Public Private Partnerships (PPPs) are used widely across certain parts of Africa for the funding of various infrastructure ventures such as road, bridge and dam projects.
“PPPs are seen as the solution to many governments who need to carry out such projects, but do not have either the money or the expertise to get past first base,” said the CEO of a financial advisory focussing on Africa.
There are currently a lot of initiatives for PPPs, and the CEO noted that many of the projects under way have PPP components in one way or another.
PPP-funded projects can be found across the continent, but are particularly prevalent in certain areas, especially outside of the former French colonial countries.
In West Africa, Nigeria and Ghana are two countries that most utilise PPPs. In the East of the region, Kenya, Uganda and Tanzania are also relatively PPP-friendly.
PPPs are prevalent in Southern Africa, especially in countries such as Zambia, Namibia and South Africa, but are rarer in the Centre of the continent.
“PPPs are a well-known concept in sub-Saharan Africa, but you have to pick the right deal.”
As with specific countries being more accepting of PPP financing, certain sectors are also more suited to the form of funding than others.
Within Africa, the major sectors that require financing such as mining and oil & gas are covered by large international companies.
The power sector however has been relatively neglected, and with power being such a huge issue across Africa, the use of PPPs becomes an important factor.
Aside from power, pure infrastructure such as roads, dams and bridges also provide significant PPP-financing opportunities.
Alongside traditional lenders for government financing, such as the World Bank, China is becoming increasingly involved in lending operations across the continent.
“The Chinese are the only ones with a chequebook big enough to finance certain operations,” the CEO stated.
Although PPPs are a very effective way of financing a project, the CEO noted that problems can arise over issues on either the public or political side, or in how the funding will be used.
“There is the question of how to manage the relationship with the government. Furthermore, different investors have different criteria when investing,” he said.