A barrier to entry is any institutional, government, technological, or economic restriction that prevents entry into a market or industry. Barriers to entry, while they may provide competitive advantages to some, can also generate inefficiencies and prevent the private sector from participating in what may seem like a commercially viable project by the public sector. Barriers can include, but are not limited to:
■ A weak domestic capital market which may prevent the private sponsor from accessing the long-term financing needed for large infrastructure projects that have long pay-back times;
■ A policy and regulatory environment that is not conducive or accepting of PPPs;
■ Poor enforcement mechanisms in legal and regulatory systems;
■ Inability to accurately value assets;
■ High transaction and bidding costs;
■ Red tape and efficiencies, which increases the amount of time and ultimately the cost of project development and implementation;
■ Size of the infrastructure project - if it's too small, the cost of due diligence may not be recoverable;
■ Lack of stakeholder buy-in. PPPs can be highly complex given the number of stakeholders. As lack of support can increase risks and the final cost of development lack of buy-in may prevent some investors and project sponsors from participating;
■ Unwillingness by users or the public to pay for infrastructure services rendered;
■ Poor public sector track record in negotiating and working with the private sector; and
■ Lack of transparency in the bidding procedures and financial management.