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Public private partnerships (PPP) in the developing world: Mitigating financiers’ risks

Owolabi, Hakeem Adedayo; Oyedele, Lukumon; Alaka, Hafiz; Ebohon, Obas John; Ajayi, Saheed; Akinade, Olugbenga; Bilal, Muhammad; Olawale, Oladimeji

Public private partnerships (PPP) in the developing world: Mitigating financiers’ risks Thumbnail


Authors

Hakeem Owolabi Hakeem.Owolabi@uwe.ac.uk
Associate Professor - Project Analytics and Digital Enterprise

Lukumon Oyedele L.Oyedele@uwe.ac.uk
Professor in Enterprise & Project Management

Hafiz Alaka

Obas John Ebohon

Saheed Ajayi

Olugbenga Akinade Olugbenga.Akinade@uwe.ac.uk
Associate Professor - AR/VR Development with Artificial Intelligence

Muhammad Bilal Muhammad.Bilal@uwe.ac.uk
Associate Professor - Big Data Application

Mr Oladimeji Olawale Oladimeji.Olawale@uwe.ac.uk
Research Associate - Project Reputation using Digital Technologies



Abstract

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.

Journal Article Type Article
Acceptance Date Sep 15, 2018
Online Publication Date Oct 1, 2018
Publication Date Jun 10, 2019
Deposit Date Oct 11, 2018
Publicly Available Date Oct 11, 2018
Journal World Journal of Science, Technology and Sustainable Development
Electronic ISSN 2042-5945
Publisher Emerald
Peer Reviewed Peer Reviewed
Volume 16
Issue 3
Pages 121-141
DOI https://doi.org/10.1108/WJSTSD-05-2018-0043
Keywords Public Private Partnerships (PPP), emerging markets, risks, bankability, foreign financiers
Public URL https://uwe-repository.worktribe.com/output/875454
Publisher URL http://dx.doi.org/10.1108/WJSTSD-05-2018-0043
Additional Information Additional Information : This is the author's accepted manuscript. The final published version is available here: http://dx.doi.org/10.1108/WJSTSD-05-2018-0043.
Contract Date Oct 11, 2018

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