Public-Private Partnerships

The lack of infrastructure in African countries is an obstacle to their economic growth and development. These shortcomings have an impact not only on the economic situation of African countries, but also on their competitiveness on a global scale. The challenge of financing the infrastructure deficit is complicated by the inefficient operation of existing infrastructure.

Public-Private Partnerships (PPPs) offer a viable complement to public investments and a solution to both the challenges impeding development and upgrading of infrastructure in Africa – increased investments, and increased efficiencies. PPPs can offer complementary sources of finance for infrastructure investments in African countries, while potentially also delivering higher quality and efficiency in public assets and services.

AfDB PPP Strategic Framework

The Bank's PPP Strategic Framework (2021-2031), approved by the Board in January 2022, is intended to further the Bank’s efforts to scale up financing for economic and social infrastructure with private sector participation in Africa, helping countries to establish enabling environments as well as prepare and structure viable projects for the market.

In addition, it enables the Bank to scale up its capacity to provide leadership in supporting PPPs on the continent. It responds to a 2019 Independent Development Evaluation (Evaluation of the AfDB’s Utilization of its Public Private Mechanism (2006- 2017) which identified opportunities to enhance the Bank’s approach in its support of PPPs, including adopting a corporate-wide strategic and operational framework.

The current global and African context, widening infrastructure gap and limited fiscal space due in part to the COVID-19 pandemic, make it crucial for the Bank to scale up its support for PPPs and to crowd in more private sector investment in both economic and social infrastructure. It also provides a foundation for the Bank to become a leading voice and financier of PPP projects in Africa.

Content and Pillars of the Framework
The PPP Strategic Framework provides overall strategic guidance on the Bank’s PPP interventions. It provides a common definition of PPPs within the Bank’s context, recommends formal internal coordination mechanisms, and provides guidance on the application of financial instruments and resources, facilitating efforts across different departments and divisions. In addition, the Framework proposes key principles to guide PPP operations, including selectivity of operations and markets, leveraging the Bank’s comparative advantage, focusing on delivery of infrastructure and public services as outcomes of PPP support, and promoting the Bank’s leadership role among development partners for PPP development.

The Framework comprises three Pillars to anchor the Bank’s support for PPPs:

Pillar 1: Upstream Support – Strengthening the PPP Enabling Environment
Pillar 2: Midstream Support – Project Preparation and Transaction Advisory Services
Pillar 3: Downstream Support – Financing of PPP Projects.

It also proposes the establishment of a dedicated PPP Fund, the Africa PPP Development Fund (APDF), to support Pillar 1 and Pillar 2 operations.

Expected Outcomes and Key Success Factors: Upscaling the Bank’s PPP interventions is expected to lead to higher PPP deal flow, an improvement in the number and quality of PPP projects reaching financial closure and a crowding in of more private sector financing into economic and social infrastructure, hence maximizing finance for development.

Key to the Framework’s successful implementation is to allocate dedicated PPP skills across the Bank’s sectors, establishing credibility in the market, engaging client countries in crucial dialogue and necessary reforms, and establishing the proposed Africa PPP Development Fund.