans have disappeared, and the PPPs, which some call “problems, problems, problems”, mobilize the streets less. In Dakar, Mr. Saware, who denounces the scandal of the "Autoroute de l'avenir", rather invites "to stop and make a global diagnosis to determine if all that we have done in the field of PPPs is profitable, but also if it contributes to sustainable development and the well-being of future generations".

(1) “How will coronavirus affect public-private partnerships? ”, World Bank blog, March 10, 2020.

(2) “The free market will only deepen the coronavirus crisis”, Al Jazeera, April 8, 2020.

(3) “Public-private partnerships in the European Union : multiple shortcomings and limited benefits”, special report no. 9, European Court of Auditors, Luxembourg, 2018.

(4) Speech of April 11, 2017, www.worldbank.org

(5) “UN poverty expert warns against tsunami of unchecked privatisation”, Office of the United Nations High Commissioner for Human Rights, 19 October 2018.

(6) “Fears raised about cost of PPP hospital in Uganda”, Jubilee debt campaign, July 8, 2019.

(7) Read N'dongo Samba Sylla, "In Africa, the promise of 'emergence' remains a mirage", Le Monde diplomatique, June 2020.