Re-examining the nexus of public investment efficiency and financing sources in Sub-Saharan Africa: do public-private partnerships crowd out other financing sources?

This study aims to analyze the effect of financing sources on the efficiency of public investment in sub-Saharan Africa. Based on an analysis of the World development indicators from 2003 to 2021, encompassing a sample of 28 countries in sub-Saharan Africa, a fractional regression was performed. The econometric estimates indicate that government debt, foreign direct investment (FDI), public-private partnerships (PPPs), and taxes all have a positive impact on the efficiency of overall public investments. Specifically, regarding sectoral public investments, government debt, PPPs, and taxes significantly enhance the efficiency of health investments by 35.9%, 21.7%, 1.4%, and 2.8%, respectively. In contrast, the corresponding figures for public investments in the education sector are 48.2%, 32.1%, 0.9%, and 2.7%. Furthermore, official development assistance (ODA) appears to negatively affect the efficiency of public investments in health and education, with reductions of 0.8% and 0.9%, respectively. Therefore, it is crucial to reconsider the implementation of PPPs in the education and health sectors across sub-Saharan African countries to achieve higher efficiency. Additionally, it is essential that developing nations utilize ODA with increased transparency.