Using innovative Private Sector Participation solutions, our work results in higher service and quality standards as well as increased productivity and improved incomes
Government has a key role in the creation and maintenance of a strong enabling economic environment. It is inefficient for government to manage assets that could be more productive in the private sector —and the stronger the enabling environment, the less efficient it is. The key arguments for private sector participation are improved efficiency and better allocation of scarce resources. The main results are unblocked supply chains and reduced unemployment in companies. Creating active markets and reducing transaction costs drives increases in incomes and buying power.
Most studies show a negative correlation between economic development and government ownership and management of productive assets in the industrial and financial sectors. However, there is more debate about how to manage private sector participation in utilities and transport, particularly where there are large numbers of people who are not connected to the main network. Different solutions suit different situations on a continuum from management contracts through to transfer asset ownership. What the different approaches are all designed to have in common is increased efficiency in delivery accompanied by a reduction in losses through illegal connections, ineffective billing and collections, and through physical leakage.
There are multiple issues associated with the protection of different classes of consumers, particularly for utilities and transport, but quality and safety guarantees in many other industries are key to the development of the economy and reduction in the reliance on imports.
In many cases, foreign strategic investors are needed in order to provide the expertise and capital necessary to improve the entities. However, poor enabling environments usually mean high-risk investment environments. As high risk requires a high return, and many state entities are not likely to offer a high return in the early years, it is necessary to identify measures that can be taken that will decrease the systemic risks.
Our Private Sector Participation Services Include:
Our Private Sector Participation (PSP) Strategies include both economy-wide strategies and single-industry strategies. We work with governments to identify key industries that would benefit from PSP, to establish how the industries should be organised, and to determine what the impact on the population would be. We use the results of trade studies; poverty and social impact studies; and government policy to select key industries for restructuring and decide on the appropriate form of PSP.
Regulatory Agencies are established to stimulate competition and use this mechanism to protect consumers against monopolistic competition. Establishing the appropriate regulatory environment for each industry begins with a review of the current legislation, regulation and practice. From this, a country and industry specific plan is developed in conjunction with key stakeholders. This can be the introduction of regulation, the reform of existing regulation or the strengthening of existing regulatory bodies by revising processes, procedures and training.
Poverty and Social Impact Analysis (PSIA)
Economic adjustment programs can cause adverse short term income and employment shocks. We conduct social impact surveys and analyses, in order to identify key vulnerable groups, and design policies that will alleviate any adverse impact for these groups.
We support governments who need to restructure SOEs by analysing the restructuring options, their costs and the probable effect on the SOE. Our recommendations typically include financial restructuring, improved supply chain management, technical improvements, and raising funds to implement the changes.
Overall Sector or Single Transaction Advice
We are involved with the transaction from the development of the privatisation strategy, through legislative reform, enterprise restructuring, due diligence, document preparation, investor identification, preparation for IPOs, marketing of the investment opportunity, bid management, and negotiation, right through to sales closure.
When strategic investors find the risk too high to invest on their own, we can create an acceptable risk profile by establishing a consortium of both strategic and financial investors.
Developing Public Support for PSP
The key stakeholders in PSP typically include: national, and sometimes local, government; the management and staff of the entity; other participants in the supply chain; consumers, and those who will finance the change. To ensure that the PSP moves ahead smoothly, we develop strategies that help stakeholders understand PSP issues and the implications for each group.
Long Term Support to Governments
We provide long term support to governments by working within privatisation units and state property funds to establish and implement streamlined and effective systems that move the PSP process forwards in an organised way.
Capacity building is an integral part of all of work. Our philosophy is to work ourselves out of a job through building up our partner organisations. We design capacity building programmes that meet the specific requirements of each organisation with which we work.