As off-balance sheet financing, project finance promises to provide alternative route to countries to fill infrastructure funding gap without increasing public debt levels. This is the case especially in developing countries in Africa where the infrastructure gap is huge and the funding gap is enormous. However, although project finance has a potential role in promoting infrastructure development some of the requisites for project finance to take place are absent in many African countries, and this casts doubt on the feasibility of project finance as a panacea for massive infrastructure financing gap in the continent.

Consider the country South Africa as a case and provide an assessment of how conducive it is to implementing project finance deals. Substantiate your claim with arguments based on the reality on the ground.

Guide to answering: Present the assessment of the local environment along the following lines

The legal system

The financial system

Private sector development

Political and macroeconomic conditions