Energy programme for solutions
scale water schemes, allowing the state to allocate money earmarked for these projects to other areas. Private operators are also highly incentivised to build top-quality water facilities that will last for the life of the agreement, and taxpayers are shielded from any cost overruns.
But private sector participation in water does have its detractors. One of the biggest criticisms is that it could lead to a rise in tariffs, which is a problem in a developing country such as South Africa.
Learning from the renewable energy programme, this can be prevented through transparent water purchase agreements between operators and the municipalities. Publicprivate partnerships don’t mean private companies own the water, they merely have rights to treat and distribute it.
Concerns about water quality can similarly be addressed through strict performance standards baked into the contracts, with noncompliance subject to heavy penalties.
Although additional water infrastructure projects should have been implemented years ago, it is better late than never. We regularly speak to financiers with a large appetite for these kind of investments but they won’t part with their money unless there is policy certainty and a proper investment framework, such as the one provided by the renewable energy programme.
The opportunities for public-private partnerships also exist in other areas of infrastructure, including roads, railways, ports and information communication technology. The enthusiasm with which fibre internet providers have turned our sidewalks into construction zones to instal their cables is proof of the speed at which the private sector can move when given the space.
“Estimates of sub-Saharan Africa’s annual infrastructure gap put it at around $100-billion. Unless and until it acquires the modern transport systems, power generation capacity and other basic infrastructure that it needs, it will lag behind not only the developed world but other emerging regions as well,” states a report by the Boston Consulting Group that was published last year.
The management consulting firm’s research continues: “Africa’s governments recognise the infrastructure problem, but they have neither the financial resources nor the technical ability needed to close the gap by themselves. Private capital and expertise must be mobilised, too.”
By adequately planning now, we can avert future infrastructurerelated crises and unlock the full potential of our country and the wider continent.