1. Activity undertaken with the financial support of the Government of Canada provided through the Canadian International Development Agency (CIDA) PUBLIC PRIVATE PARTNERSHIPS IN SADC Project Facilitation through Capacity Building WORLD BANK WORKSHOP ON LARGE PROJECT FINANCE MAPUTO, MOZAMBIQUE 7 th January, 2008

2. Presentation Overview Introduction to SADC-BA &Project Background Introduction to SADC-BA &Project Background Project Partners Project Partners Facilitating Project Development & Implementation Facilitating Project Development & Implementation SADC-BA TAF: Mauritius & Malawi SADC-BA TAF: Mauritius & Malawi Recommendations for Maximising Economic Return & Social Benefits via PPP Recommendations for Maximising Economic Return & Social Benefits via PPP

3. Introduction to SADC-BA & Project Background The SADC Banking Association: Association of 12 National Bankers Associations Association of 12 National Bankers Associations Established at the behest of the SADC Committee of Central Bank Governors. Established at the behest of the SADC Committee of Central Bank Governors. Critical function includes facilitating the creation of an environment conducive for increased domestic & FDI. Critical function includes facilitating the creation of an environment conducive for increased domestic & FDI. PPP Project Background: Increased opportunities to draw on private capital to support projects Increased opportunities to draw on private capital to support projects PPPs are effective contracts for attracting investment into infrastructure and service delivery projects PPPs are effective contracts for attracting investment into infrastructure and service delivery projects Absorptive capacity constraints must addressed Absorptive capacity constraints must addressed Facilitating capacity building is a critical role in the non-competitive space. Facilitating capacity building is a critical role in the non-competitive space.

4. Forms of PPP contracts Less Risk Transfer Short contract term Insignificant private capital outlay More Risk Transfer Long term contract Significant private capital outlay Service Contracts Design, Build, Operate, Finance & Concession contracts Leasing Management Contracts BOT, BOO Joint ventures Divestiture

5. Project Partners Project Steering Committee members: RSA: The Banking Association South Africa (Executing Agency) RSA: The Banking Association South Africa (Executing Agency) Canada: CIDA Canada: CIDA SADC-Committee for Central Bank Governors SADC-Committee for Central Bank Governors RSA: PPP Unit-RSA National Treasury RSA: PPP Unit-RSA National Treasury Botswana: Public Enterprises and Evaluation Agency (PEEPA) Botswana: Public Enterprises and Evaluation Agency (PEEPA) Tanzania: Tanzania Investment Centre (TIC) & National Construction Council (NCC) Tanzania: Tanzania Investment Centre (TIC) & National Construction Council (NCC) Mauritius: PPP Unit-Ministry of Finance and Economic Development Mauritius: PPP Unit-Ministry of Finance and Economic Development Malawi: Privatisation Commission ( Ministry of Finance) Malawi: Privatisation Commission ( Ministry of Finance) Zambia: PPP Working Group (driven by National Council for Construction) Zambia: PPP Working Group (driven by National Council for Construction) Lesotho: Office of the Minister of Finance & Lesotho Bankers Association Lesotho: Office of the Minister of Finance & Lesotho Bankers Association

6. Facilitating Project Development through Capacity Building Facilitating Project Development through Capacity Building Capacity building at 3 levels: 1. Training On-line, fully accredited courses (subscription from 25 countries, 6 continents): PPP Skills and Competency Development PPP Skills and Competency Development PPP concept and rationale; Contractual /legal options; Project appraisal and feasibility studies; Project finance and investment analysis, Procurement process; Stakeholder management and public participation; human resources and labour relations; monitoring and regulation. Project Officer Management and Leadership Training Project Officer Management and Leadership Training 2. Research Institutional, Regulatory, and Policy Reviews, PPP guidelines, Case studies 3. Technical Assistance Facility Support for Planned or Existing Projects: SLDC Highlands Project Mauritius (development of a new town) SLDC Highlands Project Mauritius (development of a new town) Malawi Railway Concession (Re-drafting & re-negotiation of Contract) Malawi Railway Concession (Re-drafting & re-negotiation of Contract)

7. SADC-BA Technical Assistance: ZAR 1.7 million ActivityOutput Establishing minimum development norms for project Minimum built up areas for preferred development components Market Assessment Assess market demand for project sub-components of highlands project, potential revenue estimates Financial (Value) Assessment Assess suitability of private participation in development of Highlands project Financial Feasibility, Project Structuring and Bid Framework Financial feasibility of project & determination of reserve price for land, project structure, bidding framework Compiling Project Information Memorandum Compilation of important project details and parts of feasibility study to be shared with prospective bidders Support the Appointment of a Transaction Advisor to complete feasibility process and facilitate procurement of private developer RFP released on 31.10.07($USD 3 million). SLDC Highlands Project in Mauritius 920 hectares of Prime Land Development of a new town Include Government Accommodation Enhance economic activity through the Establishment of a knowledge and urban industry centre (US$ 3 billion over 10 years)

8. SADC-BA TAF: Malawi Railway Concession Total track length of 797 KM (399 km Nkaya-Zambia Border, ~101 km Nkaya-Nayuchi, 297 km Nkaya-Mozambique Border (South) Total track length of 797 KM (399 km Nkaya-Zambia Border, ~101 km Nkaya-Nayuchi, 297 km Nkaya-Mozambique Border (South) Total freight traffic of 240,111 tns in 2004: International traffic 223,034 tns (Imports 134,547, Exports 88,487) Local traffic 17,077 tns Total freight traffic of 240,111 tns in 2004: International traffic 223,034 tns (Imports 134,547, Exports 88,487) Local traffic 17,077 tns 3 PSO routes: Limbe – Makande, Balaka – Nayuci, Limbe - Balaka 3 PSO routes: Limbe – Makande, Balaka – Nayuci, Limbe - Balaka

9. SADC-BA TAF: ZAR 1.3 million Activity: Malawi Railway ConcessionOutputs (Recommendations) Project Economics Financial assessment for model assumptions of revenue and profitability; Recommendations for achieving economic viability i.e. increasing exemptions, reviewing minimum payment obligations etc. Contract Quality effective provision for force majeure events Asset Management Reviewing commercial treatments: Need for Rehabilitation Programme & Depreciation Fund Critical Points Issues not included in the contract include clauses i.e. transparent formula for revenue sharing cross border, commercial arrangement of new railway connections, procedures for entry of new operators maintenance standards, methods for determining subsidy obligations.

10. 1.POLITICAL SUPPORT: to develop projects, eliminate disinterest, manage delays, spearhead communication. 2. ROBUST CONTRACTS: All Aspects must be covered; conditions should be clearly articulated with minimal ambiguity 3.STRONG REGULATORY FRAMEWORKS & INDEPENDENT REGULATORS: compliance, dispute resolution, monitoring use of loan funds and insurance proceeds, deal with unsolicited bids etc. 4. LOCAL EMPOWERMENT: Need a competent pool of local resources to compliment international resources and a system to manage resources for identified outcomes. Recommendations for Achieving Maximum Economic Returns & Benefits from PPP

11. THANK YOU! Juliet R. Kairuki julietk@banking.org.za +27-82-312-7937 (cell) +27-11-645-6726 (office) +27-11-645-6896 (fax) www.banking.org.za/sadc