An Assessment of the factors affecting price discovery in the procurement of Public - Private Partnership projects in Sub-Saharan Africa
Wamukoya, Hosborn Abasa
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Public-Private Partnerships (PPPs) have become a common development strategy for governments especially in developing countries. Given that PPPs are a form of public procurement paid for by public funds, it is crucial that governments getting into PPP arrangements ensure that they are value for money. This starts at the project procurement stage through a price discovery process which is supposed to reflect the true price of projects given the factors of price discovery which are market structure, information flow, risk management strategy and market behaviour. This study therefore purposed to assess the factors affecting price discovery in the procurement of Public-Private Partnership Projects in sub-Saharan Africa. It examined the extent to which the four factors of price discovery were important to the price discovery process in the procurement of PPP projects in sub-Saharan Africa. Using a mixed research methodology approach to draw from the strengths of both quantitative and qualitative data, the study assessed sixty PPP projects from across twenty sub-Saharan African countries. The study found that in sub-Saharan Africa, risk management strategy is the most important factor affecting the price discovery process while market behaviour is the least important. The study concludes that all the four factors are important to the PPP price discovery process, albeit with varying degrees of importance. Also, unlike other markets which lean on either market structure or information flow as the most important factors of price discovery, the PPP market reorganises these factors and places more importance on risk management strategy. The study recommends what governments in sub-Saharan Africa, private sector and development partners need to implement in order to create an environment where PPP initiatives achieve desired price discovery outcomes. Specific recommendations include establishment of an enabling environment for PPPs, incentivising private sector participation, strengthening institutional capacity to enforce PPP-supportive laws, project design that minimizes complexity, provision of low-cost financing, enhancing information flow through production of quality documentation, transparency and use of efficient communication tools, embracing public participation and ethical business practice, and establishment of robust risk management strategies and systems.