Collaboration key to partnerships
PPPs provide an opportunity to change the way we see and do things, writes ANDREW GILLINGHAM
ACCORDING to the Organisation for Economic Co-operation and Development, the amount of global infrastructure investment required by 2030 — particularly in terms of transport, electricity generation and distribution, water supply and telecommunications — amounts to more than $70-trillion.
Remo Moyo, Divisional Executive: Client Coverage and Nedbank Corporate and Investment Banking, says in its 2015 report entitled Fostering Investment Infrastructure, the organisation emphasises that the proportion of this infrastructure investment that goes to developing and emerging countries must be significantly increased in the coming decade if governments in these regions are to be expected to meet social needs and support vital economic growth.
“Unfortunately, while most governments of developing countries recognise this urgent need to increase the pace of economic development through infrastructure investment, improved service delivery and effective poverty alleviation, few have the budgetary means to achieve this. SA is no exception.
“The National Development Plan clearly sets out national government’s desire and commitment to reduce unemployment, inequality and poverty by 2030. And the levers identified to achieve these outcomes include expanded infrastructure, spatial efficiencies, accelerated rural development, and effective service delivery.”
Achieving economic growth, reducing the extent of poverty and creating jobs is no small ask of any government. The South African public sector’s job is made all the more difficult by the fact that it is trying to do all this in the context of a stop-start global economic environment and a domestic economy that is, at best, highly constrained. The challenge of infrastructure- and service delivery-led economic development is exacerbated in SA by the significant backlogs that also need to be overcome.
The challenge is also that a government budget can only be stretched so far. As such, the need for closer collaboration between SA’s public and private sectors becomes patently clear.
“Governments that are successfully harnessing the immense catalytic power of such public-private partnerships are those that view these relationships as more than just an alternative source of funding.
“Harnessing private sector expertise, technology and innovation can, and should, be a key way by which the public sector enables itself to provide better public service delivery, particularly through enhancing its own operational efficiencies.
“The obvious long-term benefit is that such close working partnerships have the potential to deliver significant knowledge and skills transfers — to both parties,” Moyo says.
This concept of shared value is key to the ability of PPPs to realise their full potential to drive economic growth and social upliftment as PPPs cannot merely be the provision of private sector funding for government-owned projects. “For PPPs to be sustainable catalysts for prolonged economic growth, the benefits have to be seen — preferably in equal measure — by both partners,” Moyo says.
A successful PPP must deliver balanced benefits to all stakeholders, preferably by enabling government to meet its obligations to its citizens without undue exposure to risk or debt, while the private sector partner should, at least, gain exposure to broader markets and investment opportunities.
He says given that, in SA, the public sector accounts for about 24% of national GDP expenditure, is also the primary role player in built infrastructure development which delivers basic services needed to drive economic growth, and has responsibility for delivering sociodevelopmental infrastructure that enables a better life for all, the importance of the private sector’s involvement to share these responsibilities, and invest in them according to their viability by applying innovative thinking, cannot be overstated.
“For Nedbank, harnessing the diverse interests of the public and private sectors for the collective good of SA and its citizens is what public-private partnerships are all about,” Moyo says.
“That is why we remain committed to growing in stature as a dependable financial partner to the public sector at a local and national government level and its agencies, serving as a facilitator of innovative finance and banking arrangements, and making our expertise available to ensure the successful completion of essential projects. For us, PPPs provide an opportunity to change the way we see things and apply solutions differently towards sustainable economic growth.”