An analysis of the effect of investment climate on performance of public private partnerships - a case study of Sub Saharan Africa

Abstract

The study investigates the relationship between the performance of Public Private Partnerships (PPPs) and the investment climate in Sub Saharan Africa. The investment climate should significantly affect the performance of PPPs since good investment climate is a necessary prerequisite for investment. Infrastructure investments are essential to achieve economic prosperity, promoting growth and enhancing well-being. Recently to meet the growing demand for infrastructure development public entities have started to too).;_ at Public Private Partnerships to meet this deficit. The private sector participation is critical, bringing more funds; expertise and efficiency to the development of projects. For the analysis, a range of advanced panel estimators, namely random-Poisson, negative binomial, random generalized least square (GLS), random-tobit, were utilized to overcome the potential data related problems and for the robustness check of the estimated results. The results of the analysis suggest that large size and relatively higher income markets attract more PPP projects. The empirical evidence also suggests that macroeconomic stability, quality of regulation and governance are important factors in determining PPP in the infrastructure. The country risk is found to have some role in determining investment in PPPs although not to a very significant effect. The findings of this study will help the policymakers of developing countries in framing up such policies, so as to encourage more private firms to engage in infrastructure building through PPP.