The Usage of Official Development Assistance (ODA) in Public Private Partnerships Investments in Africa: The impact of labour right. (Malawi Case Study)

Alex NkosiInstitute for Policy and Development

(IPODE)

Background Information Official Development Assistance (ODA) remains relevant and important

for infrastructural development. The recent past economic down-turn that firmly gripped the developed

world has exacerbated the reduction of Official Development Assistant (ODA) to the developing world.

New economic actors, CHINA, Brazil for instance, are also making their stamp on the African continent through the provision of aid.

This conflation of dynamics has induced a transformation and reconfiguration regarding the nature and manner in which the ODA is administered and implemented.

Having said this, the developing world still needs far more financing for infrastructure than can be provided by domestic public finances alone and through ODA (Pessoa, 2008:1).

Faced with this challenge most African governments are pursuing the public-private partnerships (PPPs) as an alternative approach to improving infrastructure and service delivery to enhance the quality of life for the citizenry.

The Study

This paper attempts to scrutinise the usage of ODA in the development of Public-Private Partnerships by focussing on its impact on labour rights.

The Shire River Basin Management Programme will be employed as a case study.

The Shire River Basin is a very key natural resource to Malawi. Over 5.5 million Malawians live, work and depend on the Shire River Basin.

It provides water for many purposes, including generating 98% of Malawi’s electricity through hydro power, agriculture, fisheries, transport, forestry, tourism and water for home use in urban (Blantyre) and rural areas.

There are three components to the project. The study focused on the upgrade of the Shire Liwonde Barrage

The Study: Financing GEF/LDCF and the World Bank are co-financing this project

as a fully-blended project with grant resources for biodiversity, sustainable forest management, land degradation and climate resilience.

DFID is considering parallel financing for improved basin-wide monitoring and evaluation of catchment management under Sub-component B.1 of the project.

Partnership and coordination arrangements have been initiated with the Millennium Challenge Corporation/Account (MCC/A), UK Department for International Development (DFID), Norway and The United Nations Development Program (UNDP), JICA, the International Fund for Agricultural Development (IFAD) among others, who are actively investing in catchment or flood mitigation activities in the Shire River Basin.

Contractual Agreements The researchers were systematically denied access to contractual

agreements. In the absence of the Access to Information Act…..its a nightmare to access government information in Malawi.

Project costs comprise the lifetime costs of investment, maintenance and operation of the barrage, and the costs of the development of an integrated planning and management system for the Shire basin.

The upgrade started in 2014 and will be finished in 2017 and is supervised by the Norwegian company Norplan.

Norplan, the international brand name for two Norwegian consultancy-firms (Multiconsult AS and Asplan Viak AS) that operate in engineering and development, has been awarded the supervision-contract for the upgrade, while two other European companies will oversee civil work contracts, and the supply and installation of barrage gates. The other two companies are Conduril Engenharia (Portugal) and CMC Di Ravenna (Italy).

Methodology The study used a mix-method approach where both quantitative and qualitative

methods are employed. Review of secondary and primary data was done. This was augmented by three questionnaires which were constructed and used to

obtain standardized information from technocrats, implementing entities and workers themselves respectively about: (a) the efficacy of using ODA in PPPs,

(b) (b) to ascertain the extent to which contacted companies (private sector) implementing the PPPs respect labour laws both local and international, and finally

(c) (c) and to find out about the working conditions of workers at Liwonde Barrage. While it was the aim of the study to engage as many technocrats as possible, it was extremely difficult to find “willing” officers to be interviewed.

Most of the government officials were not comfortable to be interviewed citing a politically sensitive working environment that made them afraid of reprisals. We however managed to interview 12government officials from different line ministries and 13other key informants from various key institutions which included trade unions, CSOs and parastatal.

We had to use unconventional methods to interview the workers at Liwonde Barrage. We lodged close to the site and managed to recruit 30 workers who we successfully interviewed after working hours.

Study Objectives:

The aim of the study was to explore: The existing and proposed legislative, policy,

administrative and institutional frameworks for promoting and conducting PPP initiatives and projects.

The extent to which freedom of associations, trade union rights, international and national labour standards are upheld in such projects.

Gather information on the organizational, financial and human capacities of trade unions to keep governments accountable in spending public/donor money on private sector investments.

Employment relations and Labour Rights The Trade Unions Act of 1958 provides for the registration and operation of trade unions,

the formation of employees' associations, the regulation of trade disputes, and other related matters (LO FTF, 2014).

Through the interviews with 30 workers at the Liwonde Barrage, it was revealed those workers employed there are not unionized. This revelation is not surprising because according to the MCTU, the unions in Malawi do not yet engage with PPP projects and their requisite capacity to analyse PPP contractual agreements is said to be wanting.

This assertion was apparent when we interviewed the workers on the site. All the 30 workers that we interviewed stated that none of the workers on the project was a member of the union. Asked if they knew about MCTU, only 7 out of 30 respondents were in affirmative.

The situation is even more desperate because one of the key informants at the Ministry of Labour headquarters intimated that the ministry rarely carries out labour inspections and that no inspection visit has ever been done at the Liwonde Barrage

Further, while implementing contractors are asked to draw up their operations guide (as a labour compliance measure), such a requirement is irrelevant if the inspections cannot be carried out to ascertain the adherence to the same.

Moreover, with the absence of a collective bargaining mechanism, salaries remain an individual secret for workers. What was apparent was from the collected data is that conditions of service were personal and it was difficult to tease out principles of equal pay for instance.

Respect for international Labour standards

Malawi has a robust labour legislation which is framed in tandem with the supreme law of the land, the constitution .

The labour laws are also premised and inspired by the eight of ILO Fundamental Conventions that cover four fundamental principles and rights at work and the four Governance Conventions that are cardinal to building national institutions and capacities that serve to promote employment.

During the key informant interviews, it was highlighted by labour officers that companies that come to operate in Malawi are required to follow government procedures and more importantly, are oriented on the labour laws.

Further the Ministry of Labour stressed that companies are required to draw terms and conditions to guide their operations which are in turn vetted by government. The guide is expected to highlight salient labour issues like working hours, occupational safety, health and welfare and with the aim of demonstrating the contractor’s adherence to international labour standards.

Having said this, the government key informants were also quick to mention that while such procedures and standards are existent, reinforcement by Malawi government remains very weak.

In addition to inspections, companies are supposed to submit reports on their operations to govern; no report has hitherto been submitted to government by the implementing contractors.

Creation of employment and type of employment

While the involvement of the private sector is lauded for initiating an increase in job creation, it has also been observed that the adoption of alternative procurement models such as public-private partnerships (PPPs) significantly alters the roles of the public and private sectors across different stages of the project life-cycle.

According to Reeves (2015), greater reliance on this model has potential equity consequences in terms of limiting citizen’s access to social services and public infrastructure.

When the government key informants were asked about the extent of employment creation that the project has initiated, no figures could be mentioned apart from saying that most of the jobs being created are largely for the unskilled labour.

One of the respondent went further to say that foreign contractor use these opportunities to create jobs for their own people. These two key findings were collaborated during the interviews with the workers on the site

Summary of findings and recommendations

1) There is a pervasive belief among some technocrats working with the Government of Malawi that PPPs are a donor driven agenda.

A manifestation of the West trying to reformulate and repackage the neoliberal ideas for the developing world as a tool for multinational profit making.

For instance, the tremendous influence that the World Bank and the IMF continue to wield on the direction of Malawi’s economic and financial policies is seen to vindicate this belief.

Findings

2. The prevalent view among government technocrats is that while the PPP approach is good for long term projects (infrastructural development), it calls for careful consideration because Malawi has yawning capacity gaps to ably execute this approach.

Some government officials posited that Malawi has insufficient capacity in negotiations (from economic, legal and even an ethical (labor rights etc.), procurement, implementation and management of PPPs.

Some are of the view that government of Malawi cannot have an honest and transparent negotiation process with MNCs considering the fact that MNCs have vast negotiation experience and are backed by western government which are deemed to have vested interests.

Findings:

3. There is a general mistrust of private sector intentions or more specifically, a belief that the private sector’s sole motivation is profit making and that the PPPs have the potential to thwart the citizen’s right to access essential social services.

For instance Malawi has a Millennium Challenge Compact PPP project and one of the objectives is to expand access to electricity for the Malawian people and business.

Ironically, just months after the project was rolled out, electricity has gone up by 24%.

Water tariffs also went up Is this enabling access?

Findings

4. Regarding the overall development results and impact on communities in terms of poverty reduction, the technocrats were of the view that the impact is often minimal because the huge chunk of the funds goes back to the funding countries through the MNCs.

Some companies avoid taxes, externalize profits and withhold the true extent of their incomes.

Kayelera Uranium Mining project was cited as an example in this regard. In some instances, poverty increased despite the aid flows especially due to

poor accountable mechanisms leading to endemic corruption. The current corruption scandal in Malawi dubbed as “cashgate” is a typical

example . These views are not surprising because the European Union Envoy recently commented to the effect that Malawi in contrast to its neighbouring countries is economically stagnant.

Findings: 5. Regarding employment creation the respondents were of the view that the PPPs do very little in this regard.

They contested that since most of the companies that win such huge PPP contracts are western multi-nationals, the jobs that they create for Malawi are generally for unskilled laborers because most of these companies bring their own “so called experts”.

This view was collaborated when we interviewed the workers at Liwonde Barrage; almost all of Malawian workers were unskilled.

Findings

Trade Unions (MCTU) are not yet involved in the PPPs

This has implication on labour rights

Recommendations

In the light of the key findings, the study recommends the following:1.Capacity building: There is an urgent need to build the country’s capacity to ably negotiate, implement and monitor the PPP projects.

Malawi needs to first put in place strong institutions which are multi-stakeholder in nature with clear ToRs for engaging in PPPs negotiations. The local development framework should be a guide in this context so that PPPs do not derail from the developmental objectives of the country.

Recommendations

2. Consultations and Decision making: There is a need to de-politise the agenda setting regarding the PPP projects.

Decisions on which projects to be developed and funded should be participatory and within the dictates of the national development agenda (i.e. MGDSII).

The consultations should transcend mere symbolism by engaging in meaningful multi-stakeholder consultations to engender project ownership among Malawians, strengthen the oversight roles (e.g. CSOs and Labour Unions) and optimise the benefits of the project to the communities through the Corporate Social Responsibility (CSR).

Recommendations

3. Employment creation - The government ought to approach the issue of employment creation from the contractual negotiation point of view where a guide in terms of the types of employment to be created and the share of it can be lobbied for.

4. Bolster the Union’s capacity to engage in the PPP with an aim to safeguard the rights of the workers.

Conclusion It is undeniable that investment in long term physical infrastructure like roads, telecommunications, and energy is positively associated with economic growth and enhanced productivity.

Good physical infrastructure is also the premise on which the provision of public services to the citizenry with the intent to improve their quality of life is predicated.

Certainly economies like Malawi that have an under-developed physical infrastructure and are operating below their potential are in crucial need for increased public capital investment to ignite inclusive growth.

The issues raised in this paper merely scratch the surface of the myriad issues pertaining to infrastructure development policy – these are key challenges not only to Malawi, but also to other African governments wishing to conduct successful public-private partnerships.

Conclusion How Africa, in this context, Malawi deals with these

pertinent issues has a huge implication and impact on the economy and by extension, the lives of the citizens because it will determine whether or not they will have access to basic services like energy, water, education and public transport.

The intricacies inherent in the PPP arrangement plus the huge costs involved are reason enough for Malawi and other African countries to take serious caution when indulging in the approach.

Lessons learnt from privatisation are enough indication that the PPPs are not a panacea for development.

Conclusion What ought to guide a country when engaging in

the PPPs should not only be the “touted” benefits such as value for money, affordability, cost effectiveness, risk management; but rather whether such developments are people-centred and will ultimately lead to improved quality of life for the citizens.

Such investment partnerships are a means towards the goal of better service delivery to the citizens and improved infrastructure.