The Rise of Social Sector PPPs in Africa: An Evolving Service Delivery Model

PRIMAH ATUGONZA | Senior Legal Counsel and Sector lead PPP & Infrastructure.

    1. Background

Africa faces an acute and well-documented deficit in social infrastructure and public service delivery. Despite considerable progress over recent decades, access to essential services, including healthcare, clean water and sanitation, quality education and adequate housing, remain severely constrained across much of the Continent. The scale of unmet need is considerable. Approximately 400 million people in sub-Saharan Africa lack access to basic drinking water services, and roughly half of the Continent’s people do not have access to adequate sanitation[1]. In the health sector, Africa carries nearly a quarter of the global disease burden but accounts for less than 3 per cent of global health expenditure. Although there is currently no official standard for inpatient bed density per total population, the global average for inpatient bed density is 27 per 10,000, while the average for the African region is 10 beds per 10 000 population[2]. In education, more than 98 million children of primary and secondary school age in sub-Saharan Africa are out of school, representing approximately 39 percent of the world’s out-of-school population the largest share of any region[3]. Africa's housing deficit is equally pressing. It is estimated that over 200 million people in sub-Saharan Africa live in informal settlements, and the Continent's urban population is projected to double by 2050, creating unprecedented pressure on housing supply and urban services[4].

These challenges are further intensified by rapid population growth and urbanisation. Over the past 50 years, the urban share of Africa’s population has doubled from 19% to 39%, representing more than 360 million new city dwellers. By 2030, Africa’s urban population will increase by an additional 350 million people[5]. While urbanisation can serve as a catalyst of economic transformations, productivity gains and improved access to opportunities,[6] it also places considerable pressure on existing social services and infrastructure, including schools, hospitals, markets and housing.

The shortage and inadequacy of infrastructure in African countries remains a major constraint on economic growth and development, affecting not only the living conditions and economic opportunities of Africans, but also the competitiveness of African economies. Across the Continent, rapidly growing cities are already feeling the impact of this pressure, as demand for social infrastructure and related services increasingly exceeds available supply.

The increased demand for social sector infrastructure has prompted governments to consider innovative ways of improvement. In some cases, it has become evident that infrastructure which was built with a target population in mind can no longer cater for the burgeoning needs of city dwellers. The question then for governments has become how to provide social infrastructure to communities in the midst of reduced budgets[7] and limited capacity of the public purse to respond to these needs.

Faced with this dilemma, governments and development partners are looking for alternative mechanisms for the financing, construction, management, and delivery of social sector infrastructure and services.

   2. PPPs as a Solution for Financing Social Sector Infrastructure

Publics private partnerships (PPPs) have emerged as one of the solutions to the growing demand to provide city dwellers with vital social infrastructure. The African Development Bank (AfDB) PPP Strategic Framework expressly recognises the potential of PPPs to improve access to infrastructure and public services across economic and social sectors[8]. Whilst PPPs were traditionally associated with large-scale economic infrastructure, particularly in the transport and energy sectors given the predictable cash flows associated with these sectors, there is now increased interest and activity in the application of the PPP model to social infrastructure and social delivery[9]. This broader application of PPPs reflects the need to address significant infrastructure and service delivery gaps, particularly in rapidly growing urban areas, by leveraging private sector investment, expertise and innovation to complement constrained public resources and enhance the delivery and quality of essential public services.

Several African countries, such as Rwanda, Kenya and Ethiopia, have begun to apply the PPP approach to the health, housing and education sectors albeit with varying degrees of success and institutional readiness. The primary objective under these social sector projects is the delivery of accessible, affordable and high-quality public services rather than the generation of commercial revenues. Balancing the private sector's need to earn a reasonable return with the public sector's objective of ensuring affordable, equitable and high-quality service delivery remains the central challenge in structuring social sector PPPs.

     3. Key Challenges to Implementing Social Sector PPPs

3.1 Revenue Models and Fiscal Constraints

Social sector PPPs differ from economic infrastructure PPPs in several important respects. Unlike economic infrastructure projects, which typically rely on market-based user tariffs, the revenue model for social sector PPPs is often underpinned by government availability payments or subsidised user charges. Given that the anchor proposition for the PPP model is leveraging private sector financing, PPP structures that depend on government availability payments often face resistance from African governments. Such arrangements place demand risk on the public sector while creating long-term fiscal obligations that can constrain public budgets. At the same time, in jurisdictions where government payment reliability is perceived to be uncertain, private sector investors and lenders may also be reluctant to participate in availability payment-based PPPs because of concerns over payment security and fiscal sustainability.

3.2 Balancing Commercial Viability and Public Interest 

The political economy of social sector service delivery differs significantly from that of economic infrastructure. Social sector projects are subject to heightened public scrutiny and stronger expectations of transparency, accountability, and equitable service delivery. Considerations of affordability, accessibility, equity, and quality of outcomes are therefore central to project design and implementation, placing greater pressure on PPP structures to balance public interest objectives with the commercial expectations of private partners.

Stakeholder acceptance is consequently a critical determinant of the success of social sector PPPs. For example, while the redevelopment of a public market into a larger and better-organised facility may present clear urban planning and economic benefits, it may also encounter resistance from traders whose livelihoods depend on established trading locations, customer foot traffic, and affordable rental arrangements. Such concerns, if not adequately addressed through stakeholder engagement and appropriate project design, can delay procurement, increase implementation risks, and in some cases undermine the viability of the project.

3.3 Institutional and Regulatory Capacity

Institutional and regulatory capacity for the design, procurement, and management of social sector PPPs remains underdeveloped in many African countries. In several jurisdictions, governments are only beginning to procure or implement first-generation PPP projects, while the legal and institutional frameworks governing PPPs continue to evolve. Many PPP laws have undergone multiple amendments as countries seek to refine their frameworks and adapt them to local legal, economic, and sectoral contexts. Similarly, PPP Units and other key institutions responsible for project development and oversight are relatively new, with technical expertise often being developed through practical experience rather than long-established institutional knowledge.

The institutional complexity of social sector PPPs further compounds these capacity constraints. Unlike many economic infrastructure projects, social sector PPPs frequently involve subnational governments, requiring close coordination between central and municipal or county authorities in project identification, procurement, financing, and contract management. Weak intergovernmental coordination, overlapping institutional mandates, and uneven technical capacity across levels of government can significantly complicate project preparation and implementation, increasing transaction costs and delaying project delivery.

    4. Making Social Sector PPPs Work in Africa 

As African countries increasingly explore social sector PPPs to address infrastructure and service delivery gaps in areas such as education, healthcare, affordable housing, and other essential public services, the experience to date suggests that the PPP model cannot simply be transposed from traditional economic infrastructure sectors. Social sector PPPs require careful consideration of project selection, revenue and payment mechanisms, risk allocation, affordability, and the capacity of public institutions to manage long-term contractual relationships.

4.1 Selecting and Preparing Suitable Projects

The starting point is the identification and preparation of projects that are suitable for delivery through a PPP. Not every social infrastructure project will be appropriate for private-sector participation, and governments need to assess whether a PPP can deliver better value than conventional public procurement. This requires robust project preparation, including an assessment of demand, affordability, fiscal implications, technical requirements, revenue potential, and the capacity of the public sector to meet its contractual obligations.

Project preparation is particularly important for social sector PPPs because the commercial proposition is often less straightforward and where projects do not generate sufficient revenues from users, governments may need to provide availability payments, subsidies, guarantees, or other forms of public support to make the project commercially viable. This, in turn, requires governments to consider carefully the affordability and long-term fiscal implications of the proposed structure rather than assessing the project solely on the basis of its ability to attract private capital.

4.2 Developing Appropriate Financing and Revenue Models

The financing structure must recognise the underlying economics of social infrastructure. In many cases, affordability considerations will limit the extent to which costs can be recovered through user charges, meaning that the public sector will retain a significant role in supporting project revenues. Availability payments can provide a mechanism for doing so, but they also create long-term fiscal commitments and expose governments to payment and performance obligations over the life of the PPP.

Governments may therefore need to consider a broader range of financing instruments and sources of capital to support the sustainability of social sector PPPs. National development and infrastructure finance institutions, pension funds, commercial lenders, and development finance institutions may each have a role to play, depending on the nature and risk profile of the project. The objective should be to develop a financing structure that is sufficiently attractive to private investors while remaining affordable and sustainable for the public sector.

4.3 Structuring Projects Around the Economics of the Sector

Appropriate project structuring is equally important. Rather than seeking to transfer all aspects of a social infrastructure project to the private sector, governments may need to identify those components that are capable of generating revenues or delivering efficiencies that can support private-sector participation.

For example, mixed-use or cross-subsidy models can be used in housing projects, whereby commercially viable components help support the delivery of more affordable units. Similarly, in the healthcare sector, governments may determine that private-sector participation is more appropriate for particular components, such as the operation and maintenance of facilities, rather than the financing and delivery of the entire project. Such approaches can allow governments to capture the benefits of private-sector expertise and efficiency without imposing an unrealistic commercial proposition on the private partner.

4.4 Strengthening Public-Sector Capacity

Finally, the successful use of social sector PPPs depends on the capacity of public institutions to identify, prepare, procure and manage complex long-term projects. This extends beyond the establishment of a PPP legal framework or PPP Unit. Governments require access to technical, financial, legal and commercial expertise throughout the project lifecycle, including during project preparation, procurement, negotiation and contract management.

This is particularly important where responsibilities are shared between national and subnational authorities. Clear institutional mandates, effective coordination and appropriate mechanisms for monitoring performance and managing public-sector obligations are necessary to ensure that PPP arrangements remain aligned with public policy objectives over the long term. Building this institutional capacity is therefore not simply a prerequisite for procuring PPPs; it is an ongoing requirement for ensuring that the anticipated benefits of the PPP model are realised in practice.

    5. The Role of the African Legal Support Facility (the ‘ALSF’ or the ‘Facility’)

The ALSF has received a growing number of requests from African governments for support in the development and structuring of social sector PPP transactions. The primary role of the ALSF is to provide transaction advisory and capacity building support to African governments developing and implementing complex projects, including social sector PPPs. Its support can extend across the project lifecycle, from reviewing project preparation studies and assessing potential PPP structures to supporting procurement processes and the negotiation of project agreements. In social sector PPPs, this may involve helping governments assess different financing and risk allocation options and develop structures that reconcile public policy objectives, affordability and fiscal considerations with the requirements of private-sector investors and lenders.

The Facility’s capacity building support provides government officials and PPP institutions with practical exposure to the legal, financial and commercial considerations involved in structuring and procuring PPPs. This can be particularly relevant in jurisdictions where PPP frameworks and institutional capacity are still developing and where governments have limited experience with social sector transactions. Both the experience gained through individual transactions and capacity building workshops help build institutional knowledge around project preparation, procurement, negotiation and contract management, while also supporting governments in assessing when and how the PPP model may be appropriate for a particular social infrastructure project.

The ALSF’s continent-wide engagement also provides opportunities for governments and PPP institutions to exchange experience and practical lessons on the development and implementation of PPPs. In this context, the ALSF, in partnership with the African Development Bank and the United Nations Economic Commission for Africa (UNECA), will organise the Annual PPP Units Forum in Addis Ababa in September 2026 under the theme “Making Social Sector PPPs Work: From Policy Ambition to Effective Service Delivery”. The Forum will bring together heads of PPP Units from across the Continent, as well as governments, development partners and private-sector stakeholders, to discuss practical approaches to structuring and implementing social sector PPPs.

Discussions at the Forum will focus on the issues that arise in moving from policy ambition to projects that can be sustainably implemented, including project preparation, financing and revenue models, risk allocation, affordability, private-sector participation and institutional capacity. The Forum therefore provides a platform for PPP institutions to share experiences of what has worked, the challenges encountered, and approaches that may be adaptable to different country and sector contexts. In this respect, it complements the ALSF’s transaction advisory and capacity-building work by creating a broader forum for peer learning and knowledge exchange on the practical challenges of social sector PPPs.

[1]https://www.unicef.org/senegal/en/press-releases/africa-drastically-accelerate-progress-water-sanitation-and-hygiene-report

[2] https://aho.afro.who.int/atlas-inputs-and-processes/af?lang=pt

[3] https://www.unesco.org/en/articles/244m-children-wont-start-new-school-year-unesco

[4] https://unhabitat.org/bridging-the-affordability-gap-towards-a-financing-mechanism-for-slum-upgrading-at-scale-in-nairobi

[5] https://www.afdb.org/en/knowledge/publications/tracking-africa%E2%80%99s-progress-in-figures/human-development.

[6] https://www.uneca.org/stories/people-in-africa%27s-cities-benefit-from-better-socio-economic-outcomes-and-standards-of.

[7] Africa’s debt has increased by 183% since 2010, a rate roughly four times higher than its growth rate of GDP in dollar terms, and in 2022 public debt in Africa reached USD 1.8 trillion (https://unctad.org/publication/world-of-debt/regional-stories).

[8]https://www.afdb.org/sites/default/files/documents/strategy-documents/english_version-african_development_bank_group_ppp_strategic_framework_2021-2031_0.pdf.

[9] The AfDB PPP Strategic Framework 2021-2031 also calls for the expansion of PPP activity beyond the transport and energy sectors,which have historically dominated the PPP market in Africa (https://www.afdb.org/sites/default/files/documents/strategy-documents/english_version-african_development_bank_group_ppp_strategic_framework_2021-2031_0.pdf).