Public Private Partnership craze, what is in it for the African Infrastructure Industry?

From a distance the scene is like a mini war. My curiosity carried me quickly to observe so I can give an accurate report to you reader. What I saw upon my curios approach can aptly be described as a fitting scene for a typical African movie- a drunk man confronting a drunk barber for disfiguring his child’s face with a poor shave. You can’t believe this folk. The barber eyes were his witnesses to the amount of alcohol he has consumed. Picture your self-receiving a shave from a drunk barber. What I saw is a clear human right abuse. The barber has clearly abused the child’s right to look nice.

Well at this stage I had to intervene. As I gasped in air to vomit the first word from my belly, the lights went off. The barber was saved as everybody changed their conversation gear to discuss the recent power failure in the country. That wasn’t my biggest problem. I had to drive home on a road worse than the boy’s haircut. Living in my country and many countries in Africa is a frustration.

Governments in many African countries face the increasing challenge of meeting the growing demand for new and better infrastructural services. This is evidenced by the increasing energy failure, increasing housing deficit, roads that serves as death traps, poor sewage system and many more. The estimated financing requirement to close Africa’s infrastructure deficit amounts to USD 93 billion annually until 2020. Successive governments in Africa are confronted with the problem of funding and providing the needed public sector capacity to implement infrastructural projects. The entire African continent is crippled by this infrastructural deficiency hampering trade with the western world and other developed nations. This has considerably reduced investors trust in the continent. 

Take the issue of Electricity as reported by the African Development bank (AFCB). In 2008, only 38% of Africans had access to electricity compared to an average of 68% for all developing countries. The figure is even lower for Sub-Saharan Africa (SSA), currently at 26%. Furthermore, about 30 African countries endured on average 11.5 power outages in 2007. The power outages were due largely to lack of regional interconnectivity of the electricity grids and shortages in affected countries. During this period, regional surpluses in generation capacity were noted for all the five sub-regions except for East Africa, which had intermittent shortages. Some of the surplus countries like South Africa now have deficits due to increases in demand. The costs of power outages are significant, with Africa loosing almost 12.5% of production time compared to 7% for South Asia, which the next worst case. Indeed the emergence of independent power producers (IPPs) signals sweeping changes in the power sector. For instance, the National Energy Regulator of South Africa has established a regulatory environment that would allow upward adjustments in tariffs and thus improve the viability of private sector suppliers. In Morocco, nearly two-thirds of electricity production is by private producers, the Jorf Lasfar Energy Company - presently Africa's largest IPP, Compagnie Eolienne de Detroit (CED) and Energie Electrique de Tahaddart (EET).

Folks, the new jargon in finance and governance is the portmanteau Abenomics introduced by the current prime minister of Japan Shinzo Abe. This policy is becoming as popular as the ripe tomato hair cut craze in Japan.  In this policy, Abe vowed to deregulate the energy, and infrastructure industries. He also plans to boost power industry investment to 30 trillion yen within a decade. This election winning policy is to be achieved by his established goal of tripling the use of Public-Private Partnerships to 12 trillion yen to fund infrastructure projects such as airports, waterworks and highways.

Perhaps this is the time to consider seriously the issue of Public Private Partnership (PPP). PPP- the new craze in infrastructural development for many developing countries is imagined to be the long-awaited solution for Africa infrastructural deficiency. Few governments in Africa have already taken advantage of this to form new strategic alliances and reducing government cost in providing the infrastructural needs of their countries.

PPP is when Governments turns to and/or collaborates with the private sector to provide infrastructure services in energy and power, communication, transport and water sectors that were once delivered by the public sector. The flaunted infrastructures of developed countries like US, UK, and Australia are strong evidence that to close the wedge between African citizens and infrastructure, PPP is the way to go now.

Africa stands to glean lots of infrastructural benefits from Public-Private Partnership which in effect enhance the livelihood of the citizens.

Public Private Partnerships could increase and provide greater infrastructure solutions offering faster project completion and reducing delays on infrastructure projects.

The Public private partnerships return of investment (ROI) is greater when compare to traditional methods, due to innovative design and financing approaches

Risks are weighted from initial conceptual stages to determine the feasibility of a certain project

The operational and project execution risk is transferred totally to the private sector, leaving the public component on a win-win situation

Public private partnership is a concept where early completion is expected under expected budget, reducing the claims and change order process.

Public-Private Partnership allows government funds to be re-directed to other important socio-economic areas reducing government budget and budget deficit.

P3 also provides economic growth and increased and wider employment opportunities.

The successful establishment of the West African Gas Pipeline (WAPCo) is an evidence of the profit of PPP. WAPCo is a public-private partnership owned by Chevron-Texaco West African Gas Pipeline Ltd (42%), Nigerian Natural Petroleum Corporate (25%), Shell Overseas Holdings Limited (17%), and Takoradi Power Company Limited (16%). Its shareholders are Shell, Chevron, Nigerian National Petroleum Corporation (NNPC), Volta River Authority (VRA) of Ghana, BenGaz of Benin, and SotoGaz of Togo.

Folks, after letting you know the benefits of PPP, let me also add quickly that PPP contracts are typically much more complicated than conventional procurement contracts affecting the tendering and negotiation. This is principally because of the need to anticipate all possible contingencies that could arise in such long-term contractual relationships. Parties bidding for projects spend considerable resources in designing and evaluating the project prior to submitting a tender. In addition, there are typically very significant legal costs in contract negotiation. Having several bidders do this involves a cost which can add up in total to tens of millions.

These shortcomings need careful consideration and the wobbling wheels of African infrastructure development and the benefits of PPP must compel all African nations to develop policies to guide the successful implementation of Public-Private Partnerships.

However, failure in making projects bidding transparent and publicly stating government’s stake in the joint venture could turn any PPP project honeymoon into divorce.

Folk, I believe you are interested in what happened next after the blackout. The conversation changed and eventually everyone left for our homes conversely settling the quarrel. Do not quickly commend the blackout because robbery is rampant these days and they take advantage of such situations.

Mickey Mouse and his Cigarette

Our household calls it Mickey, others in the neighborhood has named it ‘Mickey Musculus’. All these names refer to a large mouse freely roaming in our area and often admired by onlookers. It is not as if people in the neighborhood fear it which is why it is still alive, but we are all amazed at the fact that its size almost equals that of a rat! Cats even do not approach it; it enters any opened room uninvited and without a knock; little kids run away from Mickey. Uncharacteristic of typical African and mouse relationship, Mickey even receive food from the neighborhood.

Folk you may be surprised at this report about Mickey. As usual of Accra life, I had to get to the road side early enough to avoid the traffic. I was walking towards the roadside when   I saw thick smoke coming out of Mickey Mouse’s nostril! Incredible! You shouted. It was real I reply you. It was so engulfed in the smoking that it did not even recognize anyone passing. An Englishman will call it miracle; a Spaniard will say milagro and a German will exclaim wunder!

I was blessed to meet an area man who knows Mickey Mouse. Apparently he also saw what I’m reporting to you. Fortunately for me he has an answer for me. He told me Mickey Mouse has been spending his nights in their house inside an unused wooden structure. Unfortunately for Mickey Mouse, this family got three visitors and since their hall is already accommodating four people, they were left with no option than to prepare that wooden structure for their guest, conversely ejecting Mickey Mouse.

I quickly called to mind the news item I listened to the previous day; that Ghana has 1.6 million housing deficit.

This news is sad to hear but it’s real. According to this news, almost a quarter of Ghanaians live in slums, while an estimated average of 8.7 people share a house in urban areas. Successive governments have expressed their concern about this problem and most often their solution is only on building more houses. Folks, join me in asking these two questions:

1.     What if there are more buildings but we cannot afford the rent?

2.     Considering the time it takes to construct a house, could there be any cost effective way of building more houses at affordable prices?

Would you not agree with me that if the rent act of 1963, ACT 229 is strictly enforced, it can reduce the housing deficit albeit it will not completely solve it? The Rent Act stipulates that 'no one shall rent a room or a house and pay an advance fee beyond 6 months'.

The fact that we have housing deficit does not mean we do not unoccupied houses. There are a lot of vacant rooms and estate development companies are adding new ones daily. The problem is about the cost in renting and rent advance which is forcing people to sleep together in large numbers. It is not uncommon now to see in all our capital cities about 6-8 people sleeping in one single room. It is not as if all these people are completely poor but cannot raise the needed money to pay for the unregulated two or three years rent advance requested by landlords.

Admittedly regulating rent only cannot solve the huge housing deficit. What if we turn modern technology that ensures that houses are built fast and cheap without compromising quality?

One such modern building technology that has been adopted by countries like the US is the Expanded polystyrene (EPS). EPS is a product that provides smart solutions and durable, efficient results. It is a sustainable product that is recyclable and environmentally sound. Expanded polystyrene (EPS) is an innovative building material that lends to the design and structural integrity of many building projects. Polystyrene is extracted from oil. Thousands of small units of styrene, called monomers, link together to form large molecules of polystyrene by a process called polymerization.

The Expandable Polystyrene (EPS) production process uses a pure hydrocarbon, which does not contain any halogens and does not damage the earth's protective ozone layer, as the expansion agent. Since the 1950s, EPS has been recognized as a mainstream insulation material. Now, EPS is a powerful design element and an ideal choice for green building design, offering tangible environmental advantages that can maximize energy efficiency, providing improved indoor environmental quality and enhancing durability.

EPS is used widely in the building and construction industry. EPS is widely used in many everyday building and construction situations where its light weight, strength and thermal insulation characteristics provide cost effective high performance solutions.

Major applications of EPS include insulated panel systems for use in floors, walls and roofs of domestic as well as commercial buildings as well as facades for both domestic and commercial buildings. It is also used as a void-forming fill material in civil engineering projects.

 EPS is an inert material that does not rot and provides no nutritional benefits to vermin therefore does not attract pests such as rats or termites. Its strength, durability and lightweight nature makes it a versatile and popular building product.  EPS has successfully become the smartest option for modern building construction and a responsible choice for the environment.

It is therefore urgent for building construction and real estate developers to seriously consider this option of cost-effective housing. This will help in reducing if not eradicating at all, the housing deficit in the country and our area mouse, Mickey Musculus will not be ejected.

Thankfully as I stepped closer to have a close look at our most adored Mickey Musculus smoking, I woke up from sleep and realized it was dream. Mickey Musculus is still freely patrolling the area. I wish long life.

CDMA vs. GSM

Two basic technologies in mobile phones, CDMA and GSM represent a gap you can't cross. They're the reason you can't use AT&T phones on Verizon's network and vice versa. But what does CDMA vs. GSM really mean for you? 

CDMA (Code Division Multiple Access) and GSM (Global System for Mobiles) are shorthand for the two major radio systems used in cell phones. Both acronyms tend to group together a bunch of technologies run by the same entities. In this story, I'll try to explain who uses which technology and what the real differences are.

Which Carries are CDMA? Which are GSM?
Five of the top seven carriers in the U.S. use CDMA: Verizon Wireless, Sprint, MetroPCS, Cricket, and U.S. Cellular. AT&T and T-Mobile use GSM.

That means we're mostly a CDMA country. It also means we're not part of the norm, because most of the world is GSM. The global spread of GSM came about because in 1987, Europe mandated the technology by law, and because GSM comes from an industry consortium. What we call CDMA, by and large, is owned by chipmaker Qualcomm. This made it less expensive for third parties to build GSM equipment.

There are several variants and options carriers can choose, like toppings on their technological ice cream. In this story we'll be talking about U.S. networks.

What CDMA vs. GSM Means to You
For call quality, the technology you use is much less important than the way your carrier has built its network. There are good and bad CDMA and GSM networks, but there are key differences between the technologies. Here's what you, as a consumer, need to know.

It's much easier to swap phones on GSM networks, because GSM carriers put customer information on a removable SIM card. Take the card out, put it in a different phone, and the new phone now has your number. What's more, to be considered GSM, a carrier must accept any GSM-compliant phone. So the GSM carriers don't have total control of the phone you're using.

That's not the case with CDMA. In the U.S., CDMA carriers use network-based white lists to verify their subscribers. That means you can only switch phones with your carrier's permission, and a carrier doesn't have to accept any particular phone onto its network. It could, but typically, U.S. carriers choose not to.

In other words, you can take an unlocked AT&T phone over to T-Mobile (although its 3G may not work well because the frequency bands are different). You can't take a Verizon phone over to Sprint, because Sprint's network rejects non-Sprint phones.

3G CDMA networks (known as "EV-DO" or "Evolution Data Optimized") also, generally, can't make voice calls and transmit data at the same time. Once more, that's an available option (known as "SV-DO" for "Simultaneous Voice and Data Optimization"), but one that U.S. carriers haven't adopted for their networks and phones. 

On the other hand, all 3G GSM networks have simultaneous voice and data, because it's a required part of the spec. (3G GSM is also actually a type of CDMA. I'll explain that later.)

So why did so many U.S. carriers go with CDMA? Timing. When Verizon's predecessors and Sprint switched from analog to digital in 1995 and 1996, CDMA was the newest, hottest, fastest technology. It offered more capacity, better call quality and more potential than the GSM of the day. GSM caught up, but by then those carriers' paths were set.

It's possible to switch from CDMA to GSM. Two carriers in Canada have done it, to get access to the wider variety of off-the-shelf GSM phones. But Verizon and Sprint are big enough that they can get custom phones built for them, so they don't see the need to waste money switching 3G technologies when they could be building out their 4G networks.