Therefore , it is imperative that South Africa find a way to stimulate infrastructure spending within a constrained public fiscus . Jooste points to several innovative funding mechanisms the government can draw on , including Public-Private Partnerships ( PPPs ), Infrastructure Bonds and Development Impact Bonds ( DIBs ).
It can even explore crowdfunding platforms , leveraging its existing public infrastructure banks such as the DBSA and the IDC and encourage private impact Investing . “ The solutions involve attracting private capital to support infrastructure development ,” points out Jooste .
Gazetted amendments to the PPP regulatory framework simplify procedural complexities , enhance the capacity to manage PPPs , establish clear rules for unsolicited bids and strengthen fiscal risk governance . The aim is to facilitate smoother PPP execution and encourage private sector involvement in critical infrastructure projects .
The government is also looking to introduce new financing instruments such as infrastructure bonds and concessional loans . In addition , it is considering a flow-through tax vehicle for specific infrastructure projects , similar to trusts and other investment vehicles . A funding window for proposals under this new financing framework will be provided to public institutions .
The government is reviewing institutional arrangements and governance for catalytic infrastructure to fast-track infrastructure delivery . Clearer mechanisms for accountability , cooperation and coordination are being established . Functions are being consolidated to reduce duplication and inefficiencies , especially for blended finance arrangements .
“ What is positive is the direct focus on renewable energy , green hydrogen and downstream products to reform the South African energy system ,” says Mareli Botha , Technical Director , Process / Mechanical , at Zutari . Though it is wellknown that South Africa is attracting a lot of interest for green hydrogen production on an international level due to its excellent solar and wind resources , it has to be linked to the Just Energy Transition ( JET ).
“ How can we ensure that the correct parties gain an advantage from the change to renewable energy and green hydrogen ?” questions Botha . Another issue is ensuring that the local environment and communities are not disrupted to produce a resource that will mainly be exported , at least initially , to Europe or Asia .
This concern was addressed by emphasising the local manufacture of electric vehicles , improving the transmission network infrastructure and potential collaboration with neighbouring countries . If realised , these plans could significantly improve South Africa ’ s energy security , socioeconomic status and reduce unemployment . “ No wonder there is so much interest in the strategy around how these plans will be executed and managed ,” says Botha .
Jooste hopes that the intended PPP reforms level the legislative and procurement playing field . He calls for a programmatic solution to streamline project development and bring opportunities to market at scale . For example , significant lessons can be learnt from the hugely successful Independent Power Producer Programme ( IPPP ).
These include centralised procurement and leadership , standardised contracting , consistent deal flow and clear market communication . “ We believe that similar programmes for other infrastructure sectors could go a long way to addressing the current hold-up on PPP deal flow ,” stresses Jooste .
“ Mature PPPs take a lot of work on the public and private sector side . There is a level of maturity that needs to be inculcated ,” adds Lutchman . He points to advanced economies like Europe , Canada and the US where PPPs are the order of the day . This is unlike Africa , where the issuing entity is often mired in issues of corruption and bad business practices .
“ By reforming the PPP procurement process to be more efficient , transparent and conducive to innovation , South Africa can attract increased investment in infrastructure development while ensuring that projects are delivered on time , within budget and to the highest quality and sustainability standards ,” concludes Jooste .
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