Public-private partnerships (PPPs) are an essential component of the overall economic effort required to provide necessary infrastructure to post-conflict countries. However, donor aid usually precedes any consideration of PPPs, and even when it’s time for PPPs to make an entrance, these partnerships are not always adapted to the infrastructure construction or rehabilitation needs of post-conflict countries. After all, sponsors and financial institutions require well-structured projects with secure cash flows—not necessarily easy to find. Despite the obstacles, however, the success of a post-conflict PPP depends on government officials putting a priority on the projects most likely to succeed, instead of those needed the most. Once officials have established a successful track record, more challenging PPPs can be proposed to the market.
Our work on pioneering PPPs in post-conflict countries such as Bosnia and Herzegovina, Timor-Leste, Kosovo, Rwanda, Sierra Leone, and the Solomon Islands has reinforced this lesson, among many others. Despite the uniqueness of each situation, success can hinge on just a few key factors. Here are the tips we convey at the start of discussions:
Build a good hotel
Surprisingly, a good quality business hotel is the first key infrastructure need for a country recovering from conflict—because, like the airport, a hotel of international standing serves as visitors’ gateway to the country. The hotel is a straightforward infrastructure and business model, an easy win because international consultants and foreign investors require a place to stay, meet, and work. The structure itself is also one of the first positive signs to the world of the state of economic development of the country. The primacy of this step has been proven over and over: International hotels were the first infrastructure built or renovated in Eastern Europe in the early 1990s after the fall of the Berlin Wall. Sierra Leone’s first post-conflict project was also a hotel.
Post-conflict countries usually benefit from an additional effort in marketing the country as recovering or fully recovered. This could be done in the information memorandum by highlighting the history of the country and the progress accomplished since the conflict. This will help convey to the private sector a more realistic picture of the country than what may have been depicted by mainstream media.
International hotels were the first infrastructure built or renovated in Eastern Europe in the early 1990s after the fall of the Berlin Wall.
Which law or laws?
One of the first tasks of the legal consultant assisting the government in launching a PPP is to assess the legal framework and compatibility with the proposed PPP project. When a temporary peacekeeping authority has been governing the country for a transitional period it may have issued its own legislation, as in Kosovo and Timor-Leste. Many questions follow: “Which law do we apply?” “Is the new law designed to be temporary like the peacekeeping authority that drafted it?” “Now that a government has been established, should we revert to the old law or wait for new laws to be put in place?” The perception that the old law represents a previous regime and must be replaced is also a factor in moving forward.
Too many advisors makes for bad law
Another challenge of the legal framework may arise when a post-conflict country has enacted too many laws with too many advisors financed by various donor funds and countries. In theory—and in a stable country—laws are proposed by the government and approved after debate by the parliament. The civil servants drafting the laws are products of the legal culture of their country, whether it is common law or civil law. The result is compatible with the legal system even if the law might not meet international best practice in some respects. By contrast, a post-conflict country often receives grants to upgrade its laws and regulations through the assistance of legal advisors who will come from other countries and even different legal systems. They may produce a PPP law or land regime law that does not fit with other laws, or mesh with the country’s legal principles.
Land is usually a major problem
Conflicts are often linked to land. But if the land registry burned to the ground during the conflict, how is ownership evaluated for an eventual PPP? Assessing and mitigating this risk will be critical. The international legal advisor working with the government will investigate this matter along with local legal counsel and report in the legal due diligence on the potential risks. Often, there is no clear legal title. The PPP contract will likely require that government take the risk and compensate the private partner for all claims related to ownership of land. Customary rights of indigenous people over their land may also be protected by a new land law which might be applicable. Ascertaining their applicability (or not), and the procedures they entail for a project, is a key element of a legal due diligence prior to structuring a PPP.
Government counterparts may lack capacity
Advisors and private investors in post-conflict countries also suffer from a lack of experienced institutional counterparts. In some cases, former civil servants may have left the country during the conflict; in others, certain ethnic groups may be tacitly disqualified to work in the new administration. The new civil servants might not benefit from the supervision and experience of the previous employees. Regardless of the specifics, any country rolling out its first PPPs will need time to adjust and build capacity. In post-conflict countries with a new administration, it’s crucial to set aside this time. The international consultant advising the government on the first PPP will need to factor in this learning period when planning the project.
Be prepared for capacity building in local counsel
The international legal consultant may experience some difficulties with local lawyers—who, like the new civil servants, may lack the experience necessary for PPP or large commercial contracts generally. Because local lawyers will not have had the opportunity to analyze and apply the new laws being put in place, which will change often as the project moves forward, both international and local lawyers will have to be prepared to learn as they go. This may require the drafting of sector-specific or project-specific laws to allow the project to proceed smoothly.
Results may vary
It is a special challenge to work on pioneering PPPs in post-conflict countries. To succeed, projects require adaptability, innovation, and perseverance from all parties. On our list of projects in post-conflict countries, one has failed, one has succeeded, one has been “on hold” for almost two years, and two are just starting out. Given the trauma these countries have experienced in the past, however, advisors and investors can take special pride in trying to make these projects work, especially if they ultimately triumph.