Public-private partnerships in Africa: the role of a strong and responsible private sector

The infrastructure gap in Africa presents a significant obstacle to both economic development and the achievement of the Sustainable Development Goals (SDGs). According to the African Development Bank (AfDB), Africa faces an annual infrastructure financing gap of $68 to $108 billion. Public-private partnerships (PPPs) have been widely promoted as a solution to bridge the infrastructure gap. These partnerships aim to leverage private-sector capital and expertise to complement the limited resources of the public sector. In theory, PPPs offer a means to deliver efficient, high-quality, and cost-effective infrastructure.

However, despite decades of PPP investments in Africa, the results have been underwhelming. Africa accounts for only 7% of global PPP investment, reflecting its limited success in attracting and sustaining these initiatives. Further, the PPP market in Africa is heavily concentrated in a few countries, notably Egypt, Morocco, Nigeria, South Africa, Kenya, and Uganda, which account for over half of all PPP projects by value. Despite this concentration, many projects have failed to achieve their intended outcomes.

Notable examples are the partnership between the Zimbabwe National Roads Administration (ZINARA) and the South African company Group Five, which focused on tolling and highway infrastructure investment in Zimbabwe. This project significantly improved the trunk road completion rate and introduced efficient risk allocation, lowering project lifecycle costs. However, operational challenges underscored the need for enhanced governance to optimise future PPPs. Another case is Lesotho’s healthcare PPP, which involved the design, construction, financing, and operation of a hospital in Maseru. This innovative project is often cited as a model for healthcare delivery in Africa, offering core clinical services alongside infrastructure. However, there were challenges in cost overruns; payments to the private operator were far higher than was expected pre-contractually and became a major source of budgetary uncertainty, as well as a demanding call on the government’s healthcare resources. These are examples of the many cases in Africa that demonstrate the need for strong and responsible governance in the delivery of successful PPP projects in Africa.

The PPPs shortfalls are attributed to several factors, including poor government strategy, lack of public sector capacity and political will, and an inability to manage PPPs effectively. Public sector agencies in Africa often have limited resources, skills, and expertise to structure and manage complex PPP projects. In contrast, while positioned to offer technical and managerial leadership, the private sector has often fallen short of its potential due to its excessive focus on financial returns and profitability. As such, many private sector stakeholders often prioritise safeguarding their financial interests at the expense of the social and economic benefits these projects are intended to deliver.

In addition, the persistence of private sector-induced corruption, bribery, and complex contracts designed to minimise private-sector risks further undermines the potential of PPPs to bridge Africa’s infrastructure gap. In many cases, these unethical practices have resulted in projects costing more than originally projected, with taxpayers bearing the burden of failed or underperforming initiatives.

This imbalance in priorities has led to a stagnation in the success rate of PPP projects across the continent and raises critical (ethical) questions about the private sector’s role in PPPs in Africa.

PPPs require strong and responsible public and private sectors

For public-private partnerships (PPPs) to succeed, both sectors must demonstrate strength and responsibility due to the complexity and scale of infrastructure projects and their potential impact in Africa. A strong public sector is crucial to regulate and oversee PPPs, ensuring that projects align with national development goals, and serve the public interest. The public sector must thus be empowered to negotiate, monitor, and enforce these agreements effectively.

However, many African governments face challenges ranging from funding, monitoring, political risks, and enforcing large-scale infrastructure projects, leading to inefficiencies and delays limiting the public sector’s strength. Therefore, a complimentary, responsible private sector is needed to implement PPP projects with transparency, accountability, and a commitment to social outcomes. The private sector, equipped with its extensive network of resources and expertise, can play a pivotal role in the success of PPP initiatives across Africa, provided the partnership is strategically orchestrated and managed.

Ideally, the private sector’s role in PPPs should go beyond technical and financial contributions. They can engage in these projects with a high sense of responsibility and expertise in PPP procedures and processes. The private sector’s responsibility in this context is not to be taken lightly. It carries significant weight and can make a substantial difference in the success of PPPs in Africa. Without this shift, the success rate of PPPs in Africa is unlikely to improve, and the continent’s infrastructure development will continue to lag. Without a commitment to high standards of good governance by the private sector, PPPs are unlikely to succeed in delivering the social and economic benefits that justify their existence in Africa.

While we acknowledge that PPPs alone cannot fully resolve Africa’s challenges, they offer significant potential for improved infrastructure delivery. However, to realise this potential, there must be a stronger alignment of interests between the public and private sectors. Governments must ensure that PPPs are structured to benefit the public, while the private sector must adopt a more ethical approach, prioritising long-term social benefits over short-term financial gains. But what happens where governments are weak?

What can a strong private sector do where the public sector is weak?

Given the often-uneven power dynamics, the private sector must avoid exploiting weak regulatory environments for profit at the expense of public welfare. Instead, the private sector should prioritise ethical corporate governance, ensuring that the PPP projects are designed to meet both financial and societal objectives. They should prioritise transparency in planning, executing, and evaluating PPP projects. Transparent decision-making processes, coupled with regular disclosure of information regarding financial commitments and project progress, will help build trust with public stakeholders and communities.

Moreover, innovation is another area where the private sector can exert significant leadership in PPPs. The private sector often has access to cutting-edge technologies and business practices that can help address some of the most pressing challenges facing PPPs in Africa, such as inefficiencies, high costs, and lack of transparency. For instance, advancements in digital infrastructure and data analytics can improve project monitoring, allowing stakeholders to track progress in real-time and identify potential problems before they escalate. This increases transparency and enhances the accountability of all parties involved in the project.

Finally, the private sector’s ethical responsibility should extend beyond financial outcomes to building the capacities of the public stakeholders for PPP success. The private sector can contribute by sharing expertise, offering training programs for government officials, and facilitating technology transfer to strengthen the local workforce, thereby ensuring long-term sustainability. They should also ensure that PPP projects have a positive social and environmental impact. This includes respecting local communities, ensuring fair labour practices, and adhering to environmental sustainability principles.

Public-private partnerships: the way forward

While public-private partnerships have the potential to drive Africa’s infrastructure development, they have so far fallen short due to misaligned interests, ethical lapses, and poor governance. Moving forward, PPP projects in Africa can benefit significantly from the private sector’s commitment to ethical practices, transparency, innovations, and capacity-building efforts. These actions will not only improve the PPP success rates but also ensure that such partnerships contribute positively to broader social and economic development goals in Africa. Most importantly, it enhances the steps towards the achievement of Africa Union Agenda 2063 goal number twenty – Africa taking full responsibility for financing her development.

Tags: Africa, Infrastructures, Private sector, Public-private partnership