Public-Private Partnerships in Africa, Part I – Infrastructure
19 February 2012
Consultancy Africa - February 16, 2012
The past decade has seen a significant increase in the use of the public-private partnership (PPP) for African project finance as leaders grapple with struggling economies, over reliance on foreign aid and unstable tax bases. PPPs aim to provide a public service or fulfill a public need through governmental and private cooperation. A PPP may be defined as: ‘a contract between a public sector institution and a private party, in which the private party assumes substantial financial, technical and operational risk in the design, financing, building and operation of a project.’(2)
The case of Mozambique: Port Maputo and the N4 Toll Road
The African Development Bank has since long criticized the continent’s ports; Africa’s trade is largely extra-continental, with over 80% of trade requiring goods to be imported to or exported from the continent. Increasing demand is unmatched by available ports, placing a heavy burden on outdated port systems, the inefficiency of which leads to high transaction costs, impacting the competitiveness of African economies.(3) Inland infrastructure is also required to facilitate efficient freight shipments; the development of Port Maputo and the N4 toll road addresses these issues.