Modelling the barriers negating the bankability of Public-Private Partnership-financed Railway Infrastructure Projects in Southern Africa

Abstract

This research paper investigates the barriers negating the bankability of Public-Private-Partnership (PPP)-financed railway infrastructure projects in Southern Africa. The study applies Interpretive Structural Modelling (ISM) and MICMAC analysis to identify and analyse the interrelationships among the critical barriers affecting the investability and bankability of railway infrastructure projects. The study identifies nine critical factors affecting the bankability of PPP-financed railway infrastructure: ineffective regulation, fiscal constraints, investability and bankability, information asymmetry, inequitable transaction costs, ineffective governance, deteriorating industry confidence and standards, political volatility, and degeneration of railway operators. Through the ISM and MICMAC analysis, the study establishes the hierarchical relationships and driving and dependence characteristics of these factors. The analysis identifies information asymmetry and inequitable transaction costs as the root-cause factors negating the investability and bankability of PPP-financed railway infrastructure projects in Southern Africa. The findings highlight the importance of strengthening project preparation, regulatory effectiveness, governance arrangements, contractual standards, and institutional capacity to improve the bankability of railway infrastructure projects and enhance their ability to attract sustainable private-sector and institutional investment.