New ‘investor-friendly’ regulations for private-public partnerships
It took less than 24 hours for Government to act on one of President Cyril Ramaphosa's SONA promises -- new ‘investor-friendly’ regulations for private-public partnerships. While the Cape Chamber is heartened to see a promise turn into reality, the PPP regulations nevertheless remain a small step on a long journey to economic renewal.
Ramaphosa's list of SONA promises grows longer every year; in our desperation for positive change we should guard against complacency. The fact of new PPP regulations does not change the fact that these partnerships are premised on a capable state with efficient administration – two wobbly variables in the South African context.
The regulations appeared in the Government Gazette the day after SONA, signed by Finance Minister Enoch Godongwana and due to come into effect in June. In effect they reduce the amount of red tape required to set up a public-private partnership of the kind needed to accelerate infrastructure development. It means project partners will no longer need National Treasury approval for PPPs under R2-billion.
However they will still need to engage with Treasury's PPP Advisory Unit. As such they will still be dependent upon a constructive working relationship and the necessary expertise.
It is nevertheless encouraging to witness a potentially significant step in attracting private sector expertise and capital into infrastructure development. It is also a much-needed proactive step to growth the economy that will bolster investor confidence and counter the negative sentiment created by the Expropriation Act.
We need all the confidence we can muster if Ramaphosa is to realise all the promises underpinning his pledge of a 3% annual growth rate.
Successful PPPs also require both parties, public and private, to engage best practice to deliver meaningful results. The new regulations will mean little in isolation; they require Government to urgently address the systemic failure of our SOEs which continue to weigh heavily on the fiscus in the form of a massive debt burden.
In the same way that new PPP regulations signal positive Government intent, we need to see similar intent to remove other major obstacles to growth.
Infrastructure development is one of the key components of potential growth, and it will depend upon efficient public-private partnership. In his speech Ramaphosa spoke of unlocking R100-billion financing, both locally and abroad, and the new regulations signal Government's intention to get things moving.
Government itself plans an infrastructure spend of more than R940-billion over the next three years. This presupposes the financial resources to meet this target, as well as others aimed at accelerating the overall growth rate. Such is the infrastructure and employment backlog that only bold steps will stop the decline.
The Cape Chamber reiterates its willingness to partner with Government in charting a framework for future success.
John Lawson
CEO of the Cape Chamber of Commerce and Industry