Public-private partnerships (PPPs) serve as a viable policy instrument to strengthen both the private and the public sector to provide a better and more cost-effective public service. Africa’s involvement in PPPs has been limited relative to other continents. However, over the last few years, PPPs have started to become a viable source of infrastructure investment in African countries. We discussed this with several international financial consultants to find out more about the challenges that PPPs face and their importance in African countries.
What is the importance of public-private partnerships in Africa?
“Public-private partnerships (PPP) are very important in Africa due to the benefits they bring to bear on the developmental agendas for most African countries. Capital: most often the significant portion of funding to such partnerships is from the private sector. Experienced Human Resources: the private sector invests in the development of skills of the workforce and thereby opens up modern skills and technology to them although, however as compared to the public sector, the development of a skilled workforce is low. Operations: due to the profit motivation of the private sector, there are adequate controls and systematic processes and procedures in the operations of the private sector which promote efficiency and effectiveness”.
“Public-private partnerships in Africa are important for the mobilization of the international and national resources necessary for the development of Africa. The PPP is an alternative source of financing and the success stories of some PPPs in the world demonstrate the interest in their use for Africa. In just a few years, many African countries have seen many large infrastructure projects come off the ground. All these achievements are the result of PPP”.
What are the challenges of creating public-private partnerships in Africa?
“Most of the challenges associated with public-private partnerships in Africa include political risk, legal uncertainty, lack of transparency, political and civil instability or simply a lack of political will. In the Democratic Republic of Congo, the country is particularly faced with a social, economic and ecological challenge on the issue of transportation and the exploitation of its resources by many international consortia that require road and river infrastructure construction works”.
“The challenge is due to the formulation of capital contribution, management and the divergence of the operational motives of the private and public sectors. Also, the political influence in some of these partnerships is a great challenge and has a negative effect on the progress of such partnerships”.
„Political instability, policy inconsistency, corruption in PPP implementation process, protectionism by government, impracticable sense of entitlement by the masses, lack of technological know-how and buy-in of reliable investment banks are major obstacles to PPP success in Africa”.
Which sectors in Africa need the most public-private partnerships?
“Well-functioning sustainable and resilient transport, water, energy and telecommunication services are key to business development, international competitiveness and the realization of the sustainable development goals. These will be the main sectors to which PPPs can be directed to. Utility sectors such as water and energy will be the most attractive to private investors. Investment in energy (hydropower, solar and geothermal) would be in its production and distribution. In addition, the establishment of the African Continental Free Trade Area will require heavy investment in transport and communication infrastructure in order to realize the full potential. Lastly, PPPs can also be channeled to the health, education and housing sectors”.
“PPPs can play a pivot role in regional integration agenda on the African Continent especially in the transport, energy and communication sectors. PPPs can play a big role in the transport sector via improved connectivity of regional markets through construction of cross-border transport systems that will open up landlocked countries and connect them to the ports. PPPs can be an effective tool in the energy sector contributing to the continental economic growth through increased value addition activities (value chains) in the sub-sectors such as agro-processing and pharmaceuticals. PPPs can be used to improve communication infrastructure which will enhance the availability of information and increase transparency on trade barriers and therefore make businesses more competitive”.
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