Introduction

Public-Private Partnerships are the most powerful financing and delivery mechanism available to emerging market governments that need infrastructure built now and cannot wait for public budgets to grow large enough to fund it alone. Across Africa, Southeast Asia, and Latin America, the infrastructure deficit is not primarily a shortage of viable projects. It is a shortage of transactions structured well enough to attract the private capital that exists in abundance in global markets.

A PPP, at its most functional, is an alignment of interests: the government brings sovereign authority, land rights, regulatory power, and the long-term offtake obligations that make projects bankable; the private sector brings capital, engineering expertise, operational efficiency, and the commercial discipline that public procurement alone rarely achieves. When that alignment is well-designed, it produces infrastructure that gets built on time, operates efficiently across a multi-decade concession life, and delivers returns that justify the private capital deployed. When it is poorly designed, it produces disputes, renegotiations, stranded assets, and the kind of reputational damage that makes the next round of PPP procurement harder and more expensive for everyone.

This article is a practitioner’s introduction to PPPs in emerging markets. It covers what a PPP is and how its different structures work, why PPPs are the structurally necessary answer to the emerging market infrastructure financing gap, the sectors and geographies where PPP models have proven most effective, the specific risks that make emerging market PPPs harder to structure than their developed market equivalents, and the instruments and approaches that close the gap between a project that looks viable on paper and one that actually reaches financial close and delivers its intended outcomes.

BOH Infrastructure operates at the intersection of global capital markets and African infrastructure development. Our experience structuring, advising on, and de-risking PPP transactions across the continent informs every observation in this article. The opportunity is real. The tools to access it safely are available. What the market needs is the discipline to deploy them correctly.

Emerging markets are at the centre of the global growth story. Rising populations, expanding urban centres, and resource-rich economies are creating demand for infrastructure at a scale and pace that no government budget, however well-managed, can meet alone. Roads, power grids, water systems, ports, hospitals, and digital connectivity are not optional amenities in these markets. They are the foundational conditions for economic growth, public health, and social stability.

The numbers make the challenge concrete. The African Development Bank estimates that Africa requires between $130 and $170 billion in infrastructure investment annually. Current financing from all sources combined, government budgets, bilateral aid, multilateral lending, and private investment, falls significantly short of that figure. The gap is not narrowing. In most African markets, population growth and urbanisation are increasing the infrastructure demand faster than supply is growing.

But the capital to close this gap does not need to be created. It exists. Global institutional investors, infrastructure funds, sovereign wealth funds, and commercial banks collectively manage tens of trillions of dollars in assets. A meaningful share of that capital is actively seeking the long-duration, stable-yield, inflation-linked characteristics that well-structured infrastructure investment provides. The challenge is not to find the money. The challenge is to build the transactions that can attract it.

Public-Private Partnerships are the primary mechanism for doing that. This article explains how.

How PPPs Work: Structure, Risk Allocation, and the Concession Lifecycle

The Core Logic of Risk Transfer

Every PPP is, at its foundation, a risk allocation exercise. The public sector and the private sector each have different capacities for bearing different types of risk, and a well-designed PPP allocates each risk to the party best placed to manage it.

Governments are well placed to bear demand risk in some contexts, particularly where the infrastructure serves a public need that the government controls through policy. A government that commits to an availability payment for a road, regardless of traffic levels, is taking demand risk that a private investor would find very difficult to price. Governments are poorly placed to bear construction risk, because they typically lack the project management and engineering capacity to manage complex construction programmes efficiently. They are also poorly placed to bear operational efficiency risk, because public sector management incentives are rarely aligned with the operational performance that maximises infrastructure value.

Private investors are well placed to bear construction and operational risk, because their returns depend on delivering the asset on time and operating it efficiently. They are poorly placed to bear political risk, regulatory risk, and currency risk, because these are outside their control and very difficult to hedge commercially without specialist instruments. The PPP contract is the mechanism through which these different risk tolerances are mapped onto a structure where each party bears what it can manage and is compensated appropriately for what it accepts.

The Principal PPP Structures

PPPs in emerging markets take several distinct structural forms, each appropriate to different sector characteristics, risk profiles, and government preferences.

A Build-Operate-Transfer, or BOT, structure is the most common form in African infrastructure. The private consortium designs, finances, builds, and operates the infrastructure for a defined concession period, typically 20 to 30 years, at the end of which the asset is transferred back to the government. The private party recovers its investment and earns its return through user charges, a government offtake agreement, or availability payments during the concession period. BOT structures are used extensively in energy, toll roads, water treatment, and port infrastructure across Africa.

A Build-Own-Operate structure, or BOO, differs from BOT in that there is no transfer obligation. The private party retains ownership of the asset indefinitely. This structure is used where the government has no desire to repatriate ownership at the end of a fixed period, or where the asset’s useful life extends well beyond any reasonable concession horizon. It is common in telecommunications infrastructure and certain energy generation assets.

A Design-Build-Finance-Operate, or DBFO, structure combines responsibility for design, construction, financing, and operations in a single private party, creating maximum incentive alignment between how the asset is designed, how it is built, and how it performs in operation. A private consortium that knows it will operate an asset for 25 years has a powerful incentive to design and build it to a standard that minimises whole-life maintenance cost, even if that requires higher upfront capital expenditure. This incentive alignment is one of the most important advantages of the DBFO model over traditional public procurement, where designers, builders, and operators are typically separate entities with no shared interest in lifecycle performance.

A Concession Agreement, sometimes distinguished from a BOT as a separate structure, involves the government granting a private party the right to operate an existing infrastructure asset and collect revenues from it, typically in exchange for a capital investment commitment to upgrade, expand, or maintain the asset. Port and airport concessions are common examples across Africa.

The Concession Lifecycle

Understanding the full lifecycle of a PPP concession is essential for any investor evaluating an African infrastructure opportunity. The lifecycle has five distinct phases, each with its own risk profile and return characteristics.

Project development covers the period from initial concept to financial close. This phase involves feasibility studies, environmental and social impact assessments, procurement design, legal structuring, financial modelling, government negotiation, and the engagement of lenders and equity investors. Development costs are substantial and are entirely at risk until financial close. The probability of reaching financial close from a viable early-stage concept varies widely by market and sector, but across African infrastructure the development mortality rate is high, making pre-feasibility quality assurance particularly critical.

Construction is the highest-risk phase from a lender’s perspective. Capital is being deployed, the revenue stream has not yet commenced, and the project is exposed to cost overruns, schedule delays, contractor performance failures, and force majeure events. Construction phase risk management, through contractor selection, performance bonds, construction insurance, and independent monitoring, is the primary focus of lender due diligence.

Commissioning and ramp-up covers the period between physical construction completion and the achievement of stable commercial operation. This transition phase is frequently underestimated in financial models. Operations teams must take over from construction contractors, defects must be identified and remediated, and revenue must build from zero to the steady-state levels on which debt service was modelled. Projects that are physically complete but operationally immature represent a specific risk category that conventional financing structures sometimes handle inadequately.

Stable operations is the phase during which the project generates the steady-state revenue on which the financial model was based, services its debt, maintains its infrastructure to the required standard, and generates returns for equity investors. This phase dominates the concession life numerically but is typically the lowest-risk phase for lenders provided the construction phase was executed successfully.

Concession end and asset transfer requires careful management of the transition from private operation to government ownership or to a new concession period. The condition of the asset at handover, the adequacy of the maintenance that has been performed throughout the concession, and the government’s capacity to take over operation or manage a new procurement are all factors that affect the long-term value of the infrastructure to its intended beneficiaries.

Why PPPs Are Essential for Emerging Markets

Bridging the Financing Gap

The fundamental argument for PPPs in emerging markets is arithmetical. African governments collectively spend what their fiscal positions allow on infrastructure, which is a fraction of what the infrastructure deficit requires. Bilateral aid and multilateral lending from institutions such as the World Bank Group and the African Development Bank provide additional resources but are constrained by their own balance sheets and mandate parameters. The only source of capital large enough to close the infrastructure gap at the required scale is global private capital markets. PPPs are the mechanism through which public infrastructure needs are connected to private capital supply.

This is not a statement about ideology or privatisation philosophy. It is a statement about numbers. A government that refuses to consider PPP structures for its infrastructure programme is, in practice, accepting that its infrastructure will be built at the pace its own resources allow, which is significantly slower than the pace its population and economy require.

Driving Efficiency and Value for Money

Beyond the financing function, PPPs generate value through the commercial incentives they create. A private consortium that has committed equity capital to a 25-year infrastructure concession has a powerful and direct financial interest in ensuring that the project is designed efficiently, built to a standard that minimises lifecycle maintenance cost, operated with maximum availability, and managed with the kind of commercial discipline that protects the equity return.

Public sector procurement, however well-intentioned, rarely generates equivalent incentives. The civil servants managing a government construction project are not personally at financial risk if the project is over budget or underperforms in operation. Their career incentives are more likely to be aligned with managing stakeholder relationships and avoiding visible failures than with maximising whole-life value for money.

The empirical evidence on this point is mixed across sectors and contexts, and there are legitimate debates about whether PPP cost and efficiency advantages are consistent across all project types. But in the African infrastructure context, where construction oversight is often inadequate and operational management of public assets is frequently underfunded, the discipline that private sector involvement imposes on both construction quality and operational performance has genuine and substantial value.

Building Institutional Capacity

An underappreciated benefit of PPP programmes in African markets is the institutional capacity they build within governments over time. A government that manages its first PPP transaction in the energy sector develops, through that experience, the legal expertise, financial modelling capability, and negotiating skills that make its second transaction faster, cheaper, and better structured. Countries that have run sustained PPP programmes, South Africa’s REIPPPP being the most cited African example, have developed public sector procurement capability that is internationally recognised and that has substantially reduced transaction costs and timelines compared to their first-generation PPP efforts.

This institutional learning effect compounds over time and across sectors. The PPP unit that negotiated its first power purchase agreement develops the template expertise and precedent knowledge that accelerates the next port concession, the next toll road, and the next water treatment plant. The regulatory frameworks that are tested and refined through early-generation PPPs become the foundations on which later transactions are structured more confidently and at lower cost.

Accelerating Development Impact

For communities across Africa who lack reliable electricity, clean water, or adequate transport connectivity, the question of how infrastructure is financed is secondary to the question of whether it gets built at all. PPPs, by expanding the pool of available capital and imposing commercial discipline on delivery, increase the probability that infrastructure reaches the communities that need it within a timeframe that makes a difference to their lives.

This development impact dimension is not incidental to the PPP case for emerging markets. It is central to it. Infrastructure that exists delivers development outcomes. Infrastructure that remains in the planning pipeline does not.

Successful PPP Models Across Africa

Energy: South Africa’s REIPPPP

South Africa’s Renewable Energy Independent Power Producer Procurement Programme has attracted over $14 billion in private investment across more than 100 projects since its launch in 2011, making it the most successful utility-scale renewable energy PPP programme on the African continent and one of the most closely studied in the global development finance literature. The programme’s success rests on several structural features that other African markets have attempted to replicate: a transparent, competitive procurement process that allows the private sector to price risk accurately; standardised PPP documentation that reduces transaction costs for both the government and bidders; a creditworthy offtaker in Eskom, whose PPA obligations are backed by government guarantee; and clear tariff degression schedules that incentivise cost reduction across bid rounds.

The REIPPPP demonstrates that African infrastructure PPPs can attract investment at scale when the procurement framework is designed with sufficient rigour and consistency to give the private sector confidence that the rules will be applied predictably and fairly.

Transport: Nigeria’s Lekki Toll Road

The Lekki–Epe Expressway concession in Lagos is one of West Africa’s most prominent transport PPP transactions. Structured as a Public-Private Partnership under a Build-Operate-Transfer model, the project was delivered by a private concessionaire responsible for financing, rehabilitating, operating, and maintaining a major urban transport corridor.

The concession, awarded for a 30-year period, allows the private operator to recover its investment through toll revenues generated along the expressway. Serving the rapidly expanding Lekki Peninsula, one of the fastest-growing urban areas in Africa, the project plays a critical role in supporting mobility and economic activity in Lagos.

The Lekki–Epe Expressway demonstrates the potential for user-pay infrastructure models in African markets. With strong traffic volumes and a growing urban population, the project illustrates how toll-based revenue structures can support commercial viability when supported by appropriate demand and urban growth dynamics.

It also illustrated the political economy challenges that attend user-pay PPPs in African markets: the concession has faced periodic political pressure around toll rates, reflecting the tension between the commercial requirements of the private sector and the affordability concerns of a government that must manage public reaction to infrastructure charges. This tension is a recurring feature of African toll road PPPs and underlines the importance of the tariff adjustment and stabilisation mechanisms discussed in BOH’s Sovereign Risk Outlook cluster briefings.

Ports: Tema Port, Ghana

The expansion of Tema Port in Ghana through a joint venture between the Ghana Ports and Harbours Authority and the Meridian Port Services consortium is one of West Africa’s most significant port PPP transactions. The project involved a multi-billion dollar expansion of Ghana’s principal commercial port, significantly increasing container handling capacity and positioning Tema as a regional hub for West African trade. The transaction structure, combining government-owned land and existing infrastructure with private capital for expansion and private management for operations, is a model that has been replicated in port PPP transactions across the continent.

Water: Senegal’s Affermage Model

Senegal’s urban water sector has been managed through a delegated management arrangement, known locally as an affermage, since the 1990s. Under this model, a private operator manages the distribution network and bills customers, while the government retains ownership of the assets and responsibility for capital investment. The arrangement has consistently been cited by the World Bank and other development finance institutions as one of the most successful examples of private sector participation in African urban water supply, achieving significant improvements in access, water quality, and operational efficiency relative to the preceding state utility management model.

The Specific Risks of Emerging Market PPPs and How They Are Managed

Political and Regulatory Risk

The most distinctive risk dimension of African PPP investment, relative to developed market infrastructure, is the exposure to political and regulatory change over a concession life that spans multiple government administrations. A PPP agreement signed with one administration may face renegotiation pressure from a successor government that did not negotiate the original deal and does not feel bound by its terms. Regulatory frameworks that were adequate at financial close may be superseded by new legislation that imposes additional obligations or removes protections.

This risk is addressed through the legal de-risking instruments described in depth in the BOH Sovereign Risk Outlook cluster briefing on regulatory and legal protection: Stabilisation Clauses that protect the economic bargain against adverse law changes, international arbitration provisions that provide credible enforcement mechanisms outside the domestic court system, and Bilateral Investment Treaty protections that give investors treaty-level rights against the host sovereign.

Currency Risk

Infrastructure projects in emerging markets typically earn revenue in local currency while servicing debt in hard currency. When local currencies depreciate, the mismatch between revenue and debt service obligations can become catastrophic for project economics. This is the FX mismatch problem that BOH Infrastructure’s currency de-risking framework addresses through Currency Sweeps, Offshore Escrow, Local Currency Financing, and Indexed Tariffs. A PPP agreement that does not address the currency dimension of risk explicitly is a PPP agreement that is exposed to the devaluation events that African markets have repeatedly demonstrated are a feature rather than an exception of the macroeconomic environment.

Credit and Bankability Risk

Many African PPP transactions fail not because the project is fundamentally unsound but because the host sovereign’s credit rating makes it impossible to finance the transaction at a cost that allows a viable tariff. The credit enhancement instruments, Partial Risk Guarantees from the World Bank and the African Development Bank, MIGA political risk insurance, and the architecture of blended finance, exist specifically to address this problem. A transaction that has been properly credit-enhanced can access debt at 6 to 7% rather than 11 to 13%, which in many cases is the difference between a project that is viable at an affordable tariff and one that is not.

Construction and Technical Execution Risk

The risk that a PPP project does not deliver what was promised during construction is a persistent and underappreciated risk in African infrastructure. Ghost projects, transactions that reached financial close but never reached commercial operation, represent a significant proportion of the failure cases that have damaged investor confidence in African infrastructure allocation. The BOH technical de-risking framework, combining AI-driven project management, satellite monitoring, and rigorous quality assurance from pre-feasibility through to commissioning, addresses this risk directly.

Offtaker Credit Risk

Many African PPP transactions depend on a government entity as the primary offtaker: the state utility that will buy the power, the transport authority that will pay the availability fee, the water authority that will purchase the treated water. The credit quality of these offtakers is often weak, reflecting the fiscal constraints of the governments that own them. A PPP agreement whose revenue depends on timely payment from an offtaker that is chronically underfunded and administratively constrained is a PPP agreement that will face cash flow stress regardless of how well the project is built and operated.

Offtaker credit risk is addressed through a combination of government payment guarantees, escrow arrangements that prefund debt service obligations, and the multilateral guarantee instruments that cover government payment obligations specifically.

The AfCFTA Dimension: Cross-Border PPPs and Regional Integration

The African Continental Free Trade Area, which entered into force in 2021 and is progressively being operationalised across African markets, creates a new and significant context for PPP development. As intra-African trade expands and as regional value chains develop around the continent’s agricultural, manufacturing, and technology sectors, the demand for cross-border infrastructure, transport corridors, energy interconnection systems, and digital backbone networks, grows substantially.

Cross-border infrastructure PPPs are more complex than single-country transactions because they require alignment of legal frameworks, regulatory standards, procurement processes, and risk allocation principles across multiple sovereign jurisdictions. But they also offer advantages that single-country transactions cannot: larger catchment markets, diversification of sovereign risk across multiple government counterparties, and the potential to attract multilateral financing from regional institutions whose mandate specifically covers cross-border infrastructure.

The African Development Bank’s Programme for Infrastructure Development in Africa, known as PIDA, has identified a priority list of cross-border infrastructure projects across transport, energy, water, and ICT that represent the highest-impact investments for regional integration. Many of these projects are structured as PPPs or have PPP components, and their development represents one of the most significant frontier opportunities in African infrastructure investment.

BOH Infrastructure’s advisory practice includes experience in cross-border infrastructure structuring, and the firm tracks the PIDA priority pipeline and the AfCFTA implementation agenda as part of its ongoing market intelligence work.

Opportunities and Challenges for Investors

Opportunities	Challenges
Access to high-growth markets	Political and regulatory risks
Stable long-term returns	Complex negotiation processes
Government support through incentives	Currency fluctuations
Role in sustainable development	Need for strong local partnerships

What Makes a PPP Bankable: The BOH Framework Applied

The word bankable is one of the most used and least precisely defined terms in African infrastructure development. A project is bankable when it can attract the debt and equity financing required to reach financial close on terms that allow it to operate viably over its concession life. Bankability is not a binary condition. It is a spectrum, and a transaction’s position on that spectrum is determined by the quality of its structuring across the four dimensions of the BOH de-risking framework.

A bankable PPP is one where the currency risk has been structured so that debt service can be met regardless of exchange rate movements. Where the credit quality of the transaction has been enhanced to a level that commercial lenders can accept within their mandate parameters. Where the legal and regulatory protections are robust enough that lenders and investors are confident the contractual framework will be honoured across the full concession life. And where the technical quality of the project development and construction oversight gives all parties confidence that the infrastructure will be delivered and will perform as the financial model requires.

None of these conditions arise by default. They are the product of deliberate structuring work, applied from pre-feasibility, by advisers who understand both the specific risk environment of African markets and the specific requirements of the international capital that African infrastructure needs to attract. This is the advisory discipline that BOH Infrastructure brings to every transaction.

Conclusion

Public-Private Partnerships are not a new idea in emerging market infrastructure. They have been used, with varying degrees of success, across Africa, Asia, and Latin America for several decades. What is new is the combination of pressures and opportunities that make them more important now than at any previous point in the development of these markets.

The infrastructure deficit is growing faster than public resources can address it. The capital to close the gap exists in global markets. The development finance instruments to bridge the gap between perceived and actual risk have been refined over decades of practice. And the governance and regulatory frameworks in many African markets have matured to the point where bankable PPP transactions are achievable at a pace and scale that was not possible a decade ago.

What the market still lacks is the consistent application of structuring discipline from pre-feasibility through to commercial operation. It lacks the currency structuring that prevents FX mismatch from destroying returns. The credit enhancement that unlocks competitive financing costs. The legal protection that makes concession agreements durable across changing political administrations. And the technical oversight that ensures the infrastructure promised to investors, lenders, and communities is actually delivered.

BOH Infrastructure exists to provide that discipline. The opportunity is real. The tools are available. The question is whether they are applied.

For investors and sponsors seeking to understand the specific risk dimensions of African PPP investment and the instruments available to manage them, the BOH 2026 Sovereign Risk Outlook provides technical depth across all four de-risking dimensions.

Have you read?

• Currency de-risking: Beyond the Devaluation Fear.
• Credit enhancement: From B-Rated to Bankable.
• Legal and regulatory protection: Protecting Against the Stroke of a Pen.
• Technical de-risking: Ghost Projects and How to Avoid Them.