Challenges and lessons learnt in the financing of public infrastructure in South Africa, Czech and Slovak Republics: a comparative study
English: The aim was to explore how to optimize public-private partnerships in public infrastructure investment and development as an alternative financing instrument by identifying and developing core success factors and establishing key lessons learnt from failed projects. The study, underpinned by a constructionist epistemological viewpoint, used the case study approach and expert interviews to undertake an empirical study in South Africa and the Czech Republic. Purposive sampling was used to identify the interviewees as well as two case studies that fitted the context of the study. Semi structured interviews and documents were utilized as means of collecting data. Being exploratory and qualitative in nature, the study applied qualitative data analysis techniques comprising a 3-step coding process and theme building. The findings revealed that economic, financial and social factors were predominantly the main factors which constrain public finance in public infrastructure investment. Implications of constrained public finance in public infrastructure were classified as having social, economic, investment and fiscal consequences. Findings further revealed that optimization of public-private partnerships requires improved comprehensive knowledge, methodology and implementation as key strategies. Further, the study developed five core success factors of public-private partnerships implementation ranked as follows: 1st ranked core factors were legal and regulatory frameworks, technical feasibility studies and public servant’s readiness. The 2nd ranked factors were risk allocation, monitoring and evaluation. The 3rd ranked factors were decision-making, project procurement, cost benefit analysis, public institution readiness and in-house technical skills. The 4th ranked factors were risk management, good partnerships, methodological support, clear vision and competition. The 5th ranked factors were ownership, governance, project benefits, capacity building, financing capacity, project management, land acquisition, environmental impact analysis and contract management. Another significant finding was establishing core lessons from failed public-private partnerships projects. Among these critical lessons, project management lessons were found to be predominant. Other key lessons centred on institutional structure, lessons from failure, socio-economic purpose, shared vision, methodological support, legislative and regulatory framework, knowledge management and avoidance of financial losses. The findings showed that public decision makers require comprehensive public-private partnerships knowledge, because these arrangements are characterized by inherent conflicts and opportunistic behaviours, which require to be well managed and/or mitigated in order to optimize their implementation. The findings revealed that conflicts in public-private partnerships are primarily caused by asymmetrical information which leads to adverse selection strategies and moral-hazard problems due to agents’ opportunistic behaviour. Overall, the findings suggested that if the public sector did not effectively monitor construction firms in a well-structured project framework, the agents would maximize profits, increase transactional costs and undermine the potential of public-private partnerships. Results inferred that when public-private partnerships are appropriately structured with reasonable incentives, they can contribute to economic, financial, social, environmental and technological benefits. This study provides an overview of challenges associated with the implementation of public-private partnerships. It highlights useful lessons and makes a contribution by identifying and examining core success and failure factors which can improve public-private partnerships implementation. Rather than re-invent the wheel, key lessons can be learnt from failed projects and applied in practice to improve successful implementation. The study concludes that public-private partnerships are an alternative financing instrument in public infrastructure investment and development with long-term suitability.