Public-Private Partnerships as an instrument for financing efficient public infrastructure: Myth or reality? The case of member countries of the West African Monetary Union (UEMOA).
Do public-private partnerships (PPP), contracts whereby a public body entrusts a private contractor with the financing and management of an investment allocated to a public service, satisfy all the parties involved – whether private, public or users? Is there an optimal financial and ownership structure for PPP? This question concerns African countries seeking financing for their investment projects, but it also applies to developed countries which, faced with a constantly increasing public debt, may wish to use this mechanism.
PPP, as an alternative form of public financing, is the guarantee of a contribution in technical expertise for the realisation of new infrastructure. It is also associated with the successful completion of projects (76% completion rate). On the other hand, it does not guarantee compliance with the deadlines and budgets allocated to projects: the overall average annual delay is just over one year, and the average unit cost is approximately 16,000,000 euros (for more than 80% of projects).
This research invites those responsible for PPP projects to develop tools for monitoring deadlines, staying within budgets and allocating risks among stakeholders. Furthermore, it shows that the success of these operations depends on the prior preparation of the projects, particularly with regard to:
– the quality of preliminary studies
– the procedures used for selecting the private partner
– the contractual clauses linking the private and public partners.
On the other hand, there is no link between the financing and ownership structure of PPP and the performance of these schemes: clearly, in the West African context, the success of a PPP does not seem to depend on the percentage of equity or the financial weight of the private partner in the financing.
The trade-off theory was used in this research, based on the work of authors who demonstrate the existence of an optimal debt ratio that maximises the value of companies (DeAngelo et Masulis, 1980; Myers, 1984; Fischer et al., 1989). This theory is based on the notion of arbitrage while taking into account various costs such as bankruptcy costs and agency costs (Jensen et Meckling, 1976; Jensen, 1986).
Based on a hypothetico-deductive methodology with hypothesis testing, our study, which develops a positivist approach, is carried out using primary and secondary data. The primary data comes from an online satisfaction survey of users and beneficiaries of twenty-nine PPP projects in various sectors of activity in seven countries of the West African Economic and Monetary Union. The secondary data is mainly made up of the database of PPP projects supported by the West African Development Bank. The hypotheses were tested using statistical processing methods.
Further reading or viewing (in French)
Le partenariat public-privé comme alternative au financement des infrastructures publiques performante : mythe ou réalité- Cas des pays membres de l’Union Economique et Monétaire Ouest Africaine (UEMOA), Éditions EMS, 2019.
L’avis des professeurs
Professor Husson stressed the economic significance of this research: the thesis directly questions the question of development in its most global sense, of a region and its inhabitants. (Professor Husson, member of the examination panel).
Professor Gajewski underlined the merits of the work carried out, highlighting the quality of the presentation […] He also insisted on the fact that the issue is very relevant and topical, recalling the need to find such partnerships in Europe, due to public deficits. (Professor Gajewski, member of the examination panel).