115. Capacity has been continually raised as an issue in ISMED Programme consultations. PPP transactions are complex, and government officials usually lack the experience and expertise to properly engage with private-sector counterparties.
116. There are currently very few projects in the region that feature private-sector participation and fewer still that can be considered to be PPPs. The small number of successful transactions results in a circular problem: governments do not have a track record and have not built capacity in closing transactions, and are therefore less able to attract investment and complete transactions. A history of successful projects is one of the most important predictors of future successful projects.
117. The creation of a PPP central unit is an important step in building this needed capacity. Of the four ISMED focus countries, only Egypt has created a dedicated PPP Central Unit at the Ministry of Finance. In Tunisia, both the Prime Minister's Office and the Ministry of Finance currently have PPP Units and it is not clear if this situation will be permanent. Morocco and Jordan currently lack central PPP units. The Egyptian PPP Central Unit is under-resourced and understaffed in light of the significant need to renew the country's infrastructure and the government's ambitious plans to do so by using PPPs.
118. Capacity building cannot be limited to the formation of a PPP central unit. Line ministries, agencies and authorities must also have an understanding of PPPs if they are to work successfully with a PPP central unit. While a central unit may be vital to the successful tendering and closing of the transaction, it is the line ministry or procuring authority that must administer the project for the duration of the project agreement. This will require a core of expertise in PPPs at the procuring authority and an in-depth knowledge of the project agreement, making the creation of a satellite PPP unit at the authority or ministry essential. Line ministries and agencies sometimes resist working with PPP central units, as they prefer to contract under more familiar public procurement procedures and may see the central unit as a threat to their authority. Training will be required in these cases so that all government participants understand the functioning and benefits of PPPs and play their crucial role in project success.