The current COVID-19 crisis has strained infrastructure projects globally, and in particular public-private partnerships (PPPs), at all stages and in all sectors—with implications for governments, providers of infrastructure assets and services, their financiers, and end-users.
In 2019, private investment commitments to public-private partnership (PPP) projects within low and middle-income countries amounted to $97 billion across 409 projects in 62 countries. Africa’s share of these private investment commitments—approximately $7 billion—represented a small portion of the total.
The COVID-19 pandemic has placed risk allocation of public-private-partnerships (PPPs) under a stress test: risks that seemed reasonable for the private sector to take mere months ago may no longer be acceptable today. As PPP projects suffer from supply chain disruptions and lower demand, the private sector will start to redefine bankability and seek to transfer more risks to the government. To that end, there is likely increased demand for government guarantees.
