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growing demand and are subject to significant constraints, such as high population growth, high urbanisation, and lack of finance and technical support.
Water security is a critical issue of concern as it has been listed as a third global risk by the World Economic Forum and is regarded as Sustainable Development Goal number six (SDG 6) by the United Nations (UN) (Hedden and Cilliers 2014; Hinojosa et al. 2017). The UN has also defined water security as “the capacity of a population to safeguard sustainable access to adequate quantities of acceptable quality water for sustainable livelihood, human well-being, socio-economic development for ensuring protection against water-borne pollution and water-related disaster and preserving the ecosystem in a climate of peace and political stability” (Gunda et al. 2019). The definition highlights critical aspects of water scarcity, socio-economic challenges (water poverty) and water vulnerability.
Shortage of infrastructure has negative consequences on economic productivity, infrastructure development, equity, quality of life, and environmental sustainability (Arimah 2017). Public entities are challenged by exponentially increasing water infrastructure demands, dilapidation of existing infrastructure, budgetary constraints and high service delivery expectancy (more value with limited resources) (Sanni and Hashim 2014). Public entities in developing countries desperately need public sector involvement to mobilise much-needed funds and deploy critical skills and technology (Sanni and Hashim 2014).
The World Bank has advocated PPPs as a suitable alternative
table 1: PPP critical success factors (Babatunde et al. 2012)
for project financing in developing countries to ensure effi- ciency, access to private sector capital, and transfer of con- struction financial, commercial, operating, maintenance and other associated risks to the private sector (Ameyaw et al. 2017). Developed countries such as Singapore, the Unit- ed Kingdom, Canada, Australia and Hong Kong and some developing countries such as India and Malaysia have con- sidered infrastructure project financing through PPPs (San- ni and Hashim 2014). It has, however, been reported that private investors are sceptical of investing in infrastructure projects unless supported by the host government through tax incentives, guarantees and direct finance (Dailami and Leipziger 1998). These investment challenges are associat- ed with high-risk profiles, low credit rating for fundraising, high associated risks (commercial, financial, community, force majeures, and security), long fixed maturity, low re- turns, long development periods, involvement of multiple stakeholders, pricing rules and complex evaluations due to taxation (Collier 2014; Li et al. 2017). It has been proven that the risk of low returns is due to private companies’ expecta- tion of high returns while operating in a developing coun- try (low currency), thus reducing project value for money (Solana 2014). It is reported that PPPs in South Africa have been hindered by a lack of policy direction, public sector capacity to initiate PPP projects, and resources and author- ity (Sanni and Hashim 2014).
The objective of PPPs is to achieve value for money on public infrastructure investment while maintaining attractive profit margins for the private sector (Sanni and Hashim 2014). PPP critical success factors can be measured, as per Table 1 below.
SuCCeSS faCtorS
CoMPoNeNtS
effective procurement
• Procurement process • Transparent
• Competitive
• Good governance
• Well organised
• Social support
• Realistic cost-benefit analysis
• Shared authority between public and private sector
Project implementation
• Technical feasibility
• Legal framework
• Appropriate risk allocation
• Competency of project team
government guarantees
• Provision of government guarantees • Political support
• Multi-benefits objectives
favourable economic conditions
• Stable macro-economic conditions • Sound economic policy
financial market
• Availability and adequate financial market
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