Unlocking Africa’s economic potential: The role of PPPs in fuelling infrastructure development and investment–South Africa’s perspective

Abstract

Sub-Saharan African governments are grappling with the significant challenge of meeting growing citizen demands while simultaneously maintaining and improving their existing infrastructure assets. This predicament is exacerbated by financial constraints, subpar operations, and poor management afflicting publicly-owned utilities. Infrastructure development is undeniably pivotal for productivity and long-term economic growth, elevating living standards, alleviating poverty, and advancing sustainable development goals. Regrettably, infrastructure development in this region remains woefully inadequate, primarily due to the dominance of public sector investments. Attracting private investments has been challenging because of ongoing issues such as corruption, political instability, and money laundering. In light of the rising demand for infrastructure development and diminishing public budgets caused by global financial crises, innovative financing mechanisms have become an urgent necessity. This article delves into the potential of Public-Private Partnerships (hereinafter mentioned as ‘PPPs’) as an alternative approach to catalyse infrastructure development in sub-Saharan Africa. Amidst the backdrop of severe infrastructure deficits in developing countries, particularly in this region, PPPs have emerged as a promising avenue to enhance the efficient delivery of public services. However, their implementation is not without significant challenges. Drawing insights from the South African perspective, this article examines the legal framework of PPPs in South Africa and the multifaceted role and challenges faced in the implementation of PPPs. By shedding light on the potential and challenges of PPPs, this article aims to contribute to the discourse on sustainable infrastructure development in sub-Saharan Africa and provides insights for policymakers, investors, and stakeholders invested in the region’s socio-economic progress.

1 Introduction

Infrastructure plays a critical role in promoting economic growth and improving the quality of life for citizens.¹ The development of robust and high-quality infrastructure requires sustained investment, technological innovation, a skilled workforce, and effective project management.² It encompasses transportation, power, communication, and essential social services like water supply, sanitation, education, and healthcare.³

Unlocking Africa’s economic and developmental potential relies on strategic planning and investment in infrastructure.⁴ However, Sub-Saharan Africa continues to grapple with significant developmental challenges such as a severe lack of physical infrastructure, inadequate transportation, communication, water, and power infrastructure that impede economic activity, efficiency, and competitiveness.⁵ The region’s economic activity, effectiveness, and competitiveness are all severely affected by inadequate infrastructure.⁶ Despite the desire of investors to conduct business with Africa, the inadequate infrastructure of the Continent makes it challenging for investors to enter the markets.⁷ Every year, infrastructure spending in developing countries exceeds US$800 billion.⁸ The infrastructure financing deficit is projected to be roughly US$57 trillion until 2030, far exceeding the demands predicted to be more than twice that amount.⁹ According to the Programme for Infrastructure Development in Africa (hereinafter mentioned as ‘PIDA’), Africa will need to invest up to US$93 billion annually for both capital investments and maintenance projects.¹⁰ Studies like those carried out by the Infrastructure Consortium of Africa (hereinafter mentioned as ‘ICA’) show that inadequate rail, port, and road infrastructure drives up the cost of goods transported between African states by 30–40%.¹¹ Reports from the African Development Bank (hereinafter mentioned as ‘AfDB’) further emphasise that Africa’s economy remains severely hampered by the lack of adequate infrastructure, with both its quantity and quality ranking among the poorest in the world.¹² Following the 2008 global crisis, Sub-Saharan Africa saw a rise in infrastructure investment, with commitments totalling US$100 billion in 2018.¹³ However, the COVID-19 pandemic had a significant influence on infrastructure finance both internationally and in Africa.¹⁴ Several factors, including limitations on the movement of people and goods, a slowdown in trade and commercial activity, and other challenges, contributed to the failure of projects in Sub-Saharan Africa to reach financial completion and impeded its infrastructure development.¹⁵ These factors increased the Continent’s infrastructure finance deficit, estimated to be between US$50 and US$90 billion annually before COVID-19.¹⁶ In 2020, more than 32 million additional people were living in extreme poverty, while employment rates dropped by almost 8.5%.¹⁷

Due to the global economic recovery, greater trade, better commodity prices, and capital inflows, Sub-Saharan Africa is predicted to rise by 3.4%.¹⁸ However, it is projected that the region’s economic recovery will be slower than that of the rest of the world. The expected cumulative per capita Gross Domestic Product (hereinafter mentioned as ‘GDP’) growth for the years 2020 to 2025 is only 3.6%, much less than the 14% global average.¹⁹ To advance and keep pace with a rapidly evolving world it is essential to improve infrastructure. PPPs are pivotal in enhancing infrastructure and elevating all citizen’s living standards. By fostering collaborations between governments and private entities, PPPs facilitate the development of vital infrastructure such as transportation, energy, and telecommunications. This improved infrastructure would enhance the quality of life for individuals and enable governments to achieve the Sustainable Development Goals outlined in the 2030 Agenda. These goals serve as a blueprint for creating a more sustainable future, emphasising the importance of PPPs in driving socio-economic progress and ensuring a better quality of life for current and future generations.

This article employs a descriptive methodology to explore the growing demand for private sector involvement in PPPs, emphasising their substantial potential in tackling pressing challenges. South Africa serves as an exemplary case study, showcasing how African nations are actively working to attract investment, with PPPs emerging as a practical solution. In the subsequent parts, the author will examine the legal framework governing PPPs in South Africa, delve into the pivotal role of PPPs, and the challenges encountered in their implementation.

2 Obstacles faced by governments in advancing infrastructure development

Traditionally, governments have carried the responsibility of infrastructure provision due to factors like high costs, project scale, national security considerations, and natural monopolies.²⁰ However, relying solely on the public sector has proven insufficient to meet the growing demand. There is a significant perception that the public sector has become cut off and disconnected from the rest of society.²¹ The public sector lacks organisational rigour, is often ineffective, financially complacent, fixated on due process, and unconcerned with the general public’s needs.²² The availability of infrastructure services is frequently insufficient to meet the demand of the citizens, which causes delays and poor performance or reliability.²³

This prevalent challenge has increased through time as a result of population growth, changing demographics, and increasing societal needs,²⁴ and this serves to draw attention to the universal challenges encountered by developing nations.²⁵ It is difficult for public institutions to meet the growing demands and needs of citizens because of the budgetary restrictions placed on them by governmental organisations.²⁶ A government entity’s capacity to expand services and advance infrastructure is constrained by a lack of financing.²⁷ The resources and skills of public entities are frequently constrained, while the risk management expertise and experience of private sector entities are specialised as the private sector has access to modern technology, highly qualified personnel, and industry-specific knowledge that can result in more effective risk management.²⁸

Given the wide range of targets seeking public funding, governments are looking for alternative ways to pay for and handle their infrastructure needs.²⁹ As a result, feasible infrastructure projects are being assessed, along with the effects they could potentially have in the future. Governments are depending more and more on private investment in the development of infrastructure to close the financial gap and cut costs.³⁰ African nations are considering using PPPs to carry out crucial infrastructure projects due to the pressing need for enhanced infrastructure in the continent.³¹

3 Evaluation of the national legal framework on PPPs in South Africa

South Africa’s commitment to implementing a robust PPPs strategy for the delivery of high-quality infrastructure services is evident through its proactive approach. The South African government demonstrated this dedication when it directed the Minister of Finance, through the Cabinet, to take proactive measures in formulating a comprehensive PPP framework for the entire nation.³² This directive set the stage for a concerted effort to harness the potential of PPPs in South Africa. The national and provincial levels of government responded to this directive by enacting comprehensive legislative and regulatory frameworks that govern PPPs. These frameworks were designed to provide a solid foundation for the successful implementation of PPP projects across the country, ensuring that they adhere to established standards and best practices.

3.1 Constitution of the Republic of South Africa

In the Constitution of the Republic of South Africa, Section 217 primarily deals with PPPs. The Constitution outlines the principles governing public procurement, including PPPs. The Section reads as follows: ‘When an organ of the state in the national, provincial, or local sphere of government, or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive, and cost-effective’.³³ This applies to all state organs, including those involved in PPPs. This criterion is intended to make sure that there is no bias, corruption, or favouritism in the government’s procurement procedures.³⁴ The provision of the Constitution further promotes equality³⁵ given South Africa’s history of apartheid. In the context of PPPs, this means that the Government must choose private partners for PPP projects through an open and competitive bidding procedure. All prospective bidders must be treated fairly and equally during this process, and the private partner that provides the best value for the money must be chosen. This illustrates an intentional attempt to utilise the law as a device to advance fairness and equal opportunity in society.

Section 217 prohibits wasteful, unlawful, or irregular use of public monies. It also maintains the significance of an accountable, transparent, and competitive procurement system, guaranteeing an efficient and transparent use of public funds.³⁶ As a result, the Government is required to ensure the appropriate and profitable use of the public monies employed in PPP projects. Additionally, the Government must make sure that the PPP project conforms with all applicable legal criteria and is legally authorised.³⁷ In the context of PPPs, this implies that the Government must guarantee that the PPP project is financially sustainable and that the private partner is capable of providing the necessary services in a way that is both efficient and cost-effective.³⁸ The Government must ensure that the PPP project complies with all relevant legislative requirements, such as those relating to labour, the environment, and anti-corruption.³⁹ The Constitution empowers the Parliament to enact legislation pertaining to the subjects enumerated in Schedules 4 and 5 of the Constitution.⁴⁰ A few of the items on the list are housing, public transportation, and airports.⁴¹ The Constitution, also gives provinces the power to enact laws regarding a wide range of other topics, for instance, provincial roadways, provincial parks, accommodation facilities, and public transportation.⁴²

Property rights, including those of investors and private companies engaged in PPPs, are protected in the Constitution.⁴³ It ensures that property may only be taken in compliance with a law that has a broad scope and is in the public interest or serves a public purpose and is compensated.⁴⁴ This means that any expropriation of property, including that of private entities involved in PPPs, must be done in accordance with due process and in the public interest.⁴⁵ This provides a level of certainty and predictability for private entities involved in PPPs and also helps to promote investment and economic growth.⁴⁶ As a result, investors who take part in PPPs have a legitimate expectation that their property rights should be protected.⁴⁷ This is because PPPs typically involve the transfer of some or all of the ownership and/or control of public assets to private entities. For the private investors in the PPP, this change in ownership and control produces a new set of property rights.⁴⁸

The fundamental objectives and guiding principles of public administration, which must be guided by democratic values and principles, are outlined in the Constitution.⁴⁹ The democratic values enshrined in the Constitution are human dignity, equality, and freedom.⁵⁰ The values set guidelines for the conduct of public officials and institutions involved in PPPs in the context of creating and implementing PPPs: (i) accountability, public officials⁵¹ involved in PPPs must take responsibility for their actions and conduct; (ii) transparency,⁵² guarantees that public authorities working in PPPs must be transparent in their decision-making processes and must promptly and easily make information available to the public;⁵³ and (iii) the administration involved in PPPs must act impartially, in a fair and impartial manner to uphold the public interest.⁵⁴ Furthermore, citizens must be given the chance to take part in decision-making processes that have an impact on them, including the creation and execution of PPPs.⁵⁵

These guidelines offer a framework for the creation and execution of PPPs that is founded on good governance, openness, and accountability. They mandate that public employees who participate in PPPs to make sure that the rewards of PPPs are distributed properly and equally and according to the democratic values enshrined in the Bill of Rights.

3.2 Treasury Regulation 16

The main piece of law regulating PPPs for South Africa’s national and provincial tiers of government is the Treasury Regulation (hereinafter mentioned as ‘TR16’). The TR16 defines PPPs and outlines the requirements for a project to qualify as PPP. According to TR16, PPPs involve a commercial transaction in which an institution engages a private party to either carry out an institutional function on behalf of the institution for a specified or indefinite period or to utilise state property for the private party’s own commercial purposes for a specified or indefinite period.⁵⁶ In exchange for performing the function or using the property, the private party receives a benefit, which may take the form of compensation from a revenue fund, charges or fees collected from users or customers of a service provided by the private party, or a combination of such compensation and charges/fees.⁵⁷ Fundamental characteristics of a PPP are emphasised by this definition, including the sharing of obligations and risks between the public and private sectors as one of the main characteristics of a PPP.⁵⁸ The project’s private sector partner is expected to be responsible for a substantial share of the financial, technical, and operational risk, which encourages them to complete it on schedule, on budget, and to the requisite quality standards.⁵⁹ TR16 offers recommendations for PPPs in South Africa that are intended to make sure they are carried out in an open, accountable, and economical manner. According to these principles, the PPP agreement must be transparent and include a strong business case, a competitive procurement procedure, strict risk assessment and management, routine monitoring, and evaluation.⁶⁰

Since it was first published in May 2000, TR16 has undergone changes, and now offers PPPs explicit and comprehensive guidelines.⁶¹ It can be deduced that South Africa permits the implementation of both concession-based and private finance initiative (hereinafter mentioned as ‘PFI’) PPP models, which enable payments to be made through various means. These payments may involve the institution paying for the usage of the facility, the private party collecting tolls or fees from end-users for the use of the facility, or a hybrid of the two.⁶²

According to TR16, a PPP agreement can only be signed by an accounting officer acting on behalf of the institution.⁶³ Additionally, the accounting officer is strictly prohibited from proceeding with the procurement of a PPP agreement without obtaining prior written consent from either the National Treasury or the relevant provincial treasury if it is a provincial institution and the National Treasury has delegated the appropriate powers to the provincial treasury in accordance with Section 10(1)(b) of the Act.⁶⁴ TR16 mandates that PPP projects go through a thorough approval process that includes a detailed evaluation of the project’s viability and economic worth. The partnership must be the best possible choice for the project and offer greater value for money, according to the government.⁶⁵ Section 3 of TR16 deals with treasury approval. This is significant since it stipulates that PPP projects must go through an independent evaluation and approval process by the National Treasury as well as any other pertinent government ministries or bodies.⁶⁶ As a result, PPPs are reviewed fairly and this process makes the government confident in the viability and cost-effectiveness of the project.

Every PPP project is subjected to a rigorous three-part evaluation. The evaluation scrutinises: (i) whether the private party has assumed a significant transfer of technical, operational, and financial risk; (ii) whether the institution is capable of meeting the proposed fee; and (iii) whether the investment yields a favourable return.⁶⁷ A private party submitting a bid for a project must unequivocally be financially viable, both in terms of the predicted costs and the expected revenues or advantages.⁶⁸ The private sector partner must demonstrate that they have the necessary financial resources to finish the project, as well as the skill and knowledge to do so more efficiently than other parties.⁶⁹ This helps avoid projects being postponed due to a private-sector partnership’s inability to complete them. The budget required for the public entity supporting the project to carry out its obligations under the agreement. By satisfying these three criteria, the PPP project is deemed to be in compliance with the objectives of the country’s governance.

3.3 Public Finance Management Act 1999 (PFMA)

The Public Finance Management Act (hereinafter mentioned as ‘PFMA’) comprises the department(s) in charge of finances and taxes as well as the Minister, who serves as the Treasury’s head.⁷⁰ According to the PFMA, a specific PPP Unit has been established. Its fundamental objective is to provide proper transfer of risks, accessibility, and adequate value for funds in PPPs.⁷¹ It is backed by the Government Technical Advisory Centre (hereinafter mentioned as ‘GTAC’). The role of the GTAC is to provide professional consulting services, project management, and transaction assistance for public financial management.⁷² The piece of legislation’s main goal is to boost public sector financial management.⁷³ Between 2000 and 2014, twenty-four national and provincial PPP projects amounted roughly to USD$8.35 billion in monetary investment.⁷⁴ Their success depended on the PPP unit. PPP Units are used by experts in the accounting, consulting, and financial service areas. This is advantageous for the unit’s development because it necessitates in-depth knowledge of complex financial arrangements.⁷⁵ The PFMA provides guidelines for the appointment of Accounting officers in the department and constitutional institutions.⁷⁶ To carry out their governmental duties, they must directly answer to the legislative assembly for the effective management of their budgets.⁷⁷ By requiring the Auditor General to carry out an impartial examination of PPP projects and to look into their management and procurement procedures, the PFMA ensures that public funds are used effectively and efficiently. PPP projects are cost-effective and compliant with the PFMA if an independent evaluation is conducted and the documentation process is examined.

3.4 Municipal Finance Management Act 56 of 2003 (MFMA)

In 2003, the Municipal Finance Management Act (hereinafter mentioned as ‘MFMA’) was passed as a response to the shortcomings in local government finance procedures at the time.⁷⁸ The existing system was characterised by one-year line-item budgeting, which hindered strategic planning and the alignment of budgets with medium-term priorities.⁷⁹ As a result, instead of taking into account present demands and community needs, councils allocated resources based on earlier commitments.⁸⁰ The municipal finance practices also lacked a culture of performance and frequent reporting. Reports were generally inconsistent, inaccurate, unreliable, and frequently missed important information.⁸¹ Annual reports were regularly withheld from the public, and financial accounts were not instantly and accurately submitted for audit.⁸²

The MFMA’s establishment in 2003 set the foundation for addressing these challenges.⁸³ Following that, several regulations were put into place to address particular issues such as asset transfers, PPPs, supply chain management, and minimum competency standards for municipal finance officials.⁸⁴ Each of these components plays a crucial role in ensuring that expenditure is developmental, effective, and efficient, while also promoting accountability within municipalities.⁸⁵

MFMA promotes effective financial management within municipalities.⁸⁶ It mandates that municipalities establish a financial management system that aligns with generally recognised accounting practices.⁸⁷ Municipalities can promote effective budgeting in PPP projects by following these practices which provide a standardised framework for financial planning, ensuring that budgets are realistic, accurate, and based on sound financial principles.⁸⁸ MFMA’s provision for establishing a financial management system aligned with generally recognised accounting practices is essential for promoting effective financial management in municipalities, particularly in the context of PPPs.⁸⁹ Municipalities can construct accurate and realistic budgets by following these procedures, which also provide expenditure management and protect taxpayer’s funds.⁹⁰ By promoting financial accountability and effective resource allocation, the MFMA enhances municipal financial management in general and helps PPP projects be successfully implemented.⁹¹

Section 120 of the MFMA outlines the conditions and procedures for PPPs.⁹² It emphasises the importance of abiding by the broader regulatory framework governing PPPs in the municipal context by ensuring that municipalities can enter into a PPP agreement if it is affordable, offers value for money and transfers the appropriate amount of technical, operational, and financial risk to the private party.⁹³ This ensures that the municipality will evaluate PPP proposals, and determine if they are in the best interests of all parties involved by taking into account how the project will affect its citizens.⁹⁴ MFMA emphasises the need to follow specific provisions and procedures related to partnerships, cooperative governance, and intergovernmental relations outlined in Chapter 8.⁹⁵ By complying with the regulatory framework, municipalities ensure that PPPs are implemented in accordance with legislative requirements.⁹⁶

Additionally, the MFMA puts an important requirement on municipalities that feasibility studies must be conducted before a PPP is concluded.⁹⁷ These studies serve as a crucial evaluation tool for identifying the proposed PPP arrangement’s strategic and financial benefits.⁹⁸ Feasibility studies delve into an in-depth analysis of the partnership, including an examination of the private party’s role and its alignment with the municipality’s objectives.⁹⁹ Municipalities can assess the suitability of the private party’s participation in PPPs and assess their capability and competencies to effectively carry out their specified function by conducting this analysis.¹⁰⁰ By ensuring that PPPs are founded on a thorough understanding of their possible advantages and risks, feasibility studies serve as the cornerstone for informed decision-making. This fosters effective governance, promotes collaboration, and provides necessary oversight in the partnership arrangement.

3.5 Municipal Systems Act 32 of 2000 (MSA)

The purpose of the Municipal System Act (hereafter referred to as ‘MSA’) is to establish essential principles, mechanisms, and processes that will facilitate municipalities in their progressive journey toward the social and economic upliftment of local communities.¹⁰¹ It aims to ensure universal access to affordable essential services for all residents.¹⁰² This emphasises community participation, providing opportunities for the public to be involved in local decision-making.¹⁰³ The legislation also establishes a straightforward and enabling framework for core processes like planning, performance management, resource mobilisation, and organisational change, all fundamental aspects of developmental local government.¹⁰⁴

Section 77 of the MSA is critical in the context of PPPs as the Act outlines the circumstances where a municipality must consider and decide on the appropriate mechanism to provide a municipal service.¹⁰⁵ These are relevant when a municipality is creating or reviewing an integrated development plan,¹⁰⁶ offering new municipal services,¹⁰⁷ significantly enhancing or expanding existing municipal services,¹⁰⁸ reviewing a delivery method,¹⁰⁹ undergoing municipal restructuring or reorganisation,¹¹⁰ or responding to a request from the local community.¹¹¹ By examining Section 77 of the MSA, we can infer that the Act values PPPs as a method of providing effective and efficient municipal services. The Act gives municipalities the authority to consider, decide, and enter into PPPs when appropriate, depending on a variety of contextual considerations such as the service’s nature, local requirements, and potential efficiency advantages.¹¹² This encourages local governments to adopt PPPs as a proactive means of enhancing service delivery and fostering sustainable growth within their boundaries. However, the effectiveness of this provision relies on the municipality’s willingness to proactively explore PPP options and engage in a transparent and fair decision-making process.¹¹³

The criteria and procedures that municipalities must follow when selecting delivery methods for municipal services, including the possibility of PPPs, are outlined in Section 78 of the MSA.¹¹⁴ Municipalities are obliged to conduct a thorough cost-benefit analysis before deciding on a PPP for service supply.¹¹⁵ This inquiry seeks to compare a PPP to alternative delivery options and assess all possible benefits and drawbacks. Additionally, municipalities must also assess the qualifications of potential private partners. This evaluation takes into account the abilities, knowledge, and resources that the private partner may offer to guarantee the effective delivery of services under the PPP agreement.¹¹⁶ Municipalities are required to consider the opinions of organised labour when evaluating various service delivery options.¹¹⁷ MSA makes sure that municipalities take decisions that are in the best interests of their communities by performing detailed cost-benefit assessments, assessing the capabilities of private sector partners, and taking into account the opinions of organised labour and the local population. This legal framework promotes accountable and inclusive governance, making it possible to implement PPPs successfully to address South Africa’s municipal service demands.

Before entering into a service delivery agreement for a fundamental service, municipalities must set up a program for community consultation and information sharing, according to the MSA.¹¹⁸ The implementation of a community consultation program encourages the municipality to be accountable and responsive to its inhabitants.¹¹⁹ Allowing the community to express their needs, worries, and preferences, gives them more influence and guarantees that their opinions are taken into account before any service delivery agreements are finalised.¹²⁰ Furthermore, because MSA mandates the disclosure of information regarding the proposed service agreement,¹²¹ this enables the community to make well-informed decisions by assisting them in understanding the consequences, advantages, and potential challenges involved with the agreement.

Through contracts with external providers, MSA regulates the duties that municipalities must fulfil when offering services.¹²² This is vital because it guarantees effective service delivery and protects the interests of the community. Municipalities are required to manage tariff settings made by the service provider, monitor and evaluate the agreement’s implementation, and guarantee continuous service delivery in the best interests of the community.¹²³ The Act permits municipalities to provide the service provider with specified service delivery plans.¹²⁴ This enables the service provider more control over the management of operational planning, service delivery, service-related economic and social development, customer management, and financial operations.¹²⁵ In accordance with Section 81(3), the municipality regularly monitors and audits the service provider’s performance to guarantee efficiency and responsibility.¹²⁶ By encouraging accessibility, equality, and community involvement in the selection and performance monitoring of service providers, these provisions play a critical role in ensuring effective service delivery and establishing public trust.

The key competitive bidding procedure for municipalities to follow when choosing a service provider is outlined in Section 83 of the MSA.¹²⁷ This procedure must be impartial, open, equitable, cost-effective, and designed to prevent fraud and corruption.¹²⁸ All prospective service providers must have equal and simultaneous access to relevant bidding information to ensure fairness and competitiveness.¹²⁹ The municipality is accountable to the local community, providing updates on the progress of selecting a service provider and explaining the reasons behind their decision.¹³⁰ Furthermore, the selection process must adhere to principles of fairness, equity, transparency, cost-effectiveness, and competitiveness.¹³¹ To address unfair discrimination, a municipality may establish preferences for particular service providers, advancing the needs of people from disadvantaged backgrounds.¹³²

The MSA is a crucial piece of law that gives municipalities the authority to provide fundamental services, including the public in decision-making, and successfully implement PPPs. Its provisions support inclusive, transparent, and responsible government, which ultimately benefits both the municipalities and the residents they serve.

3.6 The Protection of Investment Act 22 of 2015 (PIA)

The primary goal of the Protection of Investment Act (hereafter referred to as ‘PIA’) is to ensure the protection of investors and their assets while balancing the rights and responsibilities that apply to all investors.¹³³ The Act defines an ‘investor’ as an enterprise that invests in the Republic, regardless of nationality.¹³⁴ The PIA has three main objectives, which are to protect investments in compliance with the Constitution, to uphold the Republic’s sovereign right to regulate investment in the public interest, and to affirm the Constitution’s Bill of Rights and laws that apply to all investors and their investments in the Republic.¹³⁵ Any investments made in the Republic under Section 2 of the Act are subject to the provisions of the PIA.

In the context of PPPs, the PIA gives protection to international investors who participate in PPP projects in South Africa. The PIA upholds investors’ rights to fair and equal treatment as well as protection from unjustified expropriation.¹³⁶ These protections are important in PPP projects where foreign investors may be providing financing, technology, or expertise. The Republic is required to provide foreign investors and their interests with the same level of physical security as local investors are typically entitled to under customary international law.¹³⁷

To give investors a reason to take part in PPPs and make the necessary investments for the purpose of providing public services, economic growth, and the accomplishment of contractual agreements between public and private entities, PIA grants investors who take part in PPPs a mechanism for resolving disputes. PIA offers a framework, which can help to reduce risks and increase investment in the industry. If an investor disagrees with a government’s decision that has an impact on their investment, they may request, within six months of finding out about the disagreement, that the Department appoint a mediator to help them resolve their disagreement.¹³⁸ A foreign investor is not prevented from bringing their dispute before any South African court, independent panel, or statutory agency.¹³⁹ In cases where domestic remedies have been exhausted and the dispute persists, the South African Government might agree to international arbitration. This would involve South Africa and the foreign investor’s home country.¹⁴⁰ This clause is crucial since PPPs entail cooperation between the government and private sector entities, which frequently have divergent interests, priorities, and business practices. A dispute resolution mechanism enables and assists parties to settle their disagreements in a manner that is flexible, inexpensive, and effective, allowing the parties to resolve their differences quickly and effectively. This prevents the progress of the project from slowing down or underperforming.

South Africa’s legal framework has been significantly strengthened to ensure the successful implementation of PPPs. This evaluation highlights the government’s unwavering commitment to partnering with the private sector, attracting substantial investments, and delivering public services efficiently to all citizens, regardless of their race, gender, or socioeconomic status. This Part delved into the intricacies of South Africa’s PPP legal framework, revealing the government’s dedication to innovative solutions like PPPs for addressing infrastructure deficiencies. There have been a total of 34 PPP projects implemented successfully, worth R89.3 billion.¹⁴¹ The initiatives carried out on a national scale are categorised into transport, water and sanitation, healthcare, tourism, and information technology.¹⁴² PPPs have played a significant role in South Africa’s socioeconomic advancement.¹⁴³ By effectively reducing transaction costs, streamlining supply chains, and strengthening market connections, PPPs have played a transformative role in enhancing South Africa’s competitive edge, not only in the domestic market but also on the international stage.¹⁴⁴

4 The role of PPPs

PPPs have developed a cooperative strategy to carry out infrastructure projects and encourage creative social development initiatives in recognition of this.¹⁴⁵ PPPs offer governments access to the resources as well as expertise of the private sector, enabling them to address and solve infrastructure gaps efficiently.¹⁴⁶ The technological expertise, innovation, and efficient project management techniques offered by commercial partners enable infrastructure projects of higher quality.¹⁴⁷ Private partners offer skills in project development, technological possibilities, construction, operation, and service supply, which lead to improved project outcomes.¹⁴⁸ This realisation makes it possible to construct infrastructure, allocate resources, and use cutting-edge technologies.

Adequate infrastructure in the form of an appropriate transportation system is crucial for regional integration and economic facilitation in Africa.¹⁴⁹ Sub-Saharan Africa uses road transportation as the most frequently used means of transporting goods and people because a number of the countries are landlocked.¹⁵⁰ The movement of goods and people is easily facilitated if there are effective and modern road and railway networks, which boost trade and economic growth by promoting increasing trade activities.¹⁵¹ Businesses may deliver their goods more swiftly, reliably, and affordably when there is efficient transportation infrastructure, which boosts their competitiveness and broadens their market reach.¹⁵² This interconnectedness encourages social cohesion, improves social and economic possibilities, lessens regional inequities, and draws foreign investment to a country. This highlights PPPs’ crucial role in the development of cross-border infrastructure, such as highways and logistics networks, which link markets and encourage intra-regional trade.¹⁵³ These infrastructure projects reduce trade barriers and promote market access, which strengthens economic cooperation among African countries.¹⁵⁴ Through the facilitation of access to clean water, sanitary infrastructure, and a consistent energy supply, PPPs improve public health, sanitation, and hygiene standards.¹⁵⁵

In addition to fostering the growth of well-equipped educational facilities and information and communication technology infrastructure, PPPs also encourage high-quality learning and knowledge-sharing.¹⁵⁶ Access to critical healthcare services is guaranteed by adequate healthcare infrastructure, which is made possible by PPPs.¹⁵⁷ This decreases inequities, empowers individuals, and demonstrates how crucial PPPs are to advancing infrastructure growth in Africa.¹⁵⁸ PPPs present a workable strategy to meet Africa’s infrastructure demands by enlisting the private sector’s expertise, strengthening project outcomes, promoting regional integration, and enhancing human development and quality of life.

The success of the economies of developing countries depends on capital security.¹⁵⁹ Investors require governments to be competent and efficient as partners while promoting a secure business environment that attracts investment.¹⁶⁰ The effective implementation of PPPs and the rapid growth of the PPP market depend on the active engagement of the private sector.¹⁶¹ The ability of the private sector to invest adequately determines whether PPP projects can generate enough funding to cover the project’s costs and attract investors.¹⁶² Collaboration between the public and private sectors allows governments to get access to private capital markets, reducing the burden on public finances and promoting investment in sectors that are unlikely to draw private capital.¹⁶³ Through funding PPPs, the private sector gives the governments the ability to pay project expenses over an extended period by the benefits anticipated.¹⁶⁴ This technique allows public funds to be made accessible for investments in places where private investment is either impractical or unattainable.¹⁶⁵

PPPs make it possible for private investors to contribute foreign funds to infrastructure development projects, specialised knowledge, and innovative ideas.¹⁶⁶ By engaging private investors, governments can ensure the success of PPP initiatives because these investors place a higher priority on profitability and returns, which encourages PPPs’ performance-driven management and accountability.¹⁶⁷ With this collaboration, the public and private sectors benefit from thorough project evaluations, efficient risk management, and resource allocation.¹⁶⁸ Private sector involvement in PPPs ultimately improves the outcomes of projects and promotes effective resource utilisation for the benefit of both the government and its citizens.¹⁶⁹

By including broader environmental and social objectives, PPPs extend beyond the development of physical goods and services.¹⁷⁰ PPPs have the potential to have positive effects on environmental sustainability, such as lowering carbon emissions, promoting energy efficiency, generating green jobs, and implementing innovative infrastructure ideas like adaptable or ecological infrastructure.¹⁷¹ These investments serve as an excellent example of the enormous potential for PPPs to provide beneficial spillover effects within the communities they serve.¹⁷²

The analysis presented emphasises the pivotal role played by PPPs in driving success and fostering development. The active involvement of the private sector in PPPs brings forth indispensable contributions in the form of vital financial resources, expertise, accountability, and innovation. These elements are instrumental in ensuring the financial viability and overall effectiveness of projects. By expanding and nurturing PPP markets, governments have the potential to effectively allocate public funds, bolster sustainable development, and enhance the delivery of essential services and infrastructure.

5 Challenges in implementing PPPs in South Africa

While PPPs have gained popularity worldwide, it is essential for each country to carefully assess challenges and how to address the challenges to ensure the successful implementation of projects. PPPs are faced with several challenges when it comes to their execution to deliver services in South Africa and around the world.

The number of new project transactions has decreased over the past five years, from an estimated R10.7 billion in 2011-12 to R5.6 billion in 2019-20.¹⁷³ This decline is primarily due to delays and cancelled projects in the health and security sectors.¹⁷⁴ PPP contingency liabilities refer to potential financial obligations the government may incur due to its involvement in PPP projects.¹⁷⁵ These liabilities are considered contingent because they depend on specific future events or circumstances, such as project delays, cost overruns, or the failure of a private partner to fulfil its contractual obligations.¹⁷⁶ In some PPPs, when the private sector collects user charges, the government guarantees a minimum revenue stream, creating a fiscal obligation that requires budget allocations.¹⁷⁷ This results in a financial commitment and calls for the necessary budgetary allocations. The government sphere in the Treasury report displays estimated termination amounts. They increased from R10.3 billion in 2015–16 to R10.9 billion in 2016–17.¹⁷⁸ Liabilities in the national government resulting from the Department of Environmental Affairs building and the new Statistics South Africa building, which were not included in 2015/16, were the primary cause of the increase.¹⁷⁹ Fiscal constraints and a lack of public funding have made it more difficult for the government to finance PPP projects or offer the required guarantees or subsidies to draw private sector involvement. Development in South Africa has also been hampered by the Government’s limited ability to oversee PPP projects efficiently, including project planning, procurement, and contract management.¹⁸⁰ This is evident as there are incomplete and neglected PPP projects which often face delays, fail to reach completion and suffer from financial mismanagement.¹⁸¹ These represent a few factors that have led to a decline in PPPs in South Africa.

The research identified challenges faced in executing PPP projects through an extensive literature review. The findings show the six critical universal challenges namely legal and regulatory issues, a lack of public input, a lack of transparency, political interference, a financial crisis, and ineffective risk allocation.

5.1 Legal and regulatory challenges

PPPs are contractual agreements in which the public sector and private sector partners work together to provide infrastructure and public services.¹⁸² For these agreements to be legally enforceable, they must be in accordance and comply with the Constitutional values and the country’s PPP laws.¹⁸³ While PPPs have been implemented in South Africa with varying levels of success, the legal system that regulates these partnerships faces crucial legal challenges.¹⁸⁴ According to South African PPP rules, the institution financing the project must register the project with the appropriate treasury during the project’s conceptualisation stage to select a project officer and a transaction advisor.¹⁸⁵ However, the rules do not address the importance of public collaboration.¹⁸⁶ It is possible to disregard the concerns and opinions of the impacted communities and the general public if public engagement is not expressly specified in the PPP rules.¹⁸⁷ Due to the general public’s exclusion from voicing their thoughts about these initiatives, whose primary goal is to improve their quality of living, this omission raises doubt on the project’s accuracy and results in questioning how the laws governing PPPs were drafted.¹⁸⁸ Regardless of how successful a project may be, the ethics and constitutionality of the contracting and project execution methods can be criticised.

5.2 Lack of public consultation

The call for fairness in service delivery and procurement is impacted by the reality that accountability in South Africa remains a major obstacle to PPP implementation. PPPs constitute significant long-term societal investment projects with the primary objective of ensuring improved service quality for the general public.¹⁸⁹ They combine the knowledge, innovation, and resources of the private sector with the regulatory oversight and social objectives of the public sector to deliver higher-quality services across sectors, including healthcare, education, transportation, water supply, and sanitation.¹⁹⁰ This results in the delivery of services that meet higher standards, more effectively meet citizen needs, and offer a better overall experience for users.¹⁹¹ Despite this socioeconomic impact, PPP’s inclusion of the general public is excluded from the decision-making process.¹⁹² Concerns over financial confidentiality, intellectual property rights, and database protection frequently serve as justifications for partnership confidentiality, resulting in private agreements between public and private sectors with little involvement from the general public.¹⁹³ To start a project in South Africa, the institution must register the project with the appropriate Treasury, appoint a project officer and a transaction advisor, solicit bids from potential transaction advisors, evaluate the results of those bids, and then finalise and sign the contract with the transaction advisor.¹⁹⁴ The South African PPP Manual makes a distinction between two different types of PPPs: (i) those in which a private party provides a service typically handled by the government, like providing water or maintaining a road; and (ii) those in which a private party obtains the right to use public property for its commercial purposes; and those that combine both of them.¹⁹⁵ The negotiations are between the private sector and the government.¹⁹⁶ Payment options include the private party receiving fees or charges from users of the service, the institution paying the private party for providing the service, or a combination of the two.¹⁹⁷ The lack of public participation during the initial phases of PPP projects, which are vital and have a significant impact on improving the standard of living for South African citizens, is evident in all of these processes.¹⁹⁸

Publication of information can increase awareness of PPPs in the community, but the interactive, active participation of the general public is crucial and very essential for guaranteeing that projects reflect the interests of the citizens, a component that is crucial to the PPPs’ achievement of long-term success.¹⁹⁹ When there is insufficient public participation in the decision-making process, there is inadequate communication with the broader public, which causes citizens to oppose PPPs.²⁰⁰ As a result, the general public may consequently lose faith in the government and its collaborations with the private sector.²⁰¹ The likelihood that some groups, such as marginalised groups, will not have a say during the conception and implementation of PPPs, which contribute to social inequities and exclusion, will raise concerns about the fairness and integrity of PPP efforts.²⁰² Existing gaps in access to services and infrastructure may be made worse.²⁰³ This violates the fundamental right to equality²⁰⁴ enshrined in the Constitution, which prohibits discrimination based on race, gender, and religion.²⁰⁵ Since PPP projects will directly affect the citizens’ standard of living, public participation is essential for ensuring that the citizens’ concerns are adequately taken into consideration in decision-making processes.²⁰⁶ It also ensures equal opportunities for all individuals and groups and gives them the chance to clearly express their opinions.

5.3 Lack of transparency

Transparency entails providing the public with unrestricted access to timely and dependable information regarding decisions and performance in the public sector.²⁰⁷ This includes information relating to the objectives of the project, the funding budgets, the terms of the contract, performance measures, and risk factors.²⁰⁸ To ensure that everyone is informed of the PPP project to be implemented, access to the stakeholders, including the public and private sector and the general public, should be easily accessible.²⁰⁹ The transparent governance of PPPs fosters greater public confidence in both the public and private sectors. When stakeholders are informed on the intricacies of a project, the financing information, the contractual terms, and the performance measures, they are more likely to have confidence that the project is being carried out fairly and appropriately.²¹⁰ The confidence gained from this is crucial for the ongoing support and acceptance of PPP projects by the general public.²¹¹

In South Africa, the right to information²¹² serves as the fundamental principle of democracy. The right to information serves as a pillar for accountability and transparency.²¹³ Knowledge improves people’s capacity to assert and defend their rights, which builds communities. Since it is one of the pillars of democracy, access to information is crucial.²¹⁴ To assure the accomplishment of the constitutional right to information access and to foster a culture of transparency and accountability among both public and private organisations, the Promotion of Access to Information Act (hereinafter mentioned as ‘PAIA’) was enacted.²¹⁵ PAIA is essential to hold the government responsible for all the actions it takes on behalf of the general public. Providing easy access to accurate information promotes transparency.²¹⁶

The South African PPP Unit’s online PPP information disclosure through the PPP Quarterly is insufficient and inconsistent.²¹⁷ There is a noticeable lack of current information since the latest report was released in December 2010.²¹⁸ The content of the report is constrained and falls short of offering thorough information. The data that is disclosed is limited to the project’s name, the government organisation in charge of carrying it out, the PPP type, contract duration, date of financial closure, private partner(s), financing arrangements, transaction government advisors, project value, the capital value of signed contracts, procurement process, and government benefits.²¹⁹ This restricted disclosure raises questions regarding the accountability and transparency of PPP projects in South Africa.²²⁰

For instance there were several challenges with Gautrain’s transparency, including its failure to disclose the project’s information, inadequate budgetary data, allegations of corruption, and a lack of clear bidding criteria.²²¹ As a result of ‘commercial confidence,’ discussions between the public and private parties took place behind closed doors.²²² Government and commercial agency contracts also had clauses ensuring the secrecy of partnerships. This confidentiality makes it difficult to convey information suitably.²²³ Budgetary data for the Gautrain PPP project has been criticised for being insufficient, unreliable, and misleading because reliable data was not provided.²²⁴ The Government’s disclosure of the cost projections for the Gautrain Rapid Rail Link serves as a crystal-clear demonstration of this.²²⁵ From the initial USD$300 billion projection, the cost estimate increased to US$2 billion in 2011.²²⁶ The project’s budgeting data’s accuracy and dependability were called into question by this huge cost increase. According to the leader of South Africa’s opposition Democratic Alliance (hereinafter mentioned as ‘DA’), the Gautrain contract should be made public to disclose the specific annual subsidy costs for the province.²²⁷

The DA leader stated that the government had suffered significant financial losses as a result of the project being handled in secret and poor preparation.²²⁸ It was more challenging to make informed choices and determine the project’s profitability due to the lack of transparency on the project’s accurate expenses.²²⁹ Concerns regarding the fairness and integrity of the procurement process were further heightened by the PPP document’s lack of specific guidelines for the evaluation of proposals, the choice of contracts, and bid ranking.²³⁰

The lack of frequent updates in the quarterly report is a major challenge because it makes it challenging for stakeholders to obtain up-to-date information and monitor continuing project development and performance.²³¹ Investors and financiers considering investing in PPP projects find it challenging to conduct thorough due diligence because of inadequate information.

5.4 Financial crisis

A financial crisis is a significant disruption or instability in the financial system that negatively affects the operation and viability of PPPs, such as high transaction costs and fluctuating interest rates that cause a major economic downturn, market volatility, and restricted credit availability.²³² In South Africa, there has been a decrease in new PPPs, with estimated values declining from roughly R10.7 billion in 2011–12 to R5.6 billion in 2019–20.²³³ This decline can be attributed, at least in part, to the perception that PPP projects entail transaction high costs.²³⁴

Transaction costs include planning, negotiation, and implementation fees for PPP contracts as well as administrative and due diligence costs.²³⁵ The provision of public infrastructure and services will neither be practical nor feasible due to PPP projects’ high transaction costs. When transaction costs are high, PPPs’ potential for cost-effectiveness is hindered, which lowers the anticipated financial benefits and the projects’ ability to be sustainably profitable.²³⁶ Due to the high transaction costs, private partners find it challenging to make informed decisions. The complex bureaucratic system makes it challenging for the private sector to participate part in PPPs.²³⁷ The uncertainty surrounding contract completion and the risk of higher expenses deter long-term investment commitments.²³⁸ The transaction process’ complexity and cost also operate as a barrier regarding the bidding process, particularly for small and medium enterprises (SMEs) and other smaller private firms.²³⁹ The limitation on competition has the effect of narrowing the pool of potential private partners, which could limit economic benefits, negatively impact innovation, and even increase costs for the public sector.²⁴⁰

According to an analysis of PPPs by Dudkin and Valila,²⁴¹ the costs associated with the procurement phase of PPPs alone tend to amount to considerably over 10% of the capital value of the project, which has the potential to reduce the cost savings achieved by PPPs.²⁴² However, additional major transaction costs that are challenging to identify and determine, like those brought on by delays and renegotiations, could significantly reduce the anticipated benefits of PPPs.²⁴³ Consequently, reducing these hidden costs to a sustainable level is a major challenge in PPP governance design.

The execution of PPP projects can be greatly impacted by rising tax rates.²⁴⁴ Fluctuating interest rates may lead to increased debt service commitments, which will increase project costs and raise the likelihood of liquidity issues.²⁴⁵ Furthermore, lower-than-expected profits on some projects could pose doubts about their feasibility, resulting in severe delays or even project cancellations.²⁴⁶ Investment timing may also be impacted by a trade-off between pursuing PPPs and choosing more conventional concessions.²⁴⁷ The analysis demonstrates that fluctuating interest rates can seriously impede the implementation of PPPs. This will lead to higher transaction costs and delays in payments affecting the overall feasibility and financing of projects.

5.5 Ineffective risk allocation

One of the primary motivations behind the adoption of PPPs is the ability to share risk. Some of the organisational and technical problems that PPP project partners encounter include unclear risk and responsibility-sharing agreements, inadequate dispute resolution processes, disagreements over appropriate risk allocation, and a lack of agreement on how to handle significant failure and revenue risks.²⁴⁸ Failure to implement accurate risk assessment procedures results in inaccurate assessments and unequal partnership distribution.²⁴⁹ The possibility of a financial and economic disaster is one such instance.²⁵⁰

Risks that can be controlled are referred to as internal risks.²⁵¹ In the context of finance and economics, internal risks are often associated with factors such as market behaviour, investor actions, or the interaction of various financial players within the system.²⁵² However not all risks can be controlled, and there can be circumstances in which one or more contracting parties are unable to control a risk.²⁵³ The risk of uninsurable force majeure, which affects all parties, is unpredictable to those parties, whereas the risks of politics and taxes are intrinsic to the government and predictable to the private party.²⁵⁴

In South Africa, a large number of PPP projects rely on user fees and unitary payments for services rendered by the private sector.²⁵⁵ The Government’s restrictions put in place to control the unforeseen COVID-19 outbreak were extremely detrimental to PPPs.²⁵⁶ The COVID-19 pandemic had a significant impact on the global transportation industry.²⁵⁷ The South African government restricted movement as one of its measures to curb the corona virus’ spread. This took the form of travel restrictions, such as the closing of borders, airline suspensions, and quarantine procedures for people entering the country, to restrict the spread of new cases from high-risk countries and prevent the cross-border transmission of the virus.²⁵⁸ These restrictions caused a lockdown and work-from-home employment model. The fear that the virus will spread in crowded settings caused people to travel less and when necessary.²⁵⁹

The expected rise in passengers and profitability, particularly in the transportation and tourism industries, sharply decreased.²⁶⁰ The decrease in passenger numbers resulted in reduced service, frequency, and financial strain on the transportation industry.²⁶¹ For example, the construction and operation of Chapman’s Peak Drive, a significant PPP project in South Africa is prominent since it was one of the first PPPs that a provincial government negotiated under the Public Finance Management Act of 1999.²⁶² The Western Cape Department of Roads and Transport, which was responsible for guaranteeing the private sector’s debt repayment, had to pay the private sector around R13.6 million more than was planned for 2021 and R14 million more than was planned for 2020,²⁶³ as decreased traffic values had an impact on revenue collection. The department also predicts that because of decreased traffic, it would have to pay an additional R14 million.²⁶⁴ Traffic levels and revenue were impacted by a decline in international tourism and an increase in remote work. The provincial government initially anticipated receiving income from this route once debts are paid off in full by 2023.²⁶⁵ Payment deadlines will be extended, nonetheless, as a result of decreased traffic and the recovery process following the COVID-19 pandemic.²⁶⁶ This has brought to light the need for the National Treasury to properly comprehend and manage fiscal risks in publicly financed projects with external funding.

For South Africa to develop modern infrastructure, all facets of the economy must be heavily involved in ensuring that the South African government creates appropriate investment models.²⁶⁷ To adequately protect the public interest in infrastructure development, it is essential to award work to private contractors through a transparent and enforceable public bidding process. This process must include clear performance agreements to ensure that contractors meet their obligations and deliver quality work on time. By doing so, the public can have confidence that their tax is being used effectively and that infrastructure projects are being completed to the highest standards. Additionally, a public bidding process promotes competition among contractors, which can lead to cost savings and improved quality of work. Therefore, it is crucial to prioritise the public interest when awarding contracts to private contractors and ensure that infrastructure development benefits the community as a whole.

6 Recommendations

The infrastructure chain of delivery comprises numerous intricate stages, beginning with thorough planning, project identification, financing preparation, construction, project financing, project building, and project operation and maintenance.²⁶⁸ To achieve success, each of these stages calls for significant consideration as well as practical ability.²⁶⁹ A reality-based approach to infrastructure delivery assumes that all stakeholders can handle the intricate problems that come up throughout an infrastructure project’s many stages.²⁷⁰ The governments of Sub-Saharan Africa must make sure that these essential skills are acquired centrally, to ensure that they oversee projects at every stage of the value chain and that they participate in the timely and efficient completion of infrastructure projects.²⁷¹

Collaboration with private sector organisations is crucial to reducing the backlog of infrastructure on the continent. Addressing the backlog of infrastructure on the continent requires partnerships with businesses in the private sector.²⁷² Increasing the local, regional, and debt capital markets and enhancing PPPs are critical strategies to diversify the available funding sources.

The first step in the PPP process is to define the structure of the project contract, including financial structuring, risk allocation, and payment mechanism. This entails finalising the preparation and due diligence tasks initiated during the appraisal phase, revising the affordability analysis and project service contract, and re-evaluating or validating earlier investigations.²⁷³ The model design, technical specifications, production needs, business terms and contract structure issues must all be finalised. If a clear project structure is established, all project partners will be aware of their roles, the associated risks, and whether or not the project will generate profits.²⁷⁴ Hence governments should ensure that the project’s framework is designed to enable PPP initiatives to be implemented successfully, keeping in mind that the main objective is to achieve value for money.

Governments are recommended to draft a comprehensive contract management manual. In PPP projects, contract management entails monitoring performance, managing threats and risks, managing changes in the contract, administering the obligations and responsibilities of the procuring authority, providing authorisations, calculating and liquidating payments, analysing claims, and managing information and communications.²⁷⁵ This manual will facilitate training and capacity-building, facilitate audits and reviews, enhance communication, improve risk management, and promote clarity and consistency. It will also help allocate resources more efficiently.²⁷⁶ By investing in such a manual, governments can improve the overall management of the project and increase the likelihood of its success. This is because private investors often assess governments based on stability, transparency, and long-term well-defined policies.

Effective dispute-resolution procedures are crucial to PPP success. Infrastructure projects are subject to delays and cost overruns. As a result, conflicts arising from the public and private domains could intensify these differences.²⁷⁷ Practical strategies for settling disputes contribute to preserving trust between the public and private sectors. Governments must ensure that the terms and conditions of the dispute settlement clause are acceptable and enforceable in the relevant jurisdiction and that the language has been carefully drafted and assessed.²⁷⁸ This promotes favourable relationships, guarantees project performance, reduces risks, and gives investors access to justice. By investing in effective dispute resolution processes, governments in Sub-Saharan Africa can establish an environment favourable to PPP accomplishment, attract significant investment, close infrastructure gaps, and improve the delivery of citizen services. A well-structured dispute resolution clause can help to keep projects on track and prevent prolonged and expensive legal battles by offering a structured approach to resolving conflicts.

7 Conclusion

Investment in today’s world is an essential factor that boosts a country’s economy. It not only accelerates economic growth but also provides opportunities for employment for the youth, thereby increasing the people’s standards of living. An ideal investment will result in the development of infrastructure which improves the quality of people’s lives. Vice versa, infrastructure development is the key to enabling sustainable economic growth, raising the standard of living, and attracting more foreign investment to countries. Governments must increase their financial allocations for infrastructure projects to boost economic growth.