Aqua (Dec 2023)
Determinants of the successful signing of public–private partnership contracts for water and sanitation infrastructure financing in Zimbabwe
Abstract
The private sector remains hesitant to invest in water and sanitation infrastructure in Zimbabwe. For policymakers and investors, it is pertinent to understand the factors that determine the signing of water and sanitation public–private partnership (PPP) contracts, in order to leverage expertise and resources to achieve the Sustainable Development Goal targets. This study applied count econometrics on data collected for the 25 years from 1996 ending in 2021, with the aim of investigating the determinants of the number of PPP contracts signed in Zimbabwe. Poisson regression estimations identified positive macroeconomic prospects, financial market development, and strong institutional governance environment as important determinants for PPP contracting in Zimbabwe. The number of PPP contracts is further confirmed to be dependent on the availability of inward foreign direct investment flows. The influence of institutional governance quality on the number of water and sanitation PPP contracts was tested using a composite index constructed using the principal components analysis technique. It is advised that the government of Zimbabwe should strengthen their governance institutions and further develop their capital and bank credit markets, so as to attract investors to take up the water and sanitation infrastructure PPP contract opportunities available in the country. HIGHLIGHTS Economic sanctions imposed on Zimbabwe have stalled many of its public–private partnership (PPP) infrastructure projects, largely due to its inability to raise adequate capital.; Strong institutional quality and financial market development are key determinants of the successful signing of PPP water and sanitation infrastructure financing contracts.; The Zimbabwe government needs to strengthen its institutional governance and investment policy frameworks.;
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