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Rethinking PPPs: Why Risk Transfer Has Failed Nigeria

Public-private partnerships (PPPs) have been promoted as a solution to infrastructure gaps in developing economies, yet many collapse under flawed risk allocation. Tosin Ajakaiye, an infrastructure professional specializing in PPPs and energy project finance, argues that the doctrine of risk transfer has failed especially in Nigeria . In this interview, she introduces her concept of Risk Resilient PPPs, a framework built on collaboration, shared accountability, and social value creation.

Q: You argue that PPP failures in Nigeria and other developing countries stem from a deeper structural flaw. What do you mean by that?

Ajakaiye: Every time a PPP collapses, the post-mortem usually blames contractors for over-promising, governments for under-supervising, or financiers for pulling out. But the real flaw is baked into the structure: we allocated risk to the wrong people, in the wrong way, and called it best practice. The doctrine of “allocate each risk to the party best able to manage it” looks rational on paper, but in practice it has produced bankrupt concessions, abandoned infrastructure, and unmet community needs.

Q: Why do you call risk allocation a myth?

Ajakaiye: Governments typically transfer operational, construction, and demand risk to contractors and concessionaires. The logic is that the private party is closer to the work, so they should carry the uncertainty. But what actually happens is predictable: contractors inflate bids to cover uncertainty, underprice to win and later cut corners or walk away, or over-promise on demand projections to secure financing. When those projections fail, the government inevitably steps in because no state can allow a hospital, road, or power plant to simply stop. So-called risk transfer is illusory—the public sector always ends up holding the residual risk.

Q: How did the focus on bankability shape PPPs, and what did it cost Nigeria?

Ajakaiye: The first generation of PPPs was driven almost entirely by bankability—whether a project could attract commercial debt financing. While infrastructure is capital-intensive and governments face fiscal constraints, making bankability the primary filter distorts everything else. In Nigeria, we’ve seen toll roads abandoned because demand was over-forecasted, aviation PPPs collapsing under unresolved issues, and projects stuck in legal battles. They looked bankable but were not resilient. Collaborativeness was not factored in from the start.

Q: You propose Risk Resilient PPPs as an alternative. What does that model look like?

Ajakaiye: Risk Resilient PPPs rest on four pillars: to begin with is the public and private as collaborators, not counterparties. Instead of adversarial contracting, joint governance structures incentivize both parties to solve problems together.

In addition is the shared risk and shared benefit. This means risks and gains are co-managed. If demand falls, both absorb the shortfall proportionally; if revenue exceeds projections, both share the gain.

Furthermore, collaborative governance and mutual accountability: PPPs must embed accountability to citizens, not just contract parties. Performance is measured against service quality and social outcomes.

In conclusion, it should be focused on commitment to social value creation. This is to say infrastructure is the foundation of human development and social return on investment must be a genuine determinant of project design and financing.

That’s why I believe the next generation of PPPs cannot be optimized solely for financial close but it must be optimized for delivery.

Q: Why is this shift urgent for Nigeria and other developing economies?

Ajakaiye: Nigeria faces fiscal realities that make PPPs essential. Government budgets alone cannot close the infrastructure gap. But the terms of private sector participation will determine whether we build functioning infrastructure or create more abandoned projects. Every failed PPP is not just an economic loss—it’s a school not built, a hospital not operational, a megawatt not generated, a job not created. The stakes are measured in human development, not just GDP.

Q: How does this align with global trends in PPP frameworks?

Ajakaiye: Globally, the conversation is shifting. The World Bank’s PPP framework now emphasizes value for money over pure risk transfer. Development finance institutions increasingly demand social and environmental resilience alongside financial viability. The question for Nigeria and African practitioners is whether we lead this shift or wait to be led.

Q: What should governments and practitioners ask before announcing the next PPP project?

Ajakaiye: The starting point must change. Instead of asking “can we get this to financial close?” we should ask: Have we designed this to last? Have we shared risk in a way that keeps all parties invested in delivery? Have we built governance that holds everyone accountable to the people the project is meant to serve?

This is because risk allocation got us here. Risk Resilient PPPs are the way forward. The doctrine must change, and practitioners in ministries, development banks, advisory firms, and the private sector must drive that change.

Ajakaiye is an infrastructure professional specializing in PPPs, energy project finance, and construction risk management. With years of experience structuring and delivering complex infrastructure across Nigeria, she advises on bankability, viability, and resilience. She is currently researching next-generation PPP frameworks for emerging markets. [email protected]