Principal Risks Associated with Public-Private Partnership Projects in Uganda

Abstract

Public-Private Partnerships (PPPs) have been adopted globally to reduce funding gaps amidst an increasing need for public infrastructure. However, they are prone to several risks. Little attention has been paid to this crucial phenomenon in Uganda, despite the rising interest in the use of the PPP model. Through a questionnaire survey with PPP experts in Uganda, 34 principal risks were identified of which the top 10 are construction completion, government corruption, construction cost overrun, land acquisition, delay in project approval and permits, high financing cost, operation cost overrun, inadequate tender competition, procurement risk, and inability to service debt risk. Most of these were found to arise from inadequate experience in PPPs, the complexity of the PPP model, high levels of corruption and the immature domestic financial market. The knowledge of these risks can guide PPP contract negotiations and potential investors in their investment decisions, especially the objective assessment of PPP projects.