Public private partnerships (PPP) in the developing world: mitigating financiers’ risks, Hakeem Owolabi, Prof. Lukumon Oyedele, Hafiz Alaka, Obas Ebohon, Saheed Ajayi, Olugbenga Akinade, Muhammad Bilal and Oladimeji Olawale
Hakeem Adedayo Owolabi, Prof. Lukumon Oyedele, Olugbenga Akinade, Muhammad Bilal, Oladimeji Olawale
Big Data Analytics Laboratory, Bristol Business School
University of the West of England, Bristol
Faculty of Engineering and Computing
Coventry University, Coventry
Obas John Ebohon
School of The Built Environment and Architecture
London South Bank University, London
School of Built Environment and Engineering
Leeds Beckett University, Leeds
Purpose: A major challenge for foreign lenders in financing public private partnerships (PPP) infrastructure projects in an emerging market (EM) is the bankability of country-related risks. Despite existing studies on country risks in international project financing, perspectives of foreign lenders on bankability of country-specific risks in an EM is yet to be explored. Hence, using a mixed methodology approach, three private finance initiatives/PPP projects in Sub Saharan Africa (Nigeria) were used to investigate political risk, sponsor, concession and legal risks in PPP loan applications. The paper aims to discuss these issues.
Design/methodology/approach: The study adopted mixed methodological approach comprising focus group discussions and analysis of loan documents obtained from foreign project lenders, in addition to the questionnaire survey distributed to local and international project financiers with experiences in PPPs within Nigeria.
Findings: Results identified seven topmost bankability criteria for evaluating country-related risks (political risk, sponsor, concession and legal risks) in EM PPPs. In addition, a “Risk and Bankability Framework Model” was developed from the study presenting critical parameters for gaining foreign funding approval for EM’s PPP loan applications.
Research limitations/implications: Since the study only explored bankability of PPPs in Sub Saharan Africa with the exclusion of other geographical regions, the proposed framework model should be taken in context of EMs as a mind-map for foreign lenders and local private investors seeking to finance PPPs in an EM.
Practical implications: Results from the study represent critical parameters for winning foreign loan approval for PPP infrastructure projects within an EM context.
Originality/value: Study proposed “Risk and Bankability Framework Model” relevant for evaluating PPP loan applications at the pre-approval stage for EM PPPs.
Keywords: Emerging markets; Risks.
Citation: Owolabi, H.A., Oyedele, L., Alaka, H., Ebohon, O.J., Ajayi, S., Akinade, O., Bilal, M. and Olawale, O. (2019), "Public private partnerships (PPP) in the developing world: mitigating financiers’ risks", World Journal of Science, Technology and Sustainable Development, Vol. 16 No. 3, pp. 121-141. https://doi.org/10.1108/WJSTSD-05-2018-0043