Other important considerations in many markets, particularly in emerging economies, is what currency to invest or lend in and the depth of the local banking and foreign exchange markets. For example, if the revenues and costs are in the local currency but financing can be arranged only in a foreign currency, then one party needs to take the exchange rate risk. If the country lacks a developed foreign currency market, then this risk would most likely be taken by the public authority. Ye t wider fiscal policy and regulation on the part of the government may seek to avoid such risks.
To overcome this vicious circle and its impediment to private finance, the PPP toll road transaction in Nigeria that was funded through the local banking markets with the support of the African Development Bank is an instance of such an approach (see Case Study 3: Lekki Toll Road Concession).
The involvement of private finance in infrastructure can often require a review of general local and national laws to ensure that they cater to private-sector involvement, such as the right to private land ownership. Governments need to be clear about whether they want to attract foreign private finance and, if they do, whether they are prepared to make the necessary changes to facilitate this. Frequent areas of concern are tax regulations and repatriation of profit.