SONA 2019: A new infrastructure implementation model? Let’s not reinvent the wheel

Prof PD Rwelamila

“Government has committed to contribute R100 billion into the Infrastructure Fund over a 10-year period and use this to leverage financing from the private sector and development finance institutions.” - President Ramaphosa

President Ramaphosa reiterated in SONA 2019 the commitment to establishing his Infrastructure Fund (although seemingly at a quarter of the original amount) which will be underpinned by a new infrastructure implementation model (as yet unannounced). 

The hope is that Cabinet do not reinvent the wheel in terms of the infrastructure implementation model by turning away from the public-private partnership (PPPs) model due to Sanral’s failed e-toll programme that has tarnished the reputation of this delivery method in the minds of South Africans.

The 2018/19 budget indicated that a total of 33 completed PPP projects (valuing R89.3 billion) have been undertaken since 1998, when PPPs were first introduced in South Africa.   And of the R834.1 billion planned for public-sector infrastructure spending over the next three years PPP projects account for R18.5 billion – 2.2 per cent of the total public-sector infrastructure budget estimate.

A decline in new project transactions over the past six years, has seen a decrease from an estimated R10.7 billion in 2011/12 to R5 billion in 2017/18 (mainly as a result of delays and cancelled projects in the health and security sectors), but based on the projects currently at an advanced planning stage, PPP transactions are expected to increase from R5 billion in 2017/18 to R6.4 billion in 2020/21.

Professor of Project Management and Procurement Systems at Unisa’s Graduate School of Business Leadership (SBL), Pantaleo M.D. Rwelamila, can provide commentary and insight on the importance of PPPs in unlocking SA’s potential to implement major infrastructure projects, including:

Recognising the pattern of failure:  Around the world, PPPs that have failed all have a common characteristic:  they severely lacked adequate stakeholder management, most especially of the key stakeholder within the public sector which is, in fact, the very public that they should be serving.

The real P versus the artificial P:  The first ‘P’ in PPP stands for the public, but ‘public’ can signal a variety of meanings and must be clarified. The government are agents of the general public, implementing projects on their behalf. If the public is the ultimate beneficiary of a project, they must be viewed as part of the partnership rather than an uncontrollable risk.

‘PPP’ does not stand for privatization:  Around the world, pressure from the public has challenged governments to manage public ‘properties’ more efficiently; to measure performance; to reduce costs and increase productivity; and to provide better services.  PPPs bring together the public sector (client) and the private sector (supplier) in a moderate- to long-term relationship that allows the parties to blend their special skills to serve the needs of the public.  The partnership is distinctly different to privatization in that it uses concessions and custodianship rather than ownership.

A road map of best-practice:  There is very little reason for PPPs to fail.  Case studies from countries around the globe and best-practice methodologies are accessible to support successful rollout and delivery of the PPP.  This can include issues on how to procure; how to consult; how to develop output specifications. Adhering to standard processes and methodologies reduce opportunities for corruption and mismanagement.

Appropriate use of PPPs in infrastructure development have a very good chance to produce infrastructure which is sustainable and within a running thread of value for money.