Public private partnerships – Powering the economy


With South Africa’s credit rating having avoided being downgraded to ‘junk status’, Professor of Finance at the Wits Business School, Kalu Ojah, recently intimated that Public-Private Partnerships (PPPs) have a role to play in growing our economy.

This is not a new strategy; Finance Minister Pravin Gordhan repeatedly emphasised the need for PPPs in the 2016 Budget Speech. The Budget tabled was guided by the National Development Plan 2030 (NDP) which has PPPs listed as one of the critical actions to be undertaken to reduce poverty and inequality by 2030. Gordhan outlined the government’s investment in cities and urban networks which includes over 90 integrated land development projects, valued at more than R130 billion, that are in progress to reshape our cities in partnership with the private sector.

The renewal of declining urban centres is a crucial component of economic policy due to them being a sizeable source of regional economic growth, a significant contributor to gross national domestic product and a vital source of revenue for local government. This, coupled with the United Nations estimating that 71.3% of South Africa’s population will be living in urban areas by 2030, highlights the need for PPPs geared towards urban renewal.

Cities across South Africa are already reaping the benefits of the involvement of PPPs in the renewal of urban areas. Nationally, these include examples such as the Braamfontein regeneration project in Gauteng, Durban’s Facilities Management Priority Zone project and various PPP projects in the Western Cape.

Braamfontein has been transformed from a dilapidated business district to a well designed urban neighbourhood lined with busy bars, clubs and restaurants, chic hotels and art galleries. This is as a result of local government’s multi-million rand regeneration programme for the area, supplemented by significant private-sector investment.

The Priority Zones Project has successfully reduced crime, produced a cleaner environment and attracted the public and tourists back to Durban’s inner city. The Project is a joint effort between the eThekwini Municipality and facilities management provider, Drake and Scull.

Neighbourhood projects such as the Thornhill Park PPP in Cape Town, which involved a collaboration between urban property developers, Blok, Future Cape Town and the City of Cape Town, have had a positive impact on the Atlantic Seaboard community through the provision of a safe, lush space for all to enjoy, complete with improvements in greenery and play equipment, along with locking facilities ensuring the park is safe for all ages to visit. This particular PPP came about when this particular property developer was building across the street from the park and noticed the opportunity to use their resources to positively impact the neighbourhood beyond its own development site. The park had previously been derelict and unsafe for the local community, particularly its children, to play in. Blok, working closely with the City, donated funds towards the upgrade and beautification of the Thornhill Park, and also helped residents to form a Friends of Thornhill Park (FoTP) organisation to manage the ongoing upkeep and maintenance.

Partnerships like these are not without their challenges for both the private and public entities. Challenges private entities often face when proposing these projects include the requirements for applications changing, the speed of the approvals process and a lack of communication from officials. This can significantly impact on allocated project budgets, the ability to deliver projects into the public realm and turnaround times.

Alderman Belinda Walker, Mayoral Committee Member: Community Services and Special Projects, shares that the main challenges faced by the City when approached to participate in urban rejuvenation projects lies in budgetary constraints. “Smaller projects are easier to fund whilst larger projects often have to be delayed due to a lack of budget at the time the proposals are made.”

Although these challenges do exist, it is important to bear in mind the end goals of PPPs such as improved service delivery, the promotion of black economic empowerment, the creation of employment opportunities and the building of infrastructure to better the lives of communities. As Minister Gordhan stated, “Partnership between government, business, organised labour and civil society is the key to policy coherence and more rapid development.”

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