In recent years, Zimbabwe has increasingly explored privatisation and public-private partnerships (PPPs) as vehicles to attract investment, enhance efficiency, and stimulate economic growth.
The role of transaction advisors — specialised financial and legal experts who provide strategic guidance and support to clients during complex business transactions— has emerged as a critical factor in ensuring these processes are transparent, sustainable, and beneficial to both the public and private sectors.
This article examines the key responsibilities of transaction advisors in Zimbabwe, their contributions to the success of privatisation and PPP initiatives, the best practices in the procurement of transaction advisors , transaction advisors fees and the challenges and opportunities within this context.
Transaction advisors play a pivotal role in managing the complexities of privatixation and PPP transactions.
Their involvement spans the initial feasibility analysis, financial and legal due diligence, financial structuring, risk assessment, and legal documentation through to deal management and execution, and post-transaction monitoring.
By providing strategic insights and technical expertise, transaction advisors help governments and private sector stakeholders make informed decisions, navigate regulatory frameworks, and structure transactions that are financially viable and legally sound.
Key roles and responsibilities of transaction advisors
Project feasibility and structuring Transaction advisors conduct in-depth feasibility studies to determine the viability of privatization or PPP projects. This process involves analyzing the project’s economic, financial, and social implications and assessing the potential risks and returns. Advisors also design financial structures to optimize funding sources, including debt and equity, and assess the optimal risk-sharing arrangement between public and private partners.
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Legal due diligence and compliance Ensuring legal compliance is vital in any transaction, particularly in Zimbabwe, where regulatory requirements and public policy considerations can significantly impact the success of privatization and PPP deals. Legal advisors review all pertinent regulations, help draft agreements, and ensure that contracts meet statutory and contractual obligations. They address land ownership, intellectual property, and regulatory issues that may affect the transaction, enabling projects to progress without legal interruptions.
Risk assessment and mitigation Transaction advisors conduct risk assessments to identify and address potential project risks, such as market demand fluctuations, political uncertainties, and operational risks. Financial advisors may use tools like sensitivity analyses and scenario planning to quantify and mitigate risks, advising stakeholders on strategies such as risk transfer, insurance, and performance guarantees to secure investor confidence.
Investor engagement and negotiations One of the most challenging aspects of PPP and privatization transactions is attracting and securing the right investors. Transaction advisors assist in identifying and engaging investors, showcasing project value, and managing bid processes transparently. During negotiations, advisors play a crucial role in balancing the interests of all parties, aligning incentives, and ensuring that contracts are structured for long-term sustainability and public benefit.
Monitoring and compliance post-transaction Even after a transaction is executed, transaction advisors may be involved in monitoring project implementation to ensure that the private partner meets agreed-upon standards and deliverables. They assess compliance with performance benchmarks, ensuring public resources are protected and that the project benefits continue to align with public interests.
The strategic role of transaction advisors in Zimbabwe’s economic transformation
Zimbabwe’s push for privatisation and PPPs is a strategic approach to modernise infrastructure, improve public services, and reduce the fiscal burden on government resources.
For example, privatisation initiatives in sectors like telecommunications, energy, banking, mining and transportation can lead to improved service quality, greater access to essential services, and the introduction of advanced technologies.
However, success in these transactions hinges on the involvement of skilled transaction advisors who can navigate complex markets and regulatory frameworks and offer expertise in structuring competitive deals that appeal to investors while protecting public interests and giving an independent perspective from government.
With Zimbabwe’s infrastructure investment programme focused on sectors such as water and sanitation, energy, telecommunication and transportation, transaction advisors will be instrumental in crafting solutions that leverage private capital to meet national development goals.
Through PPPs, Zimbabwe can address infrastructure deficits and unlock new opportunities for innovation and economic growth, especially in underserved areas.
Best practices for procuring transaction advisors for privatisation and public-private partnership (PPP) transactions involve following established guidelines to ensure transparency, value for money, and alignment with the Public Procurement and Disposal of Public Assets Act (PPDA Act).
To start, it is critical to conduct a thorough needs assessment to define the scope and complexity of the transaction, which informs the skills and expertise required from transaction advisors.
This process should be followed by the development of well-structured terms of reference (TOR) that detail specific deliverables, expected outputs, and timeframes.
These TORs guide potential bidders in understanding the procurement’s objectives and allow for the selection of advisors with a track record in handling similar transactions.
An open, competitive bidding process is essential to attract qualified advisors and to ensure the selection is free from conflicts of interest, which aligns with the PPDA Act’s emphasis on fairness and transparency.
The evaluation and selection process should prioritise not only cost but also technical expertise, experience, and an advisor’s capacity to deliver quality outcomes within set timelines.
A multi-criteria evaluation approach, where technical and financial scores are weighted appropriately, is a recommended best practice under the PPDA Act for complex procurements like those involving privatisation and PPPs.
Further, contract management practices, including clear performance metrics and regular review mechanisms, help ensure that transaction advisors remain accountable and aligned with the public sector’s strategic goals.
By adhering to these best practices, procuring entities can safeguard public resources, mitigate risks associated with privatisation and PPPs, and achieve optimised results that contribute to public value creation.
Transactional advisors fees
Fees for transactional advisors in PPP transactions are structured to align with the stages and complexity of the projects.
Typically, the fees are set in a phased approach, where advisors are compensated based on the progression of each phase, from preliminary assessment and due diligence to deal structuring, negotiation, and project closure.
This phased structure ensures that the advisory team is incentivized to provide continual, value-added support throughout the transaction.
Advisors might initially receive a fixed fee for early-stage work, such as project feasibility studies or initial market assessments, which involves a high level of technical analysis and legal assessment.
For large-scale PPP and privatisation deals, transactional advisors often receive a combination of fixed fees and success fees.
Fixed fees cover initial costs associated with developing the transaction framework, preparing tender documents, and providing project financial models.
Success fees, on the other hand, are usually tied to the successful completion of the transaction, such as financial close or execution of the privatisation or PPP agreement.
Success fees motivate advisors to work towards a project’s successful closure and mitigate risks for the public entity by deferring a portion of fees until tangible project milestones are achieved.
In more complex or higher-risk transactions, advisors might also work under retainer arrangements, especially for longer-term advisory roles.
Retainers ensure that advisors are available for ongoing consultation and project adjustments as needed.
The fee structure can also include hourly rates for specialised legal, financial, or technical inputs outside the core transaction phases.
Some transactions may use performance-based fees, especially in cases where measurable outcomes (like cost savings or efficiency gains) are expected.
This flexible, multi-part fee structure aligns the advisor’s incentives with the success of the privatization or PPP transaction and enables governments or project proponents to manage costs effectively across different project phases.
Challenges facing transaction advisors in Zimbabwe
Despite their critical role, transaction advisors in Zimbabwe face several challenges, including:
Regulatory complexity: Navigating Zimbabwe’s regulatory framework requires extensive legal knowledge and experience in local and international law. Regulatory hurdles can delay project timelines and deter investor interest.
Economic risks: Transaction advisors must navigate Zimbabwe’s volatile economic landscape, which can impact project stability and investor confidence.
Funding limitations: Many projects in Zimbabwe require significant funding, which may not be readily available. Advisors need to work creatively to structure financing models that attract both local and foreign investors while ensuring project viability.
The role of transaction advisors in Zimbabwe will likely grow in significance as the government continues to embrace privatisation and PPPs as essential strategies for economic development.
By fostering transparent and effective partnerships, advisors can help mitigate the risks associated with these transactions, build investor confidence, and contribute to Zimbabwe’s long-term growth and development.
Transaction advisors with experience in international finance, law, and infrastructure development will be especially valuable in helping Zimbabwe attract the expertise and capital it needs to reach its economic objectives.
In Zimbabwe’s journey towards economic revitalisation and prosperity, transaction advisors serve as critical enablers of successful privatization and PPP transactions.
Their expertise in financial structuring, risk assessment, legal compliance, and stakeholder engagement ensures that these transactions are both sustainable and beneficial to all parties involved.
As Zimbabwe continues to advance its economic reforms and infrastructure goals, the role of transaction advisors will be indispensable in creating partnerships that drive innovation, enhance efficiency, and ultimately improve the lives of Zimbabweans.
*Edgar Nyoni : Doctor in Business Administration (DBA)
Independent consultant/public enterprises reform specialist. Email: [email protected]
These weekly articles are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society and the past president of the Chartered Governance & Accountancy Institute in Zimbabwe. Email – [email protected] or Mobile No. +263 772 382 852
