BUILDING CAPACITY AND CAPABILITY FOR PPPs

Capacity building is a term that's been thrown around a lot in recent years, especially when it comes to Africa. But what does it really mean? As someone who has lived and worked in Africa, I can tell you that capacity building is a complex and multifaceted process that requires a deep understanding of the unique challenges facing the continent. Capacity building is a process of developing and strengthening the skills, abilities, processes and resources that organizations and communities need to survive, adapt, and thrive in a fast-changing world. In Africa, capacity building has been considered as a cornerstone of development for the last six decades. (Nasir A Soodhun, April 2023, (3) Capacity Building and the Importance of a Just System in Africa | LinkedIn ).

Six major trends are impacting the world today: rapid urbanization and the development of large cities, shifts in global economic power, climate change, changing demographics with ageing populations in the developed world, technological innovations and the rise of a culture of entrepreneurship. These trends are driving recognition of the important link between a country’s engineering capacity (i.e. the number and ‘quality’ of its engineers) and its economic development. (Engineering for sustainable development: delivering on the Sustainable Development Goals - UNESCO Digital Library ). When we look at the infrastructure gap in Africa and the capacity required to accelerate investment and implementation in the space, this assertion by UNESCO about Engineering applies to all other skills areas and in fact applies to both human and institutional capacity. Furthermore, to understand the challenge of investing in and successfully developing infrastructure in Africa one needs to dig deeper into the continent's infrastructure paradox - There is need and available funding, together with a large pipeline of potential projects—but not enough money is being spent (K. Lakmeeharan, Q. Manji, R. Nyairo, and H Poeltne, March 2020, McKinsey & Company - Solving Africa’s infrastructure paradox).

Closing this infrastructure gap matters greatly for the continent’s economic development, for the quality of life of its people, and for the growth of its business sector. The good news is that infrastructure investment in Africa has been increasing steadily over the past 15 years, and that international investors have both the appetite and the funds to spend much more across the continent. The challenge, however, is that Africa’s track record in moving projects to financial close is poor: 80 percent of infrastructure projects fail at the feasibility and business-plan stage. This is Africa’s infrastructure paradox—there is need and availability of funding, together with a large pipeline of potential projects, but not enough money is being spent. There are several reasons for the high failure rate. Many governments and developers lack the capabilities, as well as the budgets, to design and implement infrastructure projects with commercial potential. In addition, short political cycles may challenge commitments to long-term infrastructure projects. As a result, investors lack bankable project pipelines: only a few projects meet investors’ risk-return expectations and reach financial close. Indeed, reaching financial close can be extremely challenging even for projects in asset classes that have delivered high returns in the past (such as power generation), and for projects that have secured revenues and guarantees. (K. Lakmeeharan, Q. Manji, R. Nyairo, and H Poeltne, March 2020, McKinsey & Company - Solving Africa’s infrastructure paradox)

People interchangeably use the terms capacity and capability when referring to matters economic development but what do they mean and what's the distinction anyway? Synergy Group summarize it well.

"During our engagements with Government clients over the years, we've noticed three words which are commonly misused. They sound and look similar; they both start with a 'c' and end with a 'y'. Their meanings are inter-related, so it is understandable why they often get mixed up. But there are important distinctions between these words, and getting this right will help you ensure your learning and development systems are set up for success". Generally,?capacity?is associated with the?potential?to achieve something. One of the definitions provided by the Macquarie Dictionary describes capacity as?the power, ability or possibility of doing something. Capacity is an enabler of?capability. Capability?is the?ability and capacity to achieve and sustain a desired effect?(Defence, 2014 p. 2). A?capability?can be developed or used (Macquarie online), and applies at the organization, division or individual level. With this definition, it's clear that capability is determined by a range of factors or inputs. These include people (with the right competencies), equipment, information, resources, and organizational structures that give purpose and context to actions. Competency?refers to a performance, behaviour or action?which is specific, measurable and requires the?application of knowledge, skills and attributes.?In the learning and development sector, the term competency is commonly associated with vocational education and training sector, specifically?units?of competency?which are the building blocks for many qualifications under national qualifications frameworks. (Capacity, capability and competency - Synergy Group | Dynamic Leaders in Solutions for Government)

This last article in my blog series on PPPs and infrastructure development has taken some time for me to formulate because there is so much I can write about! I have been in the capability and capacity building space since 2011 when I first got involved in developing institutional Project Management capability for Sasol as the Business Architect leading the team that designed, implemented and operationalized its Global Project Academy, and more intensively since 2018 with BCDIP learning solutions in attempting to resolve the Kenya built environment professionals' skills gaps in Project Management and Public Private Partnerships (PPPs) by creating learning programs delivered in collaboration with Engineers Board of Kenya CPD programs and professional associations. More recently I am also involved as a Delivery Consultant for Raiser Resource Group where I facilitate learning and insights to organizational leaders through the Raiser leadership and performance improvement solutions that help organizations and leaders achieve consistency and excellent results by unlocking the human potential in their workforce. It has been over a decade and counting and I have humbly come to the realization that capacity and capability building are the most desired enablers to achieving results/development but the most difficult to attain. It is a complex, multi-faceted endeavor that requires an integrated policy/institutional approach and many actors working progressively and sustainably towards unlocking the potential within the human being. (Rose Kananu, PMP?, CP3P-Foundation, Civil Engineer is a capacity building expert and learning facilitator)

In this article the authors explore five (5) factors that will potentially unlock capability and capacity for using PPPs to expand infrastructure development in Africa.

1. Training and certification

Every day it feels like there is a new certification or qualification that a professional in the built environment needs to acquire! We are told the world of work is changing and our degree or diploma certificate in our chosen discipline (Engineering, Architecture, Construction Management, Planning...etc) will not serve us well so we must embrace Life Long Learning and continuously develop professionally to remain competitive. This need has proliferated all kinds of entrepreneurial opportunities for training companies accredited by international organizations such as Project Management Institute and APMG International which are pushing certification products to the African market. They give their customers assurance that an international certification will make you competitive and assure you of career growth and consulting work.

Professional regulators such as Engineers Board of Kenya and The Institution of Engineers of Kenya are struggling to progress the 20,000+ Engineers in Kenya from Graduate Engineer level to Professional Engineer. The question that then remains is "...if Kenya has among the best trained human capital in Africa why does this not translate in successful in implementation of infrastructure projects?" It is clear that the markets in Africa do not have a capability issue but a capacity constraint issue. Training and certification is only one piece of the puzzle.

Capacity building is a holistic endeavor that takes into consideration competency development founded on good capacity building frameworks, training that is linked to market responsive curriculums and that is delivered in a "just in time" and not "just in case" approach, and certifications that supplement work experience and not substitute it. This type of thinking will ensure human capital yields results in the market/workplace. Too many people invest in and acquire certificates to boost their CVs (the just in case approach) and have little to no work experience in the field they are certifying in. This is similar to installing a Ferrari engine in a Probox and hoping the Probox will win a rally - the form of the car is simply not designed for that speed. Similarly, when it comes to building human capital the foundational understanding and work experience in the chosen field needs to be solid before capping it with a certification.?

The place for certification is to ensure that the best-practice and a standardized way of doing something is embedded. Rose Kananu, PMP?, CP3P-Foundation, Civil Engineer started her Project Management career purely by accident and practiced it for two decades but only acquired the PMP certification in 2021. She applied to sit the exam in 2018 but postponed since she didn't have time to study as she had just started a new business, and she failed the first attempt at taking the exam in 2020 which was quite humbling. When she finally purposed to ace the exam she took the training seriously and led revision sessions in the exam prep group she was assigned to. She was thrilled to get a "passed" result after sitting the 4-hour exam online and she attests that she is a better Project Manager now because she learned the "proper" way to practice the discipline through the PMP exam process. There are too many PMPs who can't lead complex projects because they took it as an academic exercise just to acquire the certification.

2.Skills and knowledge transfer

The infrastructure deficit in Africa means that African governments are going to develop the types of infrastructure projects its workforce is not accustomed to and at an unprecedent scale that far outstrips the capability and capacity in its workforce. The Jubilee administration in Kenya under former President Uhuru Kenyatta had an ambitious infrastructure development program that entailed building thousands of kilometers of roads and powerlines, a Standard Gauge Rail that had never been built before, new cities in the LAPSSET progam, etc. Ethiopia built a high-speed rail and Tanzania also built an impressive rapid transit bus transport system in Dar. As the East African countries set off to develop their infrastructure they outsourced much of the work to foreign contractors and consultants, and quite frankly the financing was mostly foreign.

A study commissioned jointly in 2017 by NATIONAL CONSTRUCTION AUTHORITY, Kenya National Highways Authority and African Development Bank Group and conducted by Aninver Development Partners (Aninver - Capacity Assessment of Construction Industry and National Construction Industry Strategy) was quite revealing and depressing at the same time. It revealed that most of the infrastructure development work went to foreigners which coincides with the decline of local consulting firms (many downsized, retrenched staff or closed down all together) and financial failure of many contractor companies that went broke. The high level of unemployment in the construction sector in Kenya is attributed to this phenomenon and in fact we can partly attribute the "professionals for hire" who are used by unscrupulous foreign contractors to rubber stamp foreign sourced designs so that they can get local council approvals to this very occurrence. This is a subject for a separate article altogether!

How much skills and knowledge transfer has taken place from the successful implementation of SGR, Nairobi Expressway, Lake Turkana Wind Power Project, etc? How successful has the Local Content regulations enforcement in the construction industry been? I am not sure studies have been done to measure the impact of hiring foreign firms on capacity building in African markets and I can imagine it is not easy to do that. We are stuck in a catch-22 situation with large scale infrastructure needing to be built fast to close the infrastructure gap because the pace at which Africa's population is growing is far outstripping African government's ability to deliver on its public service and economic development mandate without foreign financing and capacity support. We must non the less implement sustainable capability and capacity building measures that ensure sound skills and knowledge transfer.

In the area of PPPs it was highlighted in the article on the role of transaction advisors (The role of advisors and consultants in PPP projects | LinkedIn) that this is a highly specialized space that will have to rely heavily on foreign firms. One way to ensure sustainable skills and knowledge transfer is to pair foreign Transaction Advisory Services (TAS) firms with local firms (Engineering, Environmental, Law firms etc) through enforced procurement conditionalities when putting out TA bids for transaction advisors. This will in fact create a win-win because many foreign TAS firms fail to close PPP projects because they don't have understanding of local conditions (see an instance of the complex land acquisition issues: https://www.the-star.co.ke/news/2022-04-04-nlc-spent-sh20bn-to-payout-people-affected-by-road-projects/ ) which their local counterpart firm would resolve for them. This will also ensure there is continuity of PPP projects during transition between governments and political administrations.

Many foreign consulting and contractor firms believe they have met their Local Content quota by hiring local experts but this is not enough. They need to sub-contract whole parts of their scope to local firms and then work side by side to transfer knowledge. This will further reduce their costs and increase their profitability because local firms will hire young professionals and interns which cascades the knowledge, and skills transfer to the ballooning youth population. Local Content regulations value can be unlocked through simple commercial solutions, not protracted and complex legal processes.

Further, promoting knowledge sharing and learning across the East African region is key to fostering a culture of innovation and continuous improvement in PPPs. Sharing best practices, case studies, and lessons learned from successful PPP projects can inspire new ideas, partnerships, and collaborations. Cross-border collaboration and knowledge exchange can accelerate the adoption of PPPs and drive sustainable development outcomes.

3.Local capacity enhancement

A robust policy and regulatory framework are essential for creating an enabling environment for PPPs. This involves developing PPP laws, regulations, and guidelines that provide clarity, transparency, and investor confidence. Clear rules on procurement, risk allocation, and dispute resolution are vital components of a well-functioning PPP framework. Raising awareness about the benefits of PPPs and educating stakeholders is crucial. This includes government officials, private sector entities, and the public. By showcasing successful PPP projects and highlighting their impact on economic development and service delivery, stakeholders can gain a deeper understanding of the PPP model and its potential.

Building the capacity of government agencies responsible for PPPs is paramount. This includes PPP units or authorities tasked with structuring, managing, and overseeing PPP projects. Capacity-building efforts may include training programs, hiring specialized staff, and establishing streamlined processes and procedures.

Encouraging the identification and preparation of viable PPP projects is key to attracting private sector participation. This involves conducting feasibility studies, risk assessments, and financial structuring to ensure the bankability of projects. Public sector entities should actively engage with the private sector to co-develop projects that meet market needs and align with national development priorities.

Effective collaboration and engagement between stakeholders are critical for successful PPP implementation. This includes government agencies, private sector stakeholders, civil society organizations, and international partners. Regular consultations, workshops, and forums can facilitate dialogue, knowledge sharing, and consensus-building around PPP opportunities and challenges.

Supporting the development of local businesses and entrepreneurs to participate in PPPs is crucial for promoting inclusive growth. This can involve providing technical assistance, access to finance, and opportunities for skills development. Empowering local enterprises to engage in PPPs not only stimulates economic activity but also fosters job creation and entrepreneurship.

Establishing robust monitoring and evaluation mechanisms is essential for tracking the performance of PPP projects. This includes financial performance, service delivery, and compliance with contractual obligations. Regular evaluations help identify lessons learned, best practices, and areas for improvement in future PPP initiatives.

Developing robust risk management frameworks is essential for mitigating risks associated with PPP projects. This includes identifying, assessing, and allocating risks appropriately between public and private partners. Contractual provisions, insurance mechanisms, and contingency plans should be in place to address potential risks and uncertainties.

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4.Programmatic approach to embed structured capacity building programs

Too often large infrastructure programs including the GoK Treasury-led PPP Priority Projects pipeline, LAPSSET, KONZA SEZ etc. are developed as standalone government programs/projects instead of being weaved into an integrated set of programs/portfolios with capacity building embedded within. They tend to focus on policy, sustainability and public accountability, and the technical aspects of their implementation, but seemingly seem to assume that the human capacity will be tackled separately. For instance, a lot of focus was accorded to the development of Kenya's PPP Institutional, Legal and Regulatory Framework yet we don't see an equal focus on developing Kenya's PPP Capacity Building Framework. It is no wonder then that the ambitious pipeline of the 80 odd priority PPP projects saw little success in achieving financial close with the PPP program almost collapsing by 2021.

Public programs also seem not to adopt a long-term multi-year view and instead are structured and implemented around election cycles. Former President Kibaki knew Kenya Vision 2030 was a long-term endeavour and designed it to be implemented in 5-year medium term plans. We are now in the fourth medium-term plan, but no one can articulate how the third medium-term plan went and if it was followed at all. A programmatic approach ensures that there is continuity and passing of the baton, and that all five principles of capacity building are adhered to.

Knowledge Management plays a key role in supporting effective programmatic deployment because all the information and lessons generated between medium-term cycles is captured and disseminated for posterity and for improvement. Knowledge management (KM) is the process of identifying, organizing, storing and disseminating information within an organization. This is applicable to government institutions too and is particularly useful for transitions between political administrations.

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5.Relevant education

According to UNESCO Africa continues to have the lowest number of engineering professionals per capita of all regions of the world (UNESCO in its?second engineering report ,?Engineering for Sustainable Development: Delivering on the Sustainable Development Goals, published on 4 March 2021). This report analyses the transformation of engineering education and capacity-building at the dawn of the Fourth Industrial Revolution that will enable engineers to tackle the challenges ahead. With poor quality engineering education offered in most African universities, the report emphasized, Africa might also miss out on gains that could arise from artificial intelligence, big data ecosystems and the development of smart cities. “Engineering education is changing from its traditional focus on disciplinary technical knowledge to a much broader interdisciplinary and complex problem-solving approach that integrates societal problem analyses with academic technical knowledge and solutions,” the report reads.

I can bet that if I visit the department of Civil Engineering at my undergraduate university, I will find syllabus that was used to teach me Engineering over 20 years ago. (Rose Kananu, PMP?, CP3P-Foundation, Civil Engineer)

It is not clear why Kenyan (African) universities have lagged behind in revising their curriculums to keep up with modern times. There is also limited meaningful interaction between the academia and industry except when universities seek attachment opportunities for their students to fulfil an academic requirement. Meaningful collaboration entails universities bringing groundbreaking research and innovation to industry as commercial or public administration solutions such as the case of Actuate Biomedicine? (https://www.dhirubhai.net/posts/actuatebiomedicine_nairobiactuatesummit-nairobiactuatesummit-activity-7186240030581903360-5R1I?utm_source=share&utm_medium=member_desktop .)

With the advent of large-scale PPP infrastructure development, there should be an equivalent effort to revamp built environment courses in the universities to include PPP, Project Finance, sustainable infrastructure, Project Management, amongst other emerging subjects. A graduate who comes into today's market armed with knowledge from the previous decades is not very useful to industry and ends up a frustrated jobless youth. The industry is rapidly moving into AI, big data and IoT which would mean that such graduates become obsolete before dust has gathered on their graduation gowns and caps. Relevant and value adding education will go a long way in building capacity for developing infrastructure projects.

Bridging the capacity divide to overcome Africa’s infrastructure paradox

The subject of capacity and capability building is not a straightforward one with easy answers to the hard questions. For Kenya and the region, it requires a multi-faceted approach that involves stakeholders at all levels. By investing in awareness, education, policy frameworks, institutional capacity, stakeholder engagement, risk management, local business development, monitoring, evaluation, and knowledge sharing, governments and partners can unlock the full potential of PPPs as catalysts for economic growth and development.

The areas to look out for include:

·???????? Intentionally linking economic development blueprints to capacity building programs.

·???????? Having a clear link between education and economic development.

·???????? Breaking away from obsessive focus on politics and political cycles and adopting a long-term programmatic approach.

·???????? Understanding that politics is just one pillar of development and expanding focus to include other pillars of economic development.

·???????? Exploring the value that comes with labor export and knowledge transfer particularly in this era where the global north has aging populations and Africa has the largest youthful workforce.

The authors:

Bahati Kerubo is a Technical Consultant with The World Bank Group

(Currently she is advising as a Research and Public- Private Partnerships (PPP) Specialist supporting on key aspects of PPP projects and policies in the Kenya PPP Directorate to support the World Bank's mission of infrastructure development and enhance communication.)

Rose Kananu, PMP?, CP3P-Foundation, Civil Engineer is the Founder and Managing Director of Howard Aidevo Consulting Ltd and the creator of the BCDIP brand.

(She is on a mission to build capacity for professionals and contractors in PPP and Project Management so that Africa's infrastructure is built by Africans.)