Political support for private sector participation is not, however, driven only by externalities. In many countries the impetus in favour of private sector involvement is driven by high-ranking political champions who spearhead the process of policy and legislative reform. In many countries it is possible to identify the individual(s) who championed the process at the outset and who worked with sectoral departments or local government to put policy in place. It is also vital that policy-level leaders bring about a convergence of departmental attitudes and objectives and build support in relevant administrative departments. Cross-sectoral capacity building programmes at the national level are often significant turning points, enabling change at lower levels of government.
This may not always be the case, however, and irrespective of the policy environment, political resistance can thwart efforts at the lower levels of government. In those situations in which policy on PPPs is relatively quiet, not actively promoted, ambiguous or in its infancy, municipalities may need to build political support at higher levels of government for specific initiatives. In Nepal, high-ranking national politicians refused to grant permission to Kathmandu Metropolitan City to introduce a concession for a bus terminal, and the initiative was abandoned after the papers were signed.
Municipal officials will also be interested in the political position of key stakeholders such as trade unions and consumer groups. Key national-level stakeholders involved in private sector participation will include national federations of unions, and national unions representing local government workers. Many are ideologically opposed to the process; others may be concerned merely about the interests (particularly job losses) of their members; others may object because they have not been adequately consulted. Evidence from various countries highlights the difficulties created at local level when national trade unions elect to oppose private sector involvement. In Nelspruit, South Africa, for example, the national trade unions resisted private sector participation in the water sector even though the local unions had agreed and worker terms and conditions had been addressed.
The role of national-level consumer groups may also be critical, and municipalities will have to familiarise themselves with the potential roles of such groups. In some countries consumer organisations have taken a strong interest in private sector participation. In Indonesia, the consumer organisation has a good relationship with the water companies and a strong voice in the media, advocating sensible tariff levels to ensure sustainability while also promoting consumer rights.
Municipal efforts will also be affected by the political credibility that the national government establishes with potential partners. Consistency, authority, and commitment to appropriate policies, laws and institutions will reduce risk, while failure to enforce, slowness in decision-making, and uncertainty will deter investors and increase costs for the municipality and the consumers. Municipal officials can bring some pressure to bear by joining task forces and representing local-level interests clearly and persistently.
Since 1994, the South African government has placed considerable emphasis on the elimination of service backlogs from the apartheid era. The Municipal Infrastructure Investment Framework, published in 1995, was the first attempt to quantify the investments needed. It demonstrated that this challenge could not be met by the public sector alone: it needed partnerships with private investors and operators. Thus, subsequent government policies on urban development and local government have recognised the need for partnerships. Some municipalities began to explore options involving the private sector, adding to the pressure for clearer government guidance on approaching partnerships. In 1997 the then Department of Constitutional Development published a first set of guidelines for PPPs at the municipal level. Government departments and the Development Bank of Southern Africa (DBSA) introduced municipalities to the partnership concept, but soon the need for a more consolidated initiative became apparent. In 1997 the Departments of Finance and Constitutional Development and the DBSA joined forces to establish a support unit to act as a catalyst for PPPs. The Municipal Infrastructure Investment Unit (MIIU) has the explicit objectives of encouraging private sector investment in municipal services, and building sustainable capacity in the municipal, private and consultancy sectors. Located at the DBSA, the MIIU was conceived as a five-year project. Staff are either seconded from the DBSA or are international experts supported with funding from USAID. In practical terms, the MIIU provides technical assistance to municipalities that are preparing service projects for private sector investment. It provides funding support, on a cost-sharing basis, for municipalities to appoint the specialist consultants who are needed for project preparation, and also provides direct technical assistance to municipalities regarding the process of structuring PPPs. Typically, this includes guidance on the conceptualisation and design of PPP initiatives; the selection, supervision and evaluation of local consultants charged with preparing feasibility studies and bid document packages; the negotiation of PPP contracts; and appropriate means and methods for interacting with national-level stakeholders such as labour unions and relevant ministries (Hlahla, 1999). It then provides limited support for municipalities when they move forwards into the initial stages of implementation. The MIIU is currently addressing approximately 40 municipal projects in water, electricity and solid waste as well as other non- basic municipal services. The unit has received over 40 applications from other interested municipalities. Deals concluded to date include the two most prominent water concessions in the country, in Nelspruit and Dolphin Coast. Its support is demand- led. Municipalities must request assistance and meet rigorous procedures to qualify for technical and financial assistance. Given the aim of creating PPP 'success stories' within the country, it is therefore likely that those municipalities receiving support from the MIIU and launching PPP initiatives already have a significant degree of financial capacity and technical skill. Basic municipal management skills are being developed through broader initiatives, led by the Department of Provincial and Local Government, the DBSA and donors. The process adopted by the MIIU in the development of PPPs also aims to build a national consultancy sector with the ability to underpin municipal initiatives in the future. This is envisaged as a key tool in the creation of a sustainable market for PPPs in South Africa. To this end, local consultants have worked beside international consultants on the projects, building skills as core team members but accompanied by expertise and experience. The unit places a high degree of importance on learning from international experience and the inputs of the World Bank and bilateral donors. In the light of its experience with municipal PPPs, the MIIU has been able to contribute significantly to the government's development of policy and legislation. South African government policy on partnerships was contained in a Draft White Paper on Municipal Service Partnerships published in April 2000. Partnerships are also specifically described, and their procurement regulated, in the Municipal Systems Act of 2000.\
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