Public-Private Partnerships: Deferred Investment or Disguised Public Debt?
Public-Private Partnerships (PPPs) have increasingly become the financing model of choice for Zambia’s infrastructure development. From roads and hospitals to energy projects, PPPs are often presented as strategic solutions that enable governments to deliver major infrastructure without straining national budgets. However, there are growing concerns that these arrangements may be quietly creating long-term financial burdens for the country.
Economist Kelvin Chisanga has raised concerns that many PPPs amount to a form of deferred public debt. Although they may not appear as traditional loans on the national balance sheet, he warns that the fiscal obligations they generate are very real and, in many cases, even more costly.
“PPPs are often sold as innovative solutions that avoid debt accumulation. But in reality, many are simply deferred public debt. These are long-term financial obligations that don’t show up immediately but eventually fall on taxpayers,” Chisanga said.
Many of these contracts include availability payments, tax concessions, revenue guarantees, and risk-sharing provisions. While these arrangements help finance current development, the actual costs are spread over decades and can strain future national budgets. Critics argue that this creates a fiscal illusion, making projects appear affordable now while postponing the financial consequences.
“Such practices distort the true cost of infrastructure projects. They create the illusion that Zambia can afford to build now and pay later, but the real cost is postponed. This squeezes future budgets and increases pressure on public services,” Chisanga explained.
These concerns echo findings from international financial institutions such as the International Monetary Fund and the World Bank. Poorly managed PPPs have been shown to undermine fiscal sustainability, particularly in developing economies with limited oversight and transparency.
Chisanga emphasized that his concern is not with the PPP model itself but with the way it is being implemented in Zambia.
“PPPs can be powerful development tools if they are transparent, accountable, and based on rigorous value-for-money assessments. Otherwise, they become tools of political convenience that mortgage the future,” he said.
To address these risks, Chisanga recommends key reforms, including:
- Full disclosure of all contingent liabilities and fiscal commitments linked to PPPs
- Transparent and competitive procurement processes
- Independent cost-benefit and risk assessments prior to contract signing
- Strong public oversight mechanisms, including feasibility studies and long-term evaluations
As Zambia pushes forward with its infrastructure agenda, the call is growing louder to approach PPPs with caution. Experts warn that ignoring the financial implications of these arrangements could result in a hidden debt trap that future generations will have to confront.
“Future generations must not inherit the consequences of today’s short-term decisions. We must treat PPP obligations with the same seriousness and scrutiny as traditional public debt,” Chisanga concluded.
