Innovative delivery models needed

Even before the coronavirus pandemic kicked lumps out of the South African economy, the country was on the back foot when it came to fixed investment projects and its pipeline of new investments.

Public-sector spending was waning, despite huge backlogs and community protests over the lack of services, while the private sector lacked the policy certainty and confidence needed to proceed with major projects.

Now that the virus has further undermined the financial capacity of government and its poorly managed State-owned entities to stimulate the economy through large-scale infrastructure programmes, any infrastructure-led recovery will require new delivery, funding and business models.

Indeed, public–private partnerships (PPPs) are likely to not only be critical in ensuring delivery but also become far more mainstream.

Worrying, however, is South Africa’s having enjoyed only partial PPP success in the past.

Failures can partly be attributed to large-scale corruption and poor governance. In many instances, delays and an inability to secure value for money also contribute to a growing asymmetry in skills and knowledge between strong private participants and weak public ones.

As a result, planning, delivery and oversight by the public-sector client has fallen short of the mark for traditional on-budget public investment projects and PPPs alike.

Although many private-sector projects also run behind schedule and over budget, the problem is a chronic one in the public sector, including instances where a partnership model has been adopted.

Ensuring value for money in the current environment is going to require diligent planning and implementation, as well as a better understanding of roles and responsibilities. This entails that the risks need to be apportioned to the stakeholder best able to manage and mitigate them.

In the current environment, corruption is the other big concern. Hardly ever does a national, provincial or municipal project, including PPPs, proceed in the absence of genuine allegations of fraud, fronting and tender manipulation.

Here, the best mitigating tool is extreme transparency, with public scrutiny engendered and integrated into all aspects of a project’s evolution – from conceptualisation and planning to tendering, evaluation, construction and operations.

Only through extreme transparency will South Africa attract investors motivated by fair returns over the project life cycle, rather than predatory opportunists and rent seekers.

The third critical component lies in having a ready-made pipeline of projects that are immediately bankable, rather than merely aspirational.

That pipeline must include not only projects directed at meeting the country’s most pressing infrastructure needs but those that can also be immediately funded through sustainable fiscal transfers, user-pay tariffs or a combination of the two.

South Africa, therefore, needs to adopt a far more innovative and collaborative approach to the conceptualisation, financing, implementation, operations and maintenance of public infrastructure if it is to have any hope of truly using such investments to stimulate a recovery from the economic devastation wrought by Covid-19.

To access the Projects in Progress 2020 (Second Edition) flipbook, click here