Financing Public-Private Partnerships in Nigeria: The Bankability Bargain

Introduction

It is tempting, when analysing the financing of public-private partnerships, to proceed in the natural order that comes to lawyers: first legal framework, then structure, then instruments, and finally the numbers. That order, however, produces a somewhat distorted picture. Financing is not simply one part or aspect of a larger project; it is, in a sense, the whole project. The structure of the Public-Private Partnership (“PPP”) Agreement, the allocation of risk among project parties, the security package, the priority of creditors, the contractual obligations, and the cash-flow waterfall. These considerations emanate from a single animating question: will the project attract private capital on commercially viable terms? This question is the very essence of bankability,1 and it is the right place to begin.

Nigeria’s infrastructure gap is vast and well-documented. The National Development Plan projects an aggregate infrastructure investment requirement running into trillions of dollars, with a bulk of that investment expected to originate from the private sector. The Federal Government’s fiscal position, constrained by revenue shortages, subsidies and debt pressures, renders meaningful state-led infrastructure delivery structurally impracticable at the required scale. PPPs are, in this context, not merely a policy preference but a necessity, and the bankability of individual transactions is the mechanism by which that necessity is converted into reality