Time for more win-win partnerships between private and public sectors

Potential of businesses and the government working together on infrastructure projects offers glimmer of hope

In the midst of a pandemic it is natural to focus on short-term measures that bring the speediest solutions to those most in need. However, while we work on immediate relief we must not let this crisis go to waste; we must take steps to restore the health of our economy for the long term. In SA we must use this moment to rebuild our economy by adopting more public-private partnerships, a model that is capable of building an inclusive economy in the near future, thus protecting the marginalised by creating jobs across the country.

We need to capitalise on the goodwill flowing from the clear and strong leadership displayed by President Cyril Ramaphosa, health minister Zweli Mkhize and the rest of their cabinet colleagues to take bold and decisive steps to reinvigorate the economy. Business, the government, labour and the community have never appeared so aligned and committed to solutions. We need to translate that goodwill into an economic turnaround.

This is the first time in our generation that the entire world faces a similar threat and each country can define the parameters within which it responds. Ramaphosa has spoken of a “new economy in a new global reality”, and publicprivate partnerships should form a bigger part of this economy.

Before Covid-19 forced us into a state of disaster, our economy was already in dire straits. The ramifications of ratings downgrades, no economic growth and high unemployment, and now Covid-19, have many economists predicting a contraction of GDP by 5%-7%, with unemployment nearing the 50% level.

While the government’s budgets are constrained and being reprioritised to fight Covid19, a public-private partnership infrastructure programme, financed by the private sector, could deliver affordable and quality essential services such as hospitals, roads, rail, border posts, water and sanitation, schools, universities, student accommodation and energy solutions critical to the wellbeing of most citizens.

Public-private partnerships are flexible and offer the government the opportunity to provide long-term employment in large numbers with stable, predictable wages, which is likely to be an attractive option for unions too.

A public-private partnership infrastructure programme, through specific projects, will create long-term and sustainable employment in the communities in which they are located, provide opportunities for the transfer of skills and assist in the fight against poverty. Through predictable income streams, public-private partnerships also benefit the SA Revenue Service.

These options offer glimmers of economic hope and provide the opportunity for the government and private sector to work together.

The partnership between the department of correctional services and the private sector operator to finance, build and maintain the 3,024bed Kutama-Sinthumule Correctional Centre in Makhado, Limpopo, is an example of an exemplary partnership. Not only did the facility employ and train hundreds of local residents during the construction phase, but to date it employs more than 650 people. In addition, more than 20 small businesses have been created in the local community to supply the prison with highvalue goods and services.

It has been a catalyst for social upliftment. Every month the prison commits much time, money, home-grown vegetables, and handmade school desks and chairs for early childhood development centres, schools, old-age homes, hospices and centres taking care of the disabled. This is just one project — imagine what can be achieved with a vision for a focused, nationwide rollout of modern hospitals and a new era of schools and other large-scale public-private partnership projects.

According to the 2019 Budget Review, of the

R3-trillion invested in infrastructure since 1998 R209.4bn was invested by the private sector in renewable energy and just R90.95bn in publicprivate partnerships.

The number of new public-private partnership transactions declined from an estimated R10.7bn in 2011/2012 to R4.8bn in 2017/2018, mainly due to inordinate delays and cancelled projects across various sectors. These statistics reveal that despite SA’s track record of successful public-private partnership implementation, with 34 projects completed since 1998, the private sector is not being fully used to assist the government.

The public-private partnership legislative framework and Public Finance Management Act have been in place for many years, and it is a policy framework that is modern and flexible. We have a public-private partnership unit within the Treasury, the Government Technical Advisory Centre, with skilled staff ably led by chief director Tumi Moleke.

We also have a modern lending and institutional market, banking system and skilled leadership in a robust Reserve Bank.

These are crucial ingredients in the publicprivate partnerships ecosystem. Public-private partnership legal skills abound within the country. The private sector is already attuned to publicprivate partnerships and responds with speed because it already possesses the requisite skills and knowledge.

“The timing is perfect to mobilise the utilisation of the public-private partnership model and it is now more paramount than ever before to deliver economic growth for the public interest,” says Moleke.

As Ramaphosa made clear, our economic strategy will require “a new social compact among all role players — business, labour, community and government — to restructure the economy and achieve inclusive growth”.

This co-operation is expected to accelerate structural reforms to the economy, the urgency of which has also been emphasised by finance minister Tito Mboweni.

Public-private partnerships are an ideal economic shot in the arm to ensure that we make that compact tangible — and lasting.