Identification And Evaluation Of Political Risks Influencing PPP Projects In Afghanistan

Public Private Partnership(PPP)is known a well-established model for procuring public projects and building infrastructure.Afghanistan is also keen to take aboard this methodology to facilitate investment opportunities for both foreign and domestic investors to invest in major public projects such as health,transportation,education,energy,agriculture,mining,and telecommunication sectors.PPP projects usually consist of long time contractual period and heavy investments,therefore cause high rate of the associated risks while political risk factors(PRFs)are the most influential among legal,economic,and social risk factors.The basic goal of the political risk evaluation of PPP project contracting is to the easy techniques available for assessment be applied to maximally disperse,transfer and eliminate the political risks with minimum expenses and eventually give higher chance of success to PPP projects.Yet,little research has been done and the subject has rarely been discussed in academia and institutions due to PPP is still in infancy in the Afghanistan as well as new procurement method to the Afghan construction industry.This research indicates a study conducted with the aim of identifying PRFs influencing PPP projects in Afghanistan.The specific objectives were to investigate critical risk factors,and to evaluate the findings for understanding interrelationship among risk factors as well as the probability and related risk consequences.Based on in-depth critical review of literature and considering the nature of Afghanistan's political environment,31 political risks indicators were identified from three different aspects namely international,regional and host country environments.Host country risk indicators were further classified into three sub groups.Furthermore,a structured questionnaire survey and face to face interviews were conducted to get more accurate responses.A total of one hundred fourteen project data was collected from face to face interviews and questionnaire survey.In order to determine the hypothetical model,confirmatory factor analysis(CFA)performed based on structural equation modeling(SEM)theory.In addition,risk significance index was used to determine each risk's level.Based on obtained results,PPP projects in Afghanistan can be influenced by all three(Global,Regional,Host Country)political environments.The results indicated that terrorism,conflict with neighbors,governmental corruption,inadequate legal framework,lack of strong political commitment for PPPs,delay in project approval,poor public decision-making process,unemployment rate,and poverty rate are the 10 most significant political risk indicators which have a high consequence over the PPP projects implementation in Afghanistan.It's anticipated that this study will help national and multinational firms to determine an appropriate risk response measurement to manage their PPP projects in the country.Furthermore,it can be a foundation and reference for further research.