ASSESSING THE PROSPECTS AND CHALLENGES OF PUBLIC PRIVATE PARTNERSHIP IN THE PROVISION OF PUBLIC TRANSPORT SERVICES IN GHANA: A CASE STUDY OF METRO MASS TRANSIT COMPANY LIMITED BY MOHAMMED SAANI ADAMS (B.Ed Mathematics) A Thesis submitted to the School of Graduate Studies, Kwame Nkrumah University of Science and Technology In partial fulfillment of the requirements for the degree of MASTER OF SCIENCE IN DEVELOPMENT POLICY AND PLANNING Department of Planning College of Architecture and Planning JUNE, 2012 CERTIFICATION I hereby declare that this submission is my own work, which is presented towards the award of MSc in Development Policy and Planning. The submission has not been any duplication of materials previously published by another person for the award of any other degree of the University. For those areas and content that has been included in the text, due recognition by way of acknowledgement has been duly made. MOHAMMED SAANI ADAMS ……………..…… …………….. (PG 2002008) Signature Date Certified by: Dr. Michael Poku-Boansi …………………… …………….. Supervisor Signature Date Certified by: Dr. Imoro Braimah …………………… …………… Head of Department Signature Date ii ABSTRACT In 1983, Ghana adopted the Economic Recovery Programme and its success was predicated on export-led growth. The tenets of the programme were based on the development of an open and liberalized economy, reduced state participation in trading activities, and a growing economy, which is private sector oriented.Recognizing the significant role of transportation in the socio-economic development of a country,the Government of Ghanaestablished Omnibus Services Authority (OSA), City Express Services (CES) and the State Transport Corporation (STC) to assist in the mobility of people within Ghana. These state owned companies were not profitable even though the government continued to spend money on their operations. This led to the government’s decision to diversify STC and the liquidation of OSA.However, the huge investment that is associated with public transport operation coupled with none immediate return often discourage many private organisations and individuals from entering into the business. Government therefore entered into partnership with the State Insurance Company (SIC), National Investment Bank (NIB), Ghana Oil Company (GOIL), Agriculture Development Bank (ADB), Prudential Bank Limited (PBL) and the Social Security and National Insurance Trust (SSNIT) to establish Metro Mass Transit Limited in 2003. Even though the objective for its establishment has been good, the numerous debts and none payment of dividends to shareholders since its operations has raised serious reservations with regard to its sustainability. Using a total sample size of 273, comprising passengers, management, shareholders and key informants, it was revealed that the company encounters many challenges including revenue leakages, high budget on fuel, poor infrastructure at depots and terminals and non-payment of dividends to shareholders. In spite of the challenges, the company has better prospects since the affordability of fares,good sitting arrangements, high level of safety and reliability, high level of competence of drivers, availability in most parts of the country, among others continue to give it more comparative advantage. It was therefore recommended that infrastructural development and physical facilities at the various depots and bus terminals be developed; electronic ticketing should be practised and enforced with proper monitoring and evaluation. Shareholding structure of the company should also be reassessed to ensure equity and fairness among shareholders. iii ACKNOWLEDGEMENTS It is by mercy and blessings of the most high, most knowledgeable, sustainer of the universe and creations that I have been able to come out with this piece of work. May the Almighty Allah forever be praised for HIS guidance and sustenance. I am highly indebted to my Supervisor, Dr. Michael Poku-Boansi for his brotherly care and encouragement throughout the work. In spite of the heavy demands on his time, his wealth knowledge imparted, constructive criticisms, suggestions, corrections and advice helped to bring this work to fruition. It must be registered that all relations and friends, especially Adu Sarfo Patrick who did not just recognize me as a course mate but a close brother have been very supportive. For these people and brother Baah Mintah-Richard, I say thank you. Special mention must be made of my entire family for their understanding and encouragement as well as spiritual support throughout my life. I am forever very grateful. iv TABLE OF CONTENTS CERTIFICATION` ......................................................................................................... ii ABSTRACT ........................................................................................................iii ACKNOWLEDGEMENTS ............................................................................................ iv TABLE OF CONTENTS ................................................................................................. v LIST OF TABLES ......................................................................................................... x LIST OF FIGURES ........................................................................................................ xi ABBREVIATION AND ACRONYMS ......................................................................... xii CHAPTER ONE:BACKGROUND TO THE STUDY .................................................. 1 1.1 Introduction ................................................................................................................... 1 1.2 Problem Statement ........................................................................................................ 3 1.3 Research Questions ....................................................................................................... 4 1.4 Objectives of the Study ................................................................................................. 4 1.5 Scope of the Study ........................................................................................................ 4 1.6 Significance of the Study .............................................................................................. 7 CHAPTER TWO:PUBLIC PRIVATE PARTNERSHIP IN THE PROVISION OF PUBLIC TRANSPORT SERVICES ........................................... 9 2.1 Introduction ................................................................................................................... 9 2.2 Definitions and Explanations of Terms ........................................................................ 9 2.2.1 Public Transport Services .......................................................................................... 9 2.2.2 History of Public Transport Services ....................................................................... 10 2.2.3 Objectives of Public Transport Services .................................................................. 12 2.2.4 Modes of Public Transport Services ........................................................................ 13 2.2.5 Determinants of Public Transport Services ............................................................. 15 2. 3 Significance of Public Transport Services to Economic Growth .............................. 16 2.3.1 Environmental Benefits ........................................................................................... 16 v 2.3.2 Going Green ............................................................................................................. 16 2.3.3 Efficient Use of Land (Space) ................................................................................. 17 2.3.4 Social Benefits ......................................................................................................... 17 2.3.5 Economic Benefits ................................................................................................... 17 2.4 The Concept of Public Private Partnership ................................................................. 18 2.4.1 Types of Public-Private Partnerships ....................................................................... 20 2.4.2 Public Private Partnership as a Concept in Public Transport Service Provision. .... 25 2.4.3 Types of Public Private Partnerships in Public Transport Services ........................ 26 2.4.4 History of Public Private Partnership in Ghana ....................................................... 27 2.5 Benefits of PPPs in Public Transport Services ........................................................... 28 2.5.1 Cost Savings ............................................................................................................ 28 2.5.2 Risk sharing ............................................................................................................. 28 2.5.3 Efficiency in implementation .................................................................................. 28 2.5.4 Economic Stimulant................................................................................................. 29 2.6 Challenges of PPPs in Public Transport Provision ..................................................... 29 2.7.1 Infrastructure for Public Transport Services ............................................................ 30 2.7.2 Schedules of Public Transport Services .................................................................. 31 2.7.3 Financing Public Transport Services ......................................................................