The importance of getting the process right can hardly be overstated; granting concessions is a key instrument for long term development.
The challenges are manifold and are no different in Africa than in other parts of the world. First, there is the risk of insufficiently aligning concessions to the long term development strategy for the port. Moreover, there is not always sufficient awareness of the importance of such a long term vision. This issue is relevant in Europe, where the court of auditors revealed that many investment projects that secured EU funding were not based on long term development plans.
A second challenge is interesting on a behavioral side. While effective concession processes certainly require negotiation skills and efforts to align the interests of the concessionaire with the overall port development objectives, effective concession processes also require a deep understanding of value through the eyes of customer. They also need to regard potential concessionaires as customers whose concerns have to be taken seriously.
If insufficient attention is paid to value through through eyes of customers, it could result in concession structures that are not attractive for concessionaires, such as short concession periods and labour hiring requirements, which will be reflected in the bids for the concession.
Insufficient efforts to align the interests of the concessionaire with the overall port development objectives may also lead to operations with insufficiently high operational and environmental standards.
The conclusion from the conversations is West and Central Africa was there is not a standard model or approach, every concession requires a tailor made approach. However, it is possible to think upfront about the attitude of the port authority with regard to potential concessionaires.
That ‘attitude’ should be premised on an aim for continuous close relations with concessionaires, openness for the concerns of concessionaires, firm commitment to the interests of the whole port complex and, in the case of re-negotiations, a focus on jointly developing a path to reach mutually satisfactory outcomes – with modifying financial clauses as the least desirable outcome.