Determinants of public-private partnership activity in Sub-Saharan Africa

Abstract

Public-Private Partnerships are seen as an alternative for infrastructure development in the face of financial constraints in many developing countries. Using panel data from 36 selected Sub-Saharan African countries from 1996 to 2019, the study uses both the Pooled OLS and Negative Binomial regressions to determine the drivers of PPP activity in the medium term. PPP activity, the dependent variable, is measured in two ways: average total investments and; as the total number of PPP projects. The results of the study show favorable market conditions, as proxied by population and GDP per capita, to be the most significant determinants of PPP activity as they represent demand and affordability respectively. For macroeconomic conditions, the results show that money supply and high debt levels are also key in determining PPP activity. Though some of the results on governance are inconsistent with expectations while others are not significant, improvement of overall governance conditions leads to increased PPP investments. In order to attract the required levels of PPP investment to bridge the infrastructure gap, the study recommends that SSA regions formulate policies that will improve market conditions and strengthen governance and accountability systems.