In order to achieve the municipal objectives of PPPs - financial and economic objectives particularly - many municipalities recognise that it is essential to establish a sound financial base if they are to attract private sector partners and be seen as potentially reliable partners themselves. No external investor, whether a donor or a private sector organisation, is likely to choose to risk funds in an organisation that is unable or unwilling to improve its financial position.
Detailed literature on urban government finances and financial reform is readily available.8 This section aims only to reinforce the content of previous chapters by outlining the key constraints and areas of change required for PPPs. While healthy finances are important for all partnership ventures irrespective of size and capacity, partnerships with the formal private sector may require more significant and targeted improvements.