contracts
According to the World Bank Private Participation in Infrastructure database,27 infrastructure public–private partnerships are on the rise in Africa, albeit from a lower base, and account for approximately 10 per cent of the aggregate value of such partnerships globally, and 594 public–private partnership projects, worth
$235 billion, have reached financial closure since 1990. Africa’s infrastructure public–private partnerships are relatively smaller in magnitude and numbers than other world regions, notably Latin America and the Caribbean, and East Asia and the Pacific (figure 21).
In terms of country distribution, there is a high level of variation across Africa.
Of the 52 African countries28 considered during the period 1990–2014, Nigeria tops the list with $37.9 billion of investment, followed by Morocco ($27.5 billion), South Africa ($25.6 billion), Egypt ($24.8 billion) and Algeria ($13.2 billion). In Figure 21. Global distribution of infrastructure public–private partnerships
by project count and value, 1990–2015
594
Central Asia Middle East South Asia Number of projects
Number of projects
Value in billions of dollars Source: World Bank, 2015b.
Note: Data refer to financially closed projects.
aggregate, these five countries account for almost two thirds of African investment in public–private partnerships. Half the continent (27 countries) has cumulative investment in such partnerships under $1 billion. Notably, the countries least exposed to infrastructure public–private partnerships in terms of value are Ethiopia, the Comoros and Swaziland, which are reported to have minimal public–private partnership investments, as illustrated in figure 22.
Figure 22. Cumulative public–private partnership investment in infrastructure, 1990–2014 (Millions of dollars) SwazilandComorosEthiopiaSomaliaGambiaEritrea
Sao Tome and PrincipeBurundi Central African RepublicGuinea-BissauSouth SudanBurkina FasoMozambiqueSierra LeoneMadagascarCabo VerdeSeychellesZimbabweMauritaniaBotswanaMauritiusNamibiaRwandaLesothoDjiboutiZambiaMalawiGuineaAngolaGabonCongoLiberiaBeninNigerChadTogoMali Democratic Rep. of the CongoCameroonUgandaSudan United Rep. of TanzaniaCôte d’IvoireSouth AfricaMoroccoSenegalTunisiaNigeriaGhanaAlgeriaKenyaEgypt
Sources:World Bank, 2015b.
Although the aggregate value of national public–private partnership investment across Africa varies considerably, the sectoral distributions of such partnerships appear to be homogenous on the whole.29 Telecommunications rank first in most countries, accounting for 68 per cent of public–private partnership infrastructure investment. The second sector in terms of aggregate value of such partnerships is energy, which captures 21 per cent of total public–private partnership investment.
The transport sector ranks third, representing 10 per cent of the aggregate value of such investment. In most countries, the sector reporting the lowest value of cumulative investment at the country level is water and sanitation, with a public–
private partnership investment share of 1 per cent.
Figure 23 compares the sectoral distribution of public–private partnerships in Africa (a) and the world (b). It shows that the telecommunications and electricity sectors represent 85 per cent of public–private partnership project value in Africa, compared with 69 per cent worldwide. While public–private partnerships to build roads are ranked third on a global scale, accounting for 17 per cent of public–
private partnership value, they only represent 1 per cent in Africa. Other African sectors that appear to be less prioritized are airports, water and sewerage, followed by railroads and natural gas. This is similar to the global pattern.
Public–private partnerships range from small service contracts to large-scale concessions, greenfield projects30 and divestitures (UNCTAD, 2015c). As shown Figure 23. Sectoral distribution of public–private partnerships
in Africa and the world, 1990–2015
(a) Africa (b) World
Airports 1%
Natural gas 4%RailroadsRoads 1%2%
Seaports 6%
in figure 24, an overwhelming majority of infrastructure public–private partnership contracts – 70 per cent – are greenfield investments with an estimated value of
$143.3 billion. These types of public–private partnerships are prevalent in all the four sectors described earlier, with the telecommunications sector reporting the largest value ($97.2 billion) in these types of contracts. Greenfield public–private partnerships typically envisage investments in new facilities, which may return to the public sector at the end of the concession period.
Divestiture contracts account for 22 per cent of the investment value of public–
private partnerships. For the most part, such contracts are used for public–private partnerships in the telecommunications sector, and in a few cases, in the energy sector. They are relatively capital intensive, as shown by the small number of projects, representing $43.9 billion worth of investments. Divestitures imply the sale of a State-owned enterprise to the private sector. They can either be a full divestiture,31 implying a 100 per cent transfer, or a partial divestiture, which implies that the Government only transfers a portion of the enterprise to the private sector.
Morocco, Tunisia, South Africa and Egypt have the largest divestiture projects (telecommunications), which are valued at more than $1 billion.
Concession-type contracts account for 8 per cent of public–private partnership investment value, or $17.1 billion. Concessions are mainly present in energy-related Figure 24. Breakdown of public–private partnerships, by type,
based on cumulative investment in Africa, 1990–2014
Management and lease 0.1%
Concession 8.4%
Greenfield 70%
Divestiture 21.5%
Source: World Bank, 2015b.
public–private partnerships, followed by those in the transport sector. They are the more traditional types of public–private partnerships, where a private entity typically takes over the management of a State-owned enterprise for a given period, during which it undertakes significant investments and assumes related investment risks.
Many African countries (27) have at least one concession contract in the transport sector and/or in the energy sector. These contracts are also intensive in terms of capital requirements; the largest one was registered by Morocco in the energy sector for $3 billion, followed by Nigeria in the transport sector for $2.4 billion.
Management and lease contracts represent less than 1 per cent of public–
private partnership investment value, or $276 million. These partnerships are mainly prevalent in the water and sewerage sector, followed by the transport, telecommunications and energy sectors. Most projects operate at zero investment value, with only one project, in the Algerian transport sector, reaching $161 million.
In this type of arrangement, a private entity is delegated the management of a State-owned enterprise for a given period in exchange for a fee. In management contracts, the Government remains the principal risk taker; in lease contracts, the Government delegates the risk to a private operator. In both contract modalities, the Government continues to own the enterprise and make investment decisions.