Government turns to the private sector to help fix South Africa

 ·27 Feb 2024

South Africa’s government is increasingly turning to the private sector to help mitigate some of the country’s biggest problems.

National Treasury has now opened two proposed amendments for public comment, with the aim of making it easier for Public-Private Partnerships (PPPs) to be set up.

In 2023, President Cyril Ramaphosa and the CEOs of over 100 of South Africa’s most prominent companies, including Standard Bank, FNB, Woolworths and MTN, announced a partnership to fix South Africa’s three biggest issues – crime, energy and logistics.

Increased private-sector participation has already been seen in the energy sector, with over 5,000 MW of private generation keeping load shedding at lower levels during the day.

In terms of logistics, Transnet has also seen increased private-sector participation in upgrading Pier 2 of the Durban Container Terminal to improve private investment in equipment and enhance technological capability and operational efficiency.

During the 2024 Budget last week, Finance Minister Enoch Godongwana announced that third-party access will also be given to Transnet’s freight rail network in May of this year.

National Treasury has also drafted amendments to key regulations regarding the Public-Private Partnerships (PPPs) framework.

Treasury has now opened the amendments to Regulation 16 of the Public Finance Management Act and the Municipal PPP Regulations for public comment.

The amendments aim to reduce the processes required for planning and producing PPPs, resulting in simpler regulations that align with a project’s size and complexity.

For instance, the new regulations make provisions for the setting up two pathways for PPPs – one for high-value projects and a simplified arrangement for low-value (R2 billion) projects.

The new regulations also clarify the institutional arrangements over who is responsible for what during a PPP project cycle.

Treasury added that the amendments make it easier for the private sector to engage with investment opportunities while accounting for all the risks of PPPs.

There are also amendments to improve the discipline in project execution by restricting the ability of accounting officers to cancel good projects while providing greater security to investors.

Lobbyists Business Leadership South Africa (BLSA) has welcomed the Treasury’s decision to reform infrastructure financing and delivery mechanisms.

Economists often cite investment in infrastructure as a sure-fire way to kickstart GDP growth, which South Africa’s economy is in desperate need of as it is only expected to grow by a paltry 1.0% in 2024

Read: Eskom heading in the right direction – but expect some setbacks: Ramokgopa

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