Key Projects of South Africa
Prison contracts in South Africa, Bloemfontein and Louis Trichardt
Severe shortages in prison space led South Africa’s Departments of Correctional Services and Public Works to deploy a PPP model for privately built and operated prisons in 2000. Two maximum security institutions were built in Bloemfontein and Louis Trichardt through this model, derived from a UK PPP, both under 25-year concessions. The approved consortium crucially comprised more than 50 per cent black shareholding, alongside foreign-based prison management companies. Each institution accommodates 3,000 inmates and both were operational within two years of contracts being signed. The prisons were proven to operate at a lower cost than public counterparts, as well as possessing a higher quality of facilities. However, the high specification of the build has subsequently been criticised and renegotiations of contractor costs were announced by DCS National Commissioner Linda Mti in 2002. This early PPP was a learning curve for the government, from which point it adopted a more formalised process.
Eco-tourism Concession in Kruger National Park
Still a relatively novel area for public–private partnerships, the eco-tourism sector in South Africa has seen a growing number of partnerships, with several projects in various stages of completion. In 2001 a build–operate–transfer concession was signed between South African National Parks (SANParks) and the consortium Nature’s Group covering the management of commercial outlets in Kruger National Park for a period of ten years. Nature’s Group pays a monthly concession fee equivalent to around 13 per cent of its turnover to SANParks. While the park’s profits have seen an increase and upgrades have been achieved, issues arose including the unsuitability of the consortium’s technical partner, Machachos, which was subsequently dropped as part of a 12-point intervention programme. Current eco-tourism PPPs include a 30-year concession of the Manyeleti Game Reserve, next to Kruger Park, with private partners Koko Moya Wilderness Trail, Tinswala Lodges and Pungwe Game Reserve, at a present net value of ZAR25 million.
Public-Private Partnerships
South Africa is a leader in public–private partnerships in the southern African region, with a highly developed dedicated legal structure in place. The 1999 Public Finance Management Act (PFMA) and Treasury Regulation 16 cover national and provincial procedures while municipal public–private partnerships are
governed by the 2003 Municipal Finance Management Act (MFMA). The legal and regulatory framework for public–private partnerships defines differences between national and provincial PPPs, and municipal PPPs in terms of areas of interest and advocacy of public participation. However, affordability, value for money and risk transfers remain common objectives to both frameworks. A PPP unit was founded in 2004 to achieve standardisation and the swift financial close of projects. A unique feature of public–private partnership legislation in South Africa is the terms for Black Economic Empowerment (BEE) articulated as a compatible key objective. PPP legislation defines BEE requirements to alleviate both the precedence of inequality in South Africa and the inequalities that can arise from public–private partnerships in developing countries.
National public–private partnerships far outnumber the quantity of municipal projects in South Africa, though the Municipal Infrastructure Investment Client (MIIC) advocates PPPs and some have been achieved, such as the DTI Provincial Accommodation Project. Mistrust by labour unions still characterises the use of PPPs in municipalities, with anxiety surrounding the average unemployment rate of 26 per cent. Health care and transport are core areas for public–private partnerships in South Africa, with the build–operate–own–transfer model most prevalent.
