private investors as long as tariff policies in force make it impossible to attract financial profit from investment in these sectors. However, the set up of support grants accorded to institutional operators in this sector gradually enabled private companies to operate on African transport and communications markets.
Furthermore, the transport of merchandise is to a large extent liberalized and is, therefore, not part and parcel of public service.
89. Owing to the crisis afflicting public finances in Africa the State is becoming increasing incapable of finding such subsidies, let alone meet the expenditures of these two sectors. This explains the new approaches below which increasingly characterize State policies and practices pertaining to the financing of the two sectors which have been successfully tried in developed countries. They are meant to improve upon the performance of these two sectors, thereby improving their financial performance. It should be noted that all examples of type of financing indicated in boxes 1 to 8 that follow originates from information at ECA, unless otherwise
indicated.
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(a) Performance contract
90. More and more performance contracts are being signed between the Government and unsuccessful public enterprises of the transport and communications sectors. At the expiry of these contracts, enterprises should, in the course of a period agreed upon by the two parties achieve focused quantitative (financial profitability, sub-contracting to a certain degree, the private sector, cost reduction, etc..,..) and qualitative objectives (improvement of service quality, etc ) which, to the various levels of command fully translate into obligations and motivation;
in return, these enterprises acquire a large measure of autonomy with regard to management, more flexible taxation that reconciles the demands of financial and economic profitability, a substantial subsidy for the improvement of performance paid on the basis of results achieved, etc.... (see Box 1)
BOX 1
PERFORMANCE CONTRACTS SIGNED IN SOME AFRICAN COUNTRIES Following are African public enterprises or establishments which chose this approach in order to improve cost recovery but somehow failed to perceptibly improve their financial profitability:
In the area of surface transport
A one year Performance Contract was signed between the Government of Ghana and the State Transport Corporation of Ghana.
In the area of railway transport
The railway of Senegal (contract running from 1990 to 1993), Mali with two performance contacts (1986/1990 and 1992/1993) Tunisia (1992/1996), Benin/Niger (1993/1997), Egypt (1983/1988), Uganda (1994/1997), Madagascar (1991/1996). Nigeria and Zambia are meanwhile, still studying the possibility of streamlining the management of their railway networks.
In the area of road transport
The Gambian public urban transport company signed a three-year performance contract with Gambian government. The same is true of Morocco where the Socie*te Nationale des Autorite's has been operating since, on the basis of trade regulations which, above all guarantee it a degree of taxation that is consistent with the objectives of
requisite financial profitability.
(b) Management Contract of public enterprises of transport and communications sectors in Africa
91. These are contracts at the expiry of which a private company is assigned for a limited duration of time, for instance 3 to 5 years, the management of an unsuccessful public establishments. (Ports and Airports Authorities, Transport Companies, Highway Authority, Railway Authority, Posts and Telecommunications Authorities, etc....) with a view to considerably improving the latter's cost recovery and subsequently increasing their financial profitability; in return, the private company lays down conditions such as the liberalization of taxation on the services provided, non-interference of the public authority concerned in the day to day management of the public establishment. (See Box 2 for some examples.)
BOX 2
MANAGEMENT CONTRACTS IN PRACTICE IN SOME AFRICAN COUNTRIES It was within this context, for example, that:
(i) a French private company was assigned the management of the Societe*
Centrafricaine des Transports fluiaux (SOCATRAM);
(ii) the Nigeria Murtala International Airport Authority surrendered its management to a French private company;
(iii) the Sierra-Leone Port Authority signed a management contract with a German private enterprise;
(iv) on the basis of a five year management contract, DAHACO (Dar-es-Salaam Airport Handling Company Limited) benefited from a Technical Assistance Support from SAS (Scandinavian Airlines Services). Thus presently
DAHACO is providing efficient services and is financially viable with 12 to 25 per cent financial return.
(v) Governments of Cameroon, Gabon, Togo and Madagascar have signed contracts with the following private companies for the management of one or several of their airports. These companies are respectively Airport of Cameroon (ADC), Libreville Airport (ADL), Lome-TOKOIN Airport Company (SALT) and Madagascar Airports (ADEMA).
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(c) Privatization of public enterprises in transport and communications sectors in Africa
92. Owing to the current public financial crisis, African Governments are increasingly withdrawing from commercial activities, notably those involving investment and exploitation of the transport and communication sectors; this withdrawal is effected through the privatization of
the public enterprises concerned. (Box 3 gives some examples.)BOX 3
AN EXAMPLE OF A PRIVATIZED PUBLIC ENTERPRISE This is particularly true of the Nord lac shipping company (ARNOLAC) in Burundi; the company which operates on Lake Tanganyika was privatized in 1992 on the
basis of funding from the economic development Bank of the Great Lakes countries.
(d) Building, Operating and Transfer (HOT)
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93. This approach in dealing with the public financial crisis in Africa involves the assignment by concerned public Authorities of a private investor generally selected by tender on the basis of his offer, to finance, build, maintain and manage over a set period (20 to 30 years for instance) that is renewable, the economic tool (infrastructures, installation, etc ) that the
contract involves; at the expiry of the concessional period, the property reverts back to the publicAuthority which will have previously guaranteed the private investor all reasonable pre-requisites for the conversion of the public enterprise into a profitable one in the course of the time agreed
upon.
94. Despite the great interest generated by the development of this type of funding, caution dictates that concerned African public authorities ensure, on one hand, that this kind of contract
guarantees them a sustainable increase in their infrastructural capacities and on the other hand, that this is achieved under the best, most competitive conditions possible. (Box 4 gives an example.)BOX 4
EXAMPLE OF B.O.T. CONTRACT
Morocco took this approach with regard to the development of its energy infrastructures. Australia!/ did the same concerning the development of its port, road transport and water resource infrastructures.
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