PPP Project Finance is an agreement where the private sector is allowed to play a role that was previously a government’s one. This is in regard to the investment sector. The private company gets an opportunity to carry out business after meeting the required conditions. The vacancy is created by the government when it opts not to finance a given project. This is a scenario that can be witnessed in any country. It has been known to have some advantages, to the government, the private investor and the citizens at large.
Here are some reasons to have a private-public partnership:
1. Political stability: The governance of it is deemed fair. The government allows other players to come in, and work in a project it could have influence over. This creates a healthy competition between the two sectors. If a private contractor takes on a project in a fair way, the government is expected to do the same.
2. Economical growth: Foreign investors are welcomed to tender for the open projects. Major financiers agree to finance the project. This is a good way to welcome new ideas from other companies other than relying on one source. This helps to increase the development of a given country. Recent study has shown that countries that encourage private public partnership are doing better than their counterparts who have refused to open up to other sources.
3. Job creation: Infrastructural developments from other sources of finance bring lot opportunities to the people. It is easy to get a job for a local project. When an international company or institution finances a construction project or any other types of a development, the jobs created are for the community. This creates a good relationship between the residents and the investor. It is one of the ways of making people feel like a part of the project.
4. Variety: When the public sector is invited, there are a variety of services that are offered. It is like creating a synergy. Ideas are pooled and the best is picked. This is the power of partnership between the two streams. It opens up new potentials that can be invested upon. Work is done in a quality way because there are many institutions which are available to take on the slots dropped by the government.
This partnership should be encouraged. The government plays a bigger role by making the environment a safe and lucrative one for the private investors.