| dc.description.abstract | Since the 1980s, many governments have increasingly adopted public private partnerships (PPPs)
to finance infrastructure in preference to the traditional methods that rely mainly
on public finance. PPPs are contractual arrangements between public sector organizations and private sector investors for joint and collaborative provision of infrastructure projects and services. They aim to synergistically combine the strengths of these two respective sectors while minimizing on their inherent shortcomings in providing infrastructure facilities. Despite their rising popularity, it is not yet clear whether the use of PPPs in infrastructure financing provides value for public money. This value for money is realizable when there is optimal risk sharing between the partners and enhancement
of time, quality and cost efficiency in implementing the infrastructure projects.
This paper critically reviews both theoretic and empirical literature on PPPs. The general and theoretic Iiterature review eval uates the origins, theories, models as well as the global experience in the use of PPPs in financing infrastructure. This is done to ascertain the causes of the apparent paradigm shift in infrastructure financing and appraise the evolution milestones in the use of PPPs to finance infrastructure. The empirical literature review on the other hand involves critical appraisal of the studies on the factors behind the upsurge in the use of PPPs. It also involves evaluation of the critical success factors and inherent limitations of the use this new approach to finance infrastructure. This is crucial in order ascertain from empirical assessments the key factors that determine and enhance the effectiveness ofPPPs in financing infrastructure, which is the basic objective of this study.
Three key findings emerge from the study. Firstly, the effectiveness of PPPs in financing infrastructure
is contingent upon critical success factors. Literature identifies them as the project specific micro level factors and the general macro level factors common to all projects in the economy. Secondly, a project is unlikely to attain success on all the five main parameters of effectiveness i.e. flexibility and risk management as well as time, quality and cost efficiency. Project effectiveness therefore depends on the clarity in the ex ante specification of project outcomes and the adequacy of the planning, co-ordination and control of PPP efforts by the contracting parties. Thirdly, PPPs are mainly used to address public sector resource limitations by enhancing synergistic co-operation of the public and private sectors in the provision of infrastructure projects. Lastly, there are numerous models of PPPs ranging from short term, medium term, long term to permanent agreements. The most popular are those which optimally share projects risks between the public and the ptivate partners.
In a nutshell, the effectiveness ofPPPs in infrastructure financing is contingent upon explicit definition the expected project outcomes and management of the key success factors in the implementation environment. Establishing a central unit for regulation, co-ordination and implementation of PPP policies would help to boost their effectiveness as evidenced by the successful application in countries such as South Africa, Indiaand Britain which have had fruitful experiences with infrastructure PPPs. | en |
