Exploring private sector challenges in financing ppps in botswana

Masuga, Therisanyo

Exploring private sector challenges in financing ppps in botswana

Thesis / Dissertation

2023

Abstract

The need to invest in infrastructure globally is well documented, and its role in economic growth is hotly debated. The current state of Africa's infrastructure is such that it needs huge capital investments, and Botswana is no exception. Botswana faces challenges in financing and delivering infrastructure assets, maintenance and upgrades, and meeting operational obligations for existing infrastructure. Historically, the government has funded infrastructure projects as part of its expenditure budget, supported by relatively high levels of government revenue. This situation is changing quickly, given the tight fiscal conditions driven by reduced revenue from the mining sector and the shocks brought about by the coronavirus pandemic - among other things. The current situation has forced the government to consider alternative ways of financing infrastructure, which include public-private partnerships (PPPs). The idea of PPPs was first mentioned in the 2002/2003 budget speech, and the PPP framework was approved in 2009 - however, only two projects (the SADC head office and Ombudsman office) have been delivered to date, which is disappointing and warrants investigation. Against this background, the study had two objectives: first, to assess whether the Public Investment Program (PIP) for projects is suitable for PPPs, and second, to identify factors, if any, that affect private sector participation in financing PPP projects. The study employed the thematic analysis technique to analyse semi-structured interviews conducted with 13 participants. The finding of the study indicates that the current PIP is not suitable for PPP projects, as there is little private sector involvement, and the information submitted for PPPs cannot be the same as for other projects which will be government funded. The study also revealed five challenges to the private sector: capacity issues and a lack of technical expertise, unclear legal/regulatory frameworks, unclear mandates and responsibilities for statutory bodies and ministries, unreasonable execution duration, and inadequate stakeholder engagements. Based on the findings, it is recommended that the government needs to build technical expertise and capacity at both the government and private sector levels. The government should also appoint a PPP advisory board to conduct a holistic review of laws, procurement policies and mandates for statutory bodies to ensure that they are fully supportive of PPPs. Finally, the current PPP frameworks should not only be reviewed but should also be expanded upon to include issues such as stakeholder engagements

Keywords

Development finance

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