Olanrewaju Durosinmi-Etti

The primary aim of this research is to explore micro and macro-level approaches to reducing the level of risk attached to African infrastructure assets, in order to increase private sector participation and liquidity in the market. Lagos was adopted as the primary case study region for a practical comparative analysis of three key PPP infrastructure projects that experienced varying degrees of success, alongside a high-profile PPP project in Scotland.

The findings from the analysis point to Public Partner Ineptitude, Poor Stakeholder Engagement and Poor Deal Structure as key factors hindering the successful delivery of African infrastructure assets. It was found that previous literature on PPP infrastructure development placed very little emphasis on the grave impacts of socio-cultural issues arising from poor stakeholder engagement, relative to the other two factors. The landscape for infrastructure development under the PPP model in Africa needs to be underpinned by better Stakeholder Engagement, Contingency Planning, Risk Dispersion and Accountability. Communities and target users must be engaged through the provision of roles for involvement in projects as well as opportunities to invest in local projects that have a direct impact on them through the issuance of credit-enhanced municipal bonds. This will increase risk dispersion and capital availability - whilst ensuring greater transparency and accountability of the government to the local communities, who will be doubly incentivized to ensure successful delivery of the assets.

On a macro scale, the legal and regulatory environments in African countries must be developed to support innovative trends in the global financial markets. In addition to the ongoing securitization of project finance loans by lenders, Future-Flow Securitization of free cash flows from high-performing publicly funded infrastructure assets could enable these governments to benefit from credit arbitrage, providing funding opportunities beyond the sovereign credit ceiling. By taking advantage of this sustainable financing model, governments can reduce the tax burden brought about by capital expenditure, allowing them to ensure a greater focus on their core sustainable development objectives, such as the correction of market failures and the preservation of social capital.