1. Public Private Partnerships (PPPs) or PFIs For the provision of Government Services Presentation by IFC June 25, 2008

2. Some functions of today’s Government Asset management: Revenue collection: Benefits distribution: Infrastructure Related Internal Administration Core Functions: Citizens Corporations Real estate Vehicles IP / Patents Individual tax Corporate tax Customs Property Tax Pension Social Security Subsidies Healthcare Education Vehicle traffic Parking Air traffic Toll mgmnt Public transprt. & ticketing Technology Payroll Billing and collection Procurement Legislative Regulatory Abitratory Enforcement Intervention Defense Potential PPPs or spin-off targets

3. The trend is continuing …. Today’s Gov’t Pre- Privatization Government Core Gov’t Pre - 1990 Today Next 10-15 years Size of Governments Market Efficiency Typical Government owned or administered: All Infrastructure Banking All/most Natural resources Typical Governments today own or administer: Some infrastructure Some mining All citizen services Government of the future owns or administers: Little or no infrastructure Little or no mining Little or no citizen services

4. What is accelerating this trend? 1.Citizens are more sophisticated – demanding service improvements 2.Technology is highlighting Government inefficiencies 3.Rapid change needs constant improvement which requires both capital and skill - Governments worldwide lack both 4.BPO as an industry has expanded very fast; GPO is also growing fast. 5.BPO companies are looking for ways to expand – governments look like proper targets Demand Supply

5. What governments want to achieve: 1.Service improvement 2.System-wide Efficiency Gains 3.Private sector growth 4.Jumpstart the IT / BPO industry

6. Key concerns: 1.Data privacy and security 2.Reliability of private provider 3.Is the provider too profitable? 4.Can the government regulate this new monopoly? 5.Procurement process / structure, etc.

7. Success factors: 1.Political will and buy-in 2.Proper regulatory framework so that issues and conflicts can be dealt with in a matter-of-fact way 3.Output based measurements 4.Clear definition of the Government counterparty and project ownership 5.Proper preparation / re-engineering of government processes, etc. 6.Discrete processes/functions 7.Transaction based functions

8. What creates the financial return? 1.Efficiency gains from process re-engineering 2.Efficiency gains from smart application of technology 3.Revenue proliferation 4.Financial engineering

9. Key take-aways and conclusions: 1.Success follows the prepared: define objectives, define success, prepare legal base, regulatory framework; reengineer processes and staff properly. 2.Low hanging fruit first - Discrete, transaction based processes. 3.Don’t tell them how to do it – just define what should be done - Output based objectives and measurements 4.Private companies should make money – just make sure they make money when they succeed based on your measurement of success (define success one more time) 5.It’s a partnership and only both can make it work (PPP remember?) 6.All others issues are red herrings

10. Thank you! Questions? Contact Andi Dervishi adervishi@ifc.org +1 202 458 5135