Stimulus packages in many countries, including South Africa, are being used to redress part of the infrastructure gap, which in addition to achieving the short-term goals of creating employment and fostering spending, should create a good platform for increased economic efficiencies going forward.
Governments need to look beyond short-term objectives and articulate a much broader vision for enhancing infrastructure as measured, not just by jobs created, but by enhanced productive capacity for the future.
Funding is still a problem in the current constrained credit environment, and although the stimulus packages address some of the shortfalls, market conditions are making it hard to fund the balance of required projects in the private debt capital markets.
Budgetary constraints and reduced taxation collections are impacting the State’s ability to fund large projects beyond the stimulus packages, which have placed further strain on national finances.
As a result, new and innovative Public-Private Partnership (PPP) structures are needed to make projects work. This article looks at how to structure a unique and optimal partnership solution for each project. The degree of risk sharing between the public and private sectors needs to be flexible, and optimised on a case by case basis to ensure that projects can become a reality.
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