Associate Writer | The role of Public-Private Partnership in Africa

Public-Private Partnership (PPP)  in Africa was necessitated by the need to change the mode of public procurement to manage the level of public debt, which grew enormously during the macro-economic dislocation of the 1970s and 1980s.

With limited budgets and debt crises, most governments could not provide basic amenities and effective public services to their citizens. So private investors were invited through a process to form an alliance with governments to provide, finance and maintain these public services.

Implementing PPPs can provide national governments with attractive conditions for private investment, which will in return enable governments to gain many advantages from private investors like operational efficiency, management capacity, technology and innovation – ultimately leading to better quality public services. Private sector, on the other hand, will benefit from revenue from the public, which is then used to repay borrowing, cover costs and make profit. This will, in turn, have a positive impact on reducing poverty and supporting inclusive economic growth by mitigating potential negative environmental and social externalities; creating jobs, improving economic activities and connecting markets; and reducing production costs through improvements in transport and connectivity.

In Africa, PPPs are primarily used for infrastructure provisions, such as roads, railways, building and equipping schools, hospitals, and water and sewerage systems. Even though, a noble idea, evidence of PPP performance in terms of value for money and efficiency, is mixed and often unavailable. PPPs have been highly controversial as funding tools, largely over concerns that public return on investment is lower than returns for the private funder.  The private sector is not always more efficient, and the service provider is often more expensive to the consumer.

The situation is further exuberated by the lack of a shared understanding of the process of evaluating whether PPPs have been successful complex. The issue of pricing is crucial both to avoid the political fall-out and to ensure the viability of the contract for business. Leaders need to talk openly with their citizens about their inability to continue to offer free, undervalued or heavily subsidized services, and their plans for holding the private sector accountable for providing these services. PPPs are vulnerable to graft and governments need to effectively tackle corruption before they can hope to get such partnerships right.