Chapter 3. Expand infrastructure to support emergence

To become an emerging economy, Côte d’Ivoire must strengthen its infrastructure, in terms both of its quantity and quality. Not everyone has access to essential parts of it (electricity, transport and telecommunications), which hampers growth and development. Besides, the costs of some services (such as transport and telecommunications) that rely on infrastructure are higher than in other emerging countries or relative to average household income, which makes the Ivorian economy less competitive. Becoming an emerging economy is only one stage in development, so Côte d’Ivoire should pay attention to sustained, long-term infrastructure investment, in respect of both government spending and the environment.

  

Recommendations for creating efficient infrastructure to help the nation become an emerging economy are based on three chief elements (see Figure 3.1) – improving access for all to fundamental parts of it, making the infrastructure more competitive and thus a long-term economic asset, and ensuring taxpayers and the public finances can afford it.

Figure 3.1. Access, competition and sustainability are the pillars of efficient infrastructure
picture

Note: This figure refers to the recommendations and action plan presented at the end of this report. “ER 1” stands for the main expected result and bracketed numbers to action plan recommendations.

Source: Authors.

Access to essential infrastructure for all must be improved

To improve essential infrastructure access for all, the government should use three tools – the level of investment; maximising its impact by focusing on the main needs of the people and businesses; and prolonging the life of existing infrastructure since dilapidated facilities reduce access.

Infrastructure investment must be adequate

Better access involves increasing the amount of some infrastructure through more fixed capital investment. Emerging countries have an average 25% rate of gross fixed capital formation but in Côte d’Ivoire, it is barely 16%. As public investment is limited by low tax revenue private investors can provide precious funding for infrastructure. The legal and financial structure of public-private partnerships (PPP) is a mechanism that can attract and secure long-term investment here.

The capacity of national stakeholders (especially the PPP) must be expanded for preparing and carrying out infrastructure projects (Recommendation 1)

Faster growth of high quality infrastructure in Côte d’Ivoire in part depends on boosting capacity for planning, preparing, implementing and monitoring major projects. That means that the capacities of the agencies taking part in the country’s infrastructure development need strengthening. Concentrating assessment within a single structure helps to harmonise practices, makes training easier, perpetuates skills and improves quality and efficiency. Responsibility for infrastructure development in Côte d’Ivoire is dispersed among several contracting authorities that are not held to apply standard approaches and methods, so this dispersion of roles and practices should be reduced. The national technical studies and development office (BNETD) has helped the country’s infrastructure grow over time as the designer and builder of large projects, so its experience and expertise makes it a natural choice to help contracting authorities develop infrastructure.

Côte d’Ivoire has adopted PPP as a major part of its infrastructure development strategy and has begun to lay solid foundations for such funding. PPP projects make up about 60% of those in the national development plan (PND). A national committee to supervise PPP projects, with an executive secretariat and support unit of experts, provides solid institutional support. But the government will need major skills in assessment, preparation, management and monitoring the projects, especially legal and financial expertise, and enough staff and experts to avoid bottlenecks in the PND. Enough people must be hired by the contractors and trained in the PPP unit for the many projects over the next five years if the PND is to be carried out on time.

PPP projects should, as far as possible, benefit Ivorian firms, in order to develop the skills of the local workforce and benefit local construction and the supply of materials. Promotion of the projects should also target the national market, especially when there are local providers with the necessary technical and financial capacity. The Ivorian content of infrastructure projects by foreign investors and businesses can be increased, and technical consideration of tender bids could include the amount of local content proposed. But this should not become a protectionist device as it would hamper national development.

Recommended measures are:

  • Reduce the fragmentation of roles and practices in infrastructure development by bringing more closely together the skills needed for design, preparation and management of projects. The structures involved in preparation and execution must have sufficient staff and specialised training programmes will need to be prepared.

  • Train staff in the financial and legal aspects of PPPs and management of projects, focusing on managers in PPPs and contracting authorities involved in preparing and implementing projects.

  • Train both private sector participants (consultants, accountants and law firms) and public ones (BNETD, Ageroute), emphasising forecasting skills to help the government prepare the projects.

  • Supply tools and document models to guide project preparation (feasibility studies, financial analysis, procurement and contracts and so on), and make implementation simpler by ensuring that they are well understood.

  • Set up a project development fund to finance feasibility studies (usually a great burden on PPPs), involving sources such as the African Development Bank (AfDB) and the World Bank, which could offer a valuable boost to getting projects under way.

  • Encourage local firms (including PPPs) to take part in infrastructure projects by publicising and promoting PPP projects nationally and applying the local content yardstick in assessing tendered bids.

Household access to electricity and a dependable supply for business are keys to a successful road to emerging nation status. Côte d’Ivoire plans to double its power output to 4 000 MW before 2020 by building new hydroelectric and thermal plants, so a reliable supply of natural gas for new thermal plants is needed, coming from continuing onshore and offshore gas exploration. But the country also has major potential in renewable energies such as solar, biomass and micro-hydroelectric power, the development of which could boost energy supply, especially in the countryside, as well as reducing greenhouse gas emissions. Renewable energy will also increase energy security as it does not depend on a sometimes unreliable supply of combustible fuel. Côte d’Ivoire’s 12 million tonne biomass potential is the one of the biggest in Africa, along with its solar energy reserves, especially in the north and west of the country. Despite their size, these reserves are mostly unused.

Energy policy must be supported by institutions and regulations to encourage more investment in renewable energy (Recommendation 2)

Development of these resources will depend on sizeable investment, especially by the private sector, as well as suitable regulation. Faster growth of these energy sources will come from energy and economic models different from those that have hitherto dominated the energy sector. Policies must take into changing technology and be flexible enough to incorporate innovation, and the sector’s regulations must be adapted to deal with the wider range of production methods and profitability.

Recommended measures are:

  • Develop and communicate a transparent energy strategy that sets out the role of renewables and off-grid technology in the mix of future energy supply.

  • Set up an agency to manage energy and renewables, charged with speeding up the growth of renewables, co-ordinating the work of the ministries involved – oil and energy, environment, urban sanitation and sustainable development, finance, planning and development, Ministry of State, Education and Technical Instruction. The body would be charged with drafting regulations for the new energy sources, identifying and promoting projects, seeking funding from abroad and from private investors and giving technical assistance to projects.

  • Draft regulations for development of renewable energy, including the issue of customer charges, especially the suitability of feed-in tariffs.

  • Encourage creation of a body representing private stakeholders in renewables that could be a place for dialogue with the private sector, whose involvement will be essential for providing renewable energy.

Incentives should be given for the private sector to use off-grid solar technology and biomass plants (Recommendation 3)

Solar energy is rapidly becoming cheaper (panels and storage) and more feasible, with innovative firms using new commercial models. For example suppliers are already selling cheap power to rural Kenyans, Tanzanians and Rwandans on a pay-as-you-go basis using mobile phones. But this decentralised off-grid energy will have to coexist with a central power grid, so a balance will have to be struck between expanding the grid and encouraging off-grid technology in places where it is more suited to geographical and economic conditions.

Biomass energy needs a reliable source of high quality raw materials and a regulatory and tariff structure providing an attractive return for private investors, so close co-operation between the agriculture and energy sectors is essential. Where producers sell their power to the national grid the government, as purchaser, will have to set prices or negotiate contracts with producers and agricultural stakeholders.

Recommended measures are:

  • Calculate the potential of renewables and their location in Côte d’Ivoire, map biomass resources and the degree of sun-exposure around the country and publicise this data. The World Bank’s Energy Sector Management Assistance Program (ESMAP), which funds the mapping of energy resources, could support the country’s efforts.

  • Identify possible sites for biomass plants using agricultural waste and lobby the private sector to invest.

  • Educate agricultural stakeholders about the value of waste to encourage them to help set up collection and supply networks.

  • Adopt international quality and performance standards (such as those set by ECOWAS) for renewable energy products, such as solar kits, for consumers.

  • Give tax incentives (customs reductions, lower VAT) on consumer energy items that comply with quality and performance standards.

  • Harmonise solar energy standards and incentives with ECOWAS countries to expand the market, make more economies of scale and create a good economic climate to attract private investors.

The effect of infrastructure investment is maximised

Infrastructure that targets priority needs, is the right size, suitable and efficient will be the best investment, but badly designed and planned projects waste public funds. So planning transparency is vital if projects are to have the most impact, avoid losses, and make investment more successful.

Infrastructure planning must be guided by a long-term strategic vision (Recommendation 4)

To have the greatest impact infrastructure investment must target the priorities of individuals and business and be part of a long-term development vision. The quantity of the infrastructures will only have a positive economic effect if they contribute to the country’s economic and social development goals. Government investment is often of a quite short-term nature because of the pressure of urgent needs, political events and budgetary cycles. The long life of major infrastructure (electric power stations, bridges and ports) means they must be part of a long-term vision taking into account major national and international economic, environmental, population and technological trends. The country began an outlook study in 2006 called Côte d’Ivoire 2040 which stopped when it ran out of money. The planning ministry revived it and intended to finish it in 2015, so it could be used to give the 2016-20 national development plan (PND). This could be the basis for moves to build in a more forward-looking approach with infrastructure.

Recommended measures are:

  • Analyse major national, regional and international trends and uncertainties (economic, international relations, climate, population, technology and others) relevant to the country’s long-term development. This analysis will then help with the outlook for alternative futures.

  • Draft a strategic vision and long-term development goals based on consultations, workshops, surveys, trends and futures analyses that have already been carried out. This vision should be made public to mobilise the private sector and civil society and be included in basic medium-term planning documents such as sector strategies, infrastructure plans, priority projects, and the PND.

  • Set up a system to monitor major trends and uncertainties in the country’s future development, the results of which can be summarised in an annual report which could bring up to date the various outlooks for the future, if necessary.

More transparency and concertation in planning, choosing and assessing projects is needed (Recommendation 5)

Transparency in planning, choosing and assessing projects makes it possible to reduce risks, maximise the positive impact of infrastructure projects and boost the confidence of the people at large, businesses and investors in the coherence of government policies. Projects should be prioritised by transparent criteria to focus investment on urgent needs and projects with the biggest impact. Consultation with those involved or affected by the early stages of preparation will give a better insight into people’s needs and uncover possible pitfalls. Except for special cases, such as projects funded multilaterally, public hearings for big infrastructure projects in Côte d’Ivoire are not always held. They should be organised at the preparatory stages of a project so they can help make it more successful. Independent evaluation of a project’s economic and financial surveys can detect weaknesses in its design.

Recommended measures are:

  • Make the public investment programme (PIP) easily accessible to the public (perhaps on the planning and development ministry website) as well as the multi-criteria process of choosing public infrastructure investment. PIP projects must be compatible with sectoral and national policy, so it would be appropriate that these political priorities be summarised in the PIP, to show the public a clear link between them and the infrastructure investment choices. PIP publicity could be improved if the summary could be put on line.

  • Hold public hearings during the preparation of all infrastructure projects. To encourage such participation, the PPP law could be amended to make public hearings a condition for approval of projects.

  • The budget or finance ministry can independently assess a project’s economic and financial surveys, examining the validity of the economic forecasts and projections that underpin its financial models. They should also consider the possible impact of projects on government finances and the risks they could present.

The life-span of existing infrastructure is extended

Maintaining infrastructure to prolong its life is just as important as building new facilities and is often much less a burden on public finances, especially when done regularly. Well designed and well run PPPs can maintain infrastructure for the duration of a contract. For traditionally funded infrastructure, the cost of upkeep must be budgeted or dedicated funding made available.

The road maintenance fund (FER) must be made permanent and more transparent (Recommendation 6)

The poor quality of much of Côte d’Ivoire’s road network is a serious hindrance to development and makes the country less economically competitive, so upgrading roads is priority. The FER, in charge of funding maintenance, obtained a XOF 130 billion loan from a consortium of banks in 2014 to modernise part of the road network. The debt will be repaid out of the specific tax (TSU) on oil products, and the proceeds of vehicle tax-discs and transport taxes and licences (Jeune Afrique, 2014). The FER plans to seek more loans to upgrade the entire network but funding remains a problem because though the TSU can help repay the current loan, it will not be enough to pay for long-term road maintenance. This is a recurring cost and must be funded by a reliable long-term revenue source, so money for upgrading and money for maintenance must be separated to ensure the latter.

Recommended measures are:

  • Investigate how to boost FER’s funding, such as by increasing the TSU and the number of tolls on main roads. A higher TSU will raise fuel prices if other components of the price are unchanged, but the effect on road-users will be less because of the current low world price of oil. The investigation should consider the impact of these increases on road-users, consumer prices and households and suggest ways to compensate the poorest families.

  • Separate road upgrading and maintenance and treat upgrading as an investment, to be funded on its own.

  • Seek multilateral and bilateral funding for upgrading the network.

Make key infrastructure more competitive

A strategy to develop infrastructure must have regard to both the total amount of work needed to help on the way to becoming an emergent nation and to its performance and cost. Economic infrastructure has a major impact on how productive and competitive a country is. If electricity, transport and telecommunications are costly, that slows expansion, undermines household incomes and reduces the productivity of firms. Efficient infrastructure, by contrast, can make a country much more competitive, and incentives, especially through competition, along with regulation and good governance, are the main tools for this. The best value for money should feature at all stages of infrastructure planning and management.

More competition needed in management of infrastructure

In a liberal economy where the private sector plays a big part in infrastructure, competition remains the best way to get suppliers to offer innovation and efficiency and thus reduce prices to consumers. This is especially important for priority infrastructure such as electricity, transport and communications, which play a crucial part in economic productivity, competition and the well-being of people. In Côte d’Ivoire, enthusiasm for competition does not always dictate infrastructure planning and management choices. The electricity and ICT sectors could benefit from more competition.

For infrastructure that has a natural monopoly, internal competition is often unsuitable, so the government needs to add competition to procurement bidding through compliance with the rules of procurement. Competition in bidding is especially important with PPPs, where contracts are often for up to 30 years (and sometimes more) with long-term consequences. So awarding a PPP contract without proper bidding can incur excessive costs or poor infrastructure, with damaging long-term results for users, taxpayers and the economy as a whole.

Rules of public procurement and their application must be tightened (Recommendation 7)

Procurement in Côte d’Ivoire too often contravenes the rules, and the road to the status of an emerging nation requires that procurement procedures be tightened, including more compliance by the contracting authorities. An audit by the national procurement regulatory authority (ANRMP) showed that many over-the-counter (mutually agreed) contracts were not permissible under the procurement laws, which therefore urgently need to be strengthened to reduce non-competitive bidding. Reforms and ongoing action to do this (setting up procurement units in seven trial ministries, producing guides to the rules to improve bidding applications, simplified competition procedures) should reduce over-the-counter contracts. But the ANRMP audit showed that excuses offered for these, such as urgency, often did not comply with the procurement laws. The planned reforms must be accompanied by heavier penalties for contraventions.

Recommended measures are:

  • Review the penalties regime for violations of procurement rules so that it covers all forms of exemption not justified by the procurement code, including over-the-counter contracts. The code and the decrees and rulings amending it do not provide for any administrative punishment for recourse to unjustified over-the-counter deals. Violations that can be penalised are listed in decree 118 MOMB (March 2014) and only apply to a few serious infractions.

  • Strengthen administrative penalties to deter public officials, currently punished by exclusion from all procurement activity for two years, which is hardly a deterrent.

  • More disciplinary and criminal sanctions for seriously violating the procurement law.

  • Include PPPs in the procurement law.

  • More transparency for major projects above a certain value that are agreed on directly, by asking a civil society organisation to observe the procedure, making public the reasons for awarding the contract and publicising the contract as soon as it is signed (OECD, 2012).

  • Do regular audits of over-the-counter procurement deals to ensure they are legal.

Introduce more competition and incentives in the electricity sector (Recommendation 8)

Private firms have invested in electricity in Côte d’Ivoire but the market structure is very rigid and not competitive enough. “Take-or-pay” production contracts and fixed tariffs discourage competition between them. Downstream elements such as transport, distribution and marketing are a monopoly and the private operator is vertically integrated throughout the whole chain, from production to marketing. The structure of the sector hardly encourages efficiency, much less innovation, and the government bears most of the risks.

The sector’s stability is a major national asset and introducing competition must not undermine this, so any opening-up must be done gradually, maintaining the financial balance. But more incentives should try to encourage participants to be more efficient. The state electricity firm CIE has run the sector since 1990 and its most recent contract was renewed without any competitive bidding. But it is hard for regulators to introduce successful incentives in the absence of any means to evaluate participants’ performance.

Recommended measures are:

  • Make running the transport network and the distribution and sale of electricity competitive by putting their contracts out to tender when they come up for renewal in 2020.

  • Make production of electricity competitive by putting contracts out to tender when they come up for renewal.

  • Consider making the sector more competitive by breaking it up, introducing wholesale markets and amending production contracts.

Greater competition and access to ICT is needed

Access to reasonably-priced ICT is essential to Côte d’Ivoire’s development and making its economy more competitive. The country has quite a robust and well-established mobile-phone sector and 3G subscriptions are growing fast. But Internet access through fixed lines or USB sticks is uncommon and charges are too high for the great majority of Ivorians. Much greater Internet access will be needed to reduce the digital divide and allow Ivorians to benefit from ICT opportunities, and is crucial for growth of the services sector, one of the keys to structural transformation.

The spread of ICT and affordable access will depend on new infrastructure and greater competition in the sector. Private and government investment in high-speed fibre-optic lines can extend ICT to the whole country but it will have to be more competitive to keep prices down for ordinary consumers. Telecommunications (mobile phones, fixed lines, and mobile Internet) are dominated by two vertically-integrated providers, Orange and MTN, whose activities range from international connections by way of undersea cables to selling services, so ICT regulation, especially of Internet access, should be changed to introduce more competition.

Regulation and the structure of the ICT sector must change to reduce prices to consumers (Recommendation 9)

Recommended measures are:

  • Encourage entry of another credible mobile-phone operator who could financially and technologically win a big market share. Existing operators could be obliged to negotiate a roaming deal so the new firm could offer nationwide coverage while it created its own infrastructure. This was done in France to allow a new operator into the market in 2012, to the great benefit of consumers (OECD, 2014).

  • Amend specifications for mobile operators to oblige them to offer a minimum geographical coverage.

  • Independent experts should look at access offers by existing operators to ensure they do not hamper entry of new operators.

  • Change the rules to cut the cost of network interconnection and thus encourage entry of new operators. Non-discriminatory and transparent network access is vital for telecommunications development. The country’s interconnection tariff model is based on calculating operator costs. With some operators dominating several parts of the sector and their high vertical integration, alternative tariff rules such as ceiling prices might be considered to help new operators and providers enter the market.

  • Encourage new providers of fixed-line Internet access (cable or Wi-Fi), which is currently dominated by two operators, as more competition would reduce prices.

  • Draft an operational model and regulations to access high-speed lines currently being installed, especially defining the type of technology to be used for local connections, the role of the private sector, network access conditions and customer tariffs.

Abidjan’s port must be more competitive

The performance of Abidjan’s port (PAA), the main transit point for most of the country’s exports and imports, must be improved because it affects how competitive the economy is. The government must ensure that seaports, as well as upstream and downstream infrastructure, can support economic growth and the increased foreign trade it generates. Work must continue on major projects in the strategic plans for Abidjan and San Pedro ports. Recent reforms, such as a one-stop shop for customs clearance, have reduced costs and delays at PAA but the results are still far below those of rival emerging economies, especially in Asia.

Governance of the state-owned PAA must be adapted to the port’s many functions and its national strategic role. It is a landlord with commercial and regulatory functions and as a state-owned enterprise run by a director-general and a team and it is supervised by a board chaired by a presidential appointee and composed almost entirely of representatives of ministries involved in the port (economic infrastructure, transport, budget and trade). Other major world ports that are landlords, such as Rotterdam and Singapore, which are also state-owned, have more balanced governing boards including senior officials with private sector experience and commercial, financial and sector skills, so the government is more shareholder than administrator.

Governance in Abidjan port must change to deliver better performance (Recommendation 10)

The PAA’s governance structure should be reviewed. As a state enterprise, it has great autonomy and operational independence and combines regulatory functions (truck parking, monitoring forwarding agent fees) and operational tasks (managing port land, billing for port dues). It acts as a kind of landlord but also provides services, which makes it more a public administration than the privatised structure in most industrialised countries. The PAA should be more transparent about the part it plays, the services it supplies and its contracts with the private sector.

It needs to improve its performance in respect of costs and handling delays, so efficiency and customer service must be a priority in governance and port management. Its autonomy should be increased by balancing its board with independent private sector managers (carefully avoiding conflicts of interest) preferably with international maritime transport experience. Setting performance goals for major variables such as handling times and cost of services is also important. These variables should be regularly monitored by the board and the port performance here should be part of assessing port managers and their pay.

Recommended measures are:

  • Change the board’s membership by decree to include independent members with useful private sector experience.

  • Include in the PAA statutes a legal obligation for board members to concern themselves only with the port’s interests. Board members normally have many outside interests but these must not influence their decisions about the port.

  • Set performance targets for costs and freight-handling time and appoint an independent monitoring committee reporting back to the board.

  • Base assessment of port managers and their pay on how far performance goals are met.

The PAA’s operations must be improved (Recommendation 11)

Much-needed reforms to make the port run better should deal with its main bottlenecks, taking account of interdependence between participants. Scanning (of documents and containers), provision of required documents and moving containers to and from scanning stations need to be faster, to reduce direct and indirect (waiting time) costs for importers and the final cost of goods to consumers. Port services also need to be more competitive through involvement of local suppliers relative to multinationals, strengthening local capacity without making the port less competitive overall.

Procedures within the whole port value chain should also be reviewed. Studies of passage through the port have been done without including the many participants (port authorities, customs, ministries, forwarding agents, handlers, transport firms, exporters and importers and other service suppliers), and the countless links and interdependence between them. An overall survey of the value chain is needed to find out why reforms are not bringing progress and to focus new reforms on persistent obstacles and bottlenecks. The study must take account of all port activity (setting prices, incorporating new charges, competition, the dominance of some of those involved) and the president and prime minister’s offices must ensure sufficient access to information, strict neutrality and regular monitoring. A team of experts (in procedures, freight forwarding, customs and transport) will need to be recruited to gather data to add to several fairly extensive reports that need to be completed with further data, interviews and study of laws. The aim would be to identify the main bottlenecks and propose suitable reforms, especially in links between participants. Government ministries and the private sector should discuss more in-depth reforms in running the port, to further involve the private sector and encourage the PAA to be more competitive.

Investment is good value for money throughout the life of an infrastructure

Transparent and impartial procedures and practices must be adopted and no particular approach favoured (Recommendation 12)

Infrastructure projects must be impartially chosen and implemented if the best value for money is to be had. Planning procedures and methods must not favour one approach over another and initial project studies must analyse all available options. So it is possible that upgrading and expanding existing infrastructure might be less expensive (with similar results) than building new facilities. Practices and standards in assessing and preparing projects should not vary much despite differences in implementation.

Recommended measures are:

  • Include analysis of alternatives in pre-feasibility studies.

  • Harmonise and publicise practices and standards for PPPs and traditional projects. The British Treasury (finance ministry) puts out a guide (the Green Book) to help all ministries assess programmes and projects.

  • Draft and make public a roadmap for planning and implementing all infrastructure projects, whatever their sector or mode of implementation, spelling out different stages and decision-points involved in their preparation.

Independent monitoring and assessment methods during the life of an infrastructure must be established (Recommendation 13)

Good follow-up and regular monitoring, using quality and performance indicators managed by an independent body throughout the life of an infrastructure, are essential for its good performance and for keeping costs under control. Major projects (both PPP and traditional) should be also assessed subsequently during their lifetimes by an independent body such as the state auditing board to verify such aspects as efficient implementation, fulfilment of contractual obligations by stakeholders, compliance with environmental standards and transparent finances. Evaluation should include comparison between the economic projections that underpinned the go-ahead for the project and choice of suppliers and the actual results, for such variables as revenue and number of users. So project assessment is a learning process that streamlines project preparation and improves the accuracy of projections used in feasibility studies (Rajaram et al., 2014).

Recommended measures are:

  • Institute the means to monitor the performance of operators and suppliers of economic infrastructure. Specify during project preparation how and by whom monitoring will be done and earmark enough funding. Sign contracts with suppliers in respect of what performance and quality aspects will be monitored. Those doing the monitoring should not have been involved in initial assessments or approval decisions and ideally should be drawn from a separate entity.

  • Submit major projects (PPP and traditional) to be independently examined by the state auditing board, which will have to be empowered to do so and whose staff will need to be increased and trained for this kind of work. Special training for judges and exchanges with other senior public finance monitoring bodies will be needed too. The auditing board also urgently needs new offices so it can do this important job properly.

  • Establish a learning loop to use the lessons drawn from audits and strengthen planning and assessment for new projects.

Financially sustainable infrastructure must be ensured for taxpayers and the government

Planning new infrastructure should consider the medium and long-term effect on public finances, as such projects directly or indirectly involve long-term funding, the impact of which needs to be managed in the light of Côte d’Ivoire’s major ambitions to expand its infrastructure, especially through PPP funding. PPP contracts are fairly inflexible (changes have to be negotiated, often with difficulty), which can limit a country’s freedom to change its tax policies, especially if PPPs are a sizeable part of the investment budget. PPPs also involve compensation clauses and tax risks that need to be monitored and managed.

Medium and long-term costs and risks involving infrastructure need to be under control (Recommendation 14)

  • Estimate operational and maintenance costs at a project’s planning stage.

  • Manage the impact of a project on public finances by involving the budget ministry in planning and preparation.

  • Publish an annual report on all the provisions, guarantees and other financial exposures linked to PPPs, as well as budgeted payments and revenue during the life of the PPPs.

  • Include recurrent infrastructure costs (operation, maintenance and PPP payments) in pluriannual budget planning (such as a Medium-Term Budget Framework – MTBF).

  • Take into account risks and conditional obligations linked to PPPs in budget documents.

  • With PPPs funded by taxpayers, include PPP payments in calculating public debt and use international financial reporting standards (IFRS).

References

Jeune Afrique (2014), “Côte d’Ivoire: le Fonds d’entretien routier récolte 130 milliards de FCFA”, 20 February, http://www.jeuneafrique.com/12139/economie/c-te-d-ivoire-le-fonds-d-entretien-routier-r-colte-130-billion-de-f-cfa/ (consulted on 3 November 2015).

OECD (2014), OECD Communications Outlook 2013, OECD Publishing, Paris, http://dx.doi.org/10.1787/comms_outlook 2013-fr.

OECD (2012), Recommendation of the Council on Principles for Public Governance of Public-Private Partnerships, May 2012, http://acts.oecd.org/.

Rajaram, A. et al. (2014), “The power of public investment management: Transforming resources into assets for growth”, Directions in Development, World Bank, Washington, DC.