Understanding Zambia’s Public-Private Partnership Framework After the 2023 Amendments

Key Features of the Public-Private Partnership Act and What They Mean for Investors

As Zambia continues to confront infrastructure financing challenges amid fiscal constraints and debt restructuring efforts, Public-Private Partnerships (“PPPs”) are increasingly becoming central to the country’s economic development strategy. Infrastructure development in energy, transport, water, housing, telecommunications, and logistics requires substantial long-term capital investment that government alone may not be able to finance through conventional public expenditure and sovereign borrowing.

Against this backdrop, Zambia’s Public-Private Partnership Act, as amended by the Public-Private Partnership (Amendment) Act No. 18 of 2023, represents a significant legal and institutional framework aimed at attracting private sector participation into public infrastructure development.

The 2023 amendments are particularly important because they seek to strengthen project governance, improve fiscal oversight, enhance institutional coordination, and increase investor confidence in Zambia’s PPP framework.

The Purpose of the PPP Framework

The PPP framework seeks to facilitate collaboration between public institutions and private sector investors in the financing, development, construction, operation, and maintenance of public infrastructure and services.

The objectives of the Act include:

• mobilising private sector financing for infrastructure development;
• improving public service delivery;
• reducing pressure on public finances;
• encouraging innovation and efficiency;
• promoting economic development; and
• ensuring proper management of fiscal risks associated with PPP projects.

The framework is especially relevant at a time when Zambia must balance infrastructure expansion with fiscal sustainability and debt management obligations.

What Constitutes a PPP Under the Act?

Under the PPP framework, a PPP generally involves a long-term contractual arrangement between a contracting authority and a private party for the provision of infrastructure or public services.

Depending on the structure of the transaction, the private sector may:

• finance the project;
• design and construct infrastructure;
• operate and maintain public assets; and
• recover investments through user fees, concession revenues, government payments, or agreed commercial arrangements.

The framework accommodates various PPP models, including:

• Build-Operate-Transfer (“BOT”);
• Build-Own-Operate (“BOO”);
• Design-Build-Finance-Operate (“DBFO”);
• concessions;
• joint ventures; and
• lease and management contracts.

This flexibility allows projects to be structured according to sector-specific commercial and operational requirements.

Key Changes Introduced by the 2023 Amendment Act

The 2023 amendments introduced several important reforms aimed at strengthening governance, oversight, accountability, and fiscal management in PPP implementation.

1. Strengthened Institutional Oversight

One of the major features of the Amendment Act is the strengthening of institutional structures responsible for PPP oversight and project approval.

The amendments reinforce the role of the Minister responsible for finance and strengthen coordination between contracting authorities and the PPP Department.

This reflects government’s intention to ensure that PPP projects align with broader fiscal and economic policy objectives.

2. Enhanced Fiscal Risk Management

A key concern globally with PPP projects is the creation of hidden or contingent liabilities that may ultimately expose governments to unsustainable financial obligations.

The 2023 amendments place greater emphasis on:

• fiscal affordability assessments;
• value-for-money analysis;
• contingent liability management; and
• government approval mechanisms.

This is particularly significant given Zambia’s debt restructuring context and the increasing need to ensure that PPP projects do not create uncontrolled fiscal exposure.

The amendments therefore seek to ensure that PPP projects are financially sustainable before approval is granted.

3. Greater Emphasis on Project Preparation

The Amendment Act reinforces the requirement for proper project preparation before procurement.

Contracting authorities are expected to undertake:

• feasibility studies;
• technical assessments;
• environmental evaluations;
• financial modelling; and
• risk allocation analyses.

This is important because poorly prepared infrastructure projects often fail to attract investment or become commercially unsustainable after implementation.

Well-prepared projects are more likely to achieve bankability and attract credible private investors.

4. Procurement and Transparency Measures

The PPP framework continues to emphasise competitive procurement and transparency in project implementation.

The Act generally requires PPP projects to undergo structured procurement procedures aimed at:

• promoting fairness;
• encouraging competition;
• improving value for money; and
• reducing corruption risks.

The framework also provides mechanisms for unsolicited proposals, although such proposals remain subject to review, approval, and competitive safeguards.

This is particularly important for sectors such as energy, mining infrastructure, transport, and telecommunications where private investors may independently identify commercially viable opportunities.

5. Clarification of Institutional Roles

The amendments further clarify the responsibilities of:

• contracting authorities;
• the PPP Department;
• the Minister of Finance; and
• approval bodies involved in project evaluation and implementation.

Clearer institutional coordination is intended to reduce bureaucratic inefficiencies and improve project implementation timelines.

6. Monitoring and Contract Management

The Amendment Act also strengthens provisions relating to project monitoring and compliance oversight.

PPP projects are long-term arrangements that may extend over decades. Effective monitoring is therefore critical to ensuring:

• contractual compliance;
• service delivery standards;
• operational efficiency; and
• fiscal accountability.

The amendments seek to improve ongoing supervision of PPP projects throughout their lifecycle.

Why the PPP Framework Matters for Zambia

Infrastructure Financing Without Excessive Sovereign Borrowing

One of the most significant advantages of PPPs is that they allow government to pursue infrastructure development while reducing immediate pressure on sovereign borrowing.

This is particularly important for Zambia given:

• fiscal constraints;
• debt restructuring obligations;
• infrastructure financing needs; and
• limited public resources.

PPPs therefore provide an opportunity to mobilise private capital while supporting broader fiscal sustainability objectives.

Attracting Private Sector Investment

The success of PPP programmes depends heavily on investor confidence.

Investors require:

• legal certainty;
• transparent procurement systems;
• enforceable contracts;
• predictable regulation; and
• effective dispute resolution mechanisms.

The 2023 amendments are therefore important because they seek to strengthen governance and improve the credibility of Zambia’s PPP framework.

Supporting Economic Growth

Infrastructure development remains central to Zambia’s economic diversification agenda.

PPPs may assist in accelerating investment into:

• renewable energy projects;
• transport corridors;
• rail infrastructure;
• logistics hubs;
• water systems;
• industrial parks; and
• digital infrastructure.

Improved infrastructure may in turn support:

• mining expansion;
• trade competitiveness;
• industrialisation;
• employment creation; and
• regional integration.

Key Legal and Commercial Considerations for Investors

Despite the opportunities created by the PPP framework, investors must still carefully assess:

• political and regulatory risks;
• foreign exchange risks;
• land acquisition issues;
• project bankability;
• dispute resolution provisions; and
• government support arrangements.

Investors should also carefully negotiate:

• risk allocation mechanisms;
• termination provisions;
• payment structures;
• guarantees; and
• lender protections.

Well-structured contracts remain critical to successful PPP implementation.

Conclusion

The Public-Private Partnership (Amendment) Act No. 18 of 2023 represents an important development in Zambia’s infrastructure financing framework.

At a time when fiscal pressures limit government’s ability to independently finance large-scale infrastructure projects, PPPs are becoming increasingly important as a mechanism for mobilising private capital, expertise, and innovation.

The 2023 amendments seek to strengthen governance, improve fiscal oversight, enhance project preparation, and build investor confidence in Zambia’s PPP framework.

However, legislation alone will not guarantee successful PPP implementation. The effectiveness of Zambia’s PPP programme will ultimately depend on institutional capacity, transparent procurement, regulatory consistency, and sound project governance.

If properly implemented, Zambia’s PPP framework has the potential to significantly accelerate infrastructure development while supporting long-term economic growth and fiscal sustainability.