In 2024, Kenya’s attempt to upgrade its main international airport through a Public Private Partnership (PPP) with India’s Adani group failed due to protests, investigative journalism, and strikes. The deal was ultimately cancelled when corruption charges against Adani in the US made it untenable.

The cancelled Adani deal in Kenya highlights the issues with PPPs in Africa, where privatized profit and public risk are prevalent. The model often shifts the risk to the public, who end up bearing the costs.

This model is wrong and is the reason there is a backlash when projects get proposed or pushed through. It needs private capital to invest in key infrastructure, agriculture, scientific research etc. We should let them do so. In fact, we should make it easier for them to do so, incentivize them to do so, but we should take the public risk out of the equation.

Thus, the solution is to throw out the model and think beyond infrastructure. Partnership between African governments and the African private sector must extend into research and Development, industrial strategy, trade policy and climate change mitigation.

What is a PPP, and why is it a problem.

The name, public-private partnership, is vague and could mean any number of things. The world bank defines it as “A long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility and remuneration is linked to performance.”. However during the last couple of decades this definition has come to almost exclusively focus on building infrastructure or the private sector taking over certain government functions to provide them more efficiently.

This has not only narrowed the scope of what partnership between the private and public sectors could achieve but also exposed the continent to significant risk. Principally the misalignment of interests, where the private sector is after profits and public sector actors get compromised in pursuit of those profits. Resulting in projects with highly complex structures that end up putting more risk on taxpayers than was promised. Privatized profit – public risk. Furthermore the secretive nature of the contracts and lack of engagement and consultation with the public leads to open hostility against many of these projects. Examples of this abound across the continent.

• In Nigeria the federal government abandoned a PPP for the Lagos-Ibadan expressway and Niger Bridge in which the private sector was asking for a funding guarantee (shifting the risk from the private to the public sector) and funded them itself, with the minister at the time stating “If you are guaranteeing something, you might as well do it yourself.”
• In Kenya a medical equipment leasing project has ballooned in cost from USD 246 million to USD 485 million, far exceeding the cost of simply purchasing the equipment and avoiding issues where equipment wasn’t delivered, or is simply left unused.

Reshaping the model and redefining PPPs

How do we get away from the current corner that PPPs in Africa seem to have boxed themselves into, where they are about infrastructure or service provision projects, that end up being secretive, complex, too expensive and leaving the African taxpayer holding the bill. To a place where we can crowd in private capital into financing critical projects and develop meaning full partnerships between the public and private sectors that drive growth. To do that we must reform the PPP model and redefine the meaning of partnership.

1.     Reforming the model

During the industrial revolution, private enterprise and capital were instrumental in building infrastructure in the US and UK. Governments provided incentives like land concessions and time-based monopolies, enabling these projects to be profitable. Africa can adopt a similar model.

Africa can and should move to the same model.

• Identify key projects where it is viable for a profit to be made and develop concession models such as
  1. 1. Free land for the project,
     2. a sole license or monopoly for a certain period of time.
• Pre-existing or fast tracked building and environmental approvals and licenses making it easier and cheaper to build.
• Offer the concessioned project in an open bidding process that allows the public to see and understand what is going and what is intended to be built.
• Have an oversight mechanism (most countries have PPP units and Auditor Generals offices) that ensures the winning bidder sticks to the agreement, with a clear enforcement mechanism, e.g. a fine of a significant portion of the project or the confiscation of the project entirely that ensures the winning the bidder is not just able to make a profit but incentivised not cheat in doing so.

There will be failures and bankruptcies, but that is fine, for markets to work risk must exist and consequence be real. In addition it will narrow the scope of what is offered for PPPs disincentivising governments from trying to privatize critical public goods like health, education or the provision of water by using the excuse of “efficiency”. Finally this model is simpler, more transparent and critically does not leave the public holding the bag if it fails.

2.     Redefining partnership for growth

Partnership between the public and private sectors is not just about projects. One of the most important and oft missed aspects of the rise of Asian tigers in the latter half of the 20^th century is how closely governments worked with the private sector in a number of areas including:

• The development of industrial, financial and business sector policies. This a fostered the development of mutual goals and understanding between the public and private sectors. Creating a stable predictable environment that fostered investment and growth. In short, the private sector understood what the government wanted to achieve and the public sector understood what the private sector needed to get there.
• Education, the public and private sectors worked together to ensure that the education system produced graduates with the skill sets and knowledge needed. Ensuring that graduates could find jobs and that they kept creating jobs relevant to driving their growth.
• Trade, governments worked hand in hand with the private identify key markets in which to sell products, and materials which needed to be sourced from oversees and worked to gain access to those markets and drive workable trade negotiations and agreements.

As I have written about previously, the continent desperately needs private-sector growth. To create the jobs, growth and investment that Africa needs. After half a century of trying its clear that Foreign Investment and development aid will never meet our needs. It must come from within, and for that the private sector needs to grow. Fostering that growth requires the public and private sectors to work together, to partner with each other. Thus the focus of private public partnerships should not be on projects or filling the infrastructure gap, but rather on filling the growth gap.

Public Private Partnership for Africa

Africa needs PPPs. The continent needs to get more private (hopefully indigenous) capital to invest in key projects that will connect and power the continents development. Just as importantly if not more so, Africa needs the public and private sectors to work together to co-create the policies, laws and conditions needed to drive investment, growth and creation of jobs on the continent.

The way we currently do PPPs is wrong. It’s why they are so hard to do, are so controversial, and are so expensive. If we do not rework our model of how to originate and fund PPP projects this will remain the case. And if we do not redefine and revitalise how the public private sectors partner together on an agenda for growth Africa will never achieve the game changing growth it needs and wants.