Harnessing private sector assistance for service delivery {writer: Piet Coetzer}

Public-private partnerships (PPPs) seem to be destined to play an increasing role in assisting South African local authorities to come to grips with the challenges of service delivery, and catching up on the backlog that has developed, as indicated by announcements on this front in recent times.

The City of Joburg, for example, in February this year announced that the metropolitan council has entered into a PPP that is to deal with the challenge of ever increasing waste in the city.

On another front, it was announced by the South African Local Government Association (Salga), the Local Government Sector Education and Training Authority (LG Seta), the Development Bank of Southern Africa (DBSA) and Microsoft South Africa that a PPP has been launched to help reduce South Africa’s service delivery backlog by placing skilled graduates and high-level training initiatives directly into municipalities around the country.

In an article by Ndaba Dlamini on the official website of the Joburg council at www.joburg.org.za, on the thinking behind the PPP created to deal with the challenges of waste management, it is stated that the global economic downturn has left many municipalities in the country cash strapped, some having to abandon essential service delivery projects crucial to improving the lives of their citizens.

The country’s economic powerhouse of Johannesburg has not escaped this calamity, but it has taken some innovative measures to ensure that residents enjoy quality services. One City department that has taken the economic initiative is Infrastructure and Services, which monitors the performance of the City’s waste management entity, Pikitup.

The department is implementing a PPP – the first ever to be undertaken by Joburg – in which the department will join hands with a private company to dispose of waste through an alternative waste technology plant.

Speaking at a Municipal Public Private Partnership Conference at Turffontein Racecourse on 18 February, Palesa Mathibeli, director of the waste sector in the Infrastructure and Services department, said the project would not only drastically reduce waste at landfill sites, but also would bring in much needed revenue.

Landfill shortage

“The City is fast running out of landfills to dispose of waste, but at the same time, the amount of waste is increasing. It is estimated that this PPP will reduce waste by 80%,” said Mathibeli.

She added that it was difficult to establish new landfills because of the lack of suitable land and new legislation that required 15% of waste to be diverted
from landfills.

Two landfills in the north of the city have closed down, leaving only four in the south.

Robinson Landfill has three years left before it is full, while Marie Louise and Ennerdale have seven and 10 years left, respectively. Goudkoppies has 17 years.

The City is a signatory on the Polokwane Declaration, which states that municipalities should put measures in place to reduce waste to landfills by 50% by 2012, and zero waste to landfills by 2022 – making the alternative technology project all the more necessary.

“After the Polokwane Declaration, the City set itself targets to divert 15% of waste from landfills by 2010. However, we are in 2010 now, but we are only managing 5% to 7%. But we are working towards these targets,” said Mathibeli.

Electricity

Once implemented, the alternative waste technology plant would have the potential to generate electricity for sale to residents, earning the City much needed revenue.

“We project that even though the cost per tonne to process waste to energy will be more expensive than the cost per tonne without waste to energy, the total income from the sale of electricity will be way over these costs,” said Mathibeli.

While the project is the first of its kind for Joburg, it has taken a leaf out of the book of similar successful projects overseas.

In Denmark, 13 organic household composting plants, 33 incinerators, 120 garden waste composting plants and five biogas facilities have been established, reducing waste to landfills drastically, according to Mathibeli.

Establishing the plant would take about three years. The process would include site selection, a hazardous landfill site to deposit any waste from the plant, and possibly changing certain bylaws.

There was also the process to find a suitable partner to finance the project, said Mathibeli.

The chief executive officer of the Gauteng Shared Service Centre (GSSC) Molaodi Khutsoane, who also attended the conference, urged municipalities in Gauteng to follow Joburg’s example and look into innovative ways to enhance service delivery.

He said resources were very limited, and municipalities needed to “unlock and explore other ways to mobilise alternative sources of funding” during these
tough times.

“Municipalities have to be innovative. Not only government can enhance people’s lives, but all communities must put their heads together, explore public-private partnerships to increase service delivery.”

Khutsoane said there was a huge backlog in building infrastructure in municipalities.

After the advent of democracy, there was a notable reluctance by municipalities to explore PPPs in developing infrastructure, but circumstances had changed.

“Let’s bring the private sector on board. We have seen how PPPs have worked well recently, and a good example is the Gautrain project. Such projects have seen municipalities in Gauteng gain from skills transfer and capacity building. They also have benefited from the efficiencies of the private sector,” he said.

Functions

The need for municipalities to hook in the private sector to enhance service delivery could be illustrated by the dwindling of functions performed by local governments, according to Allyson Lawless of the South African Institute of Civil Engineers.

She said that, ideally, five functions were performed by municipalities:

• Non-income generating residential infrastructure;

• Income-generating residential infrastructure;

• Infrastructure to support commercial, industrial and economic development;

• Operations; and

• Maintenance of existing infrastructure.

Currently, most municipalities performed only two of these functions: provision of non-income generating residential infrastructure and maintenance of existing infrastructure.

“In the new South Africa, we need to have all five functioning. We also need to access the private sector as much as possible,” said Lawless.

Exacerbating this situation, municipalities were losing engineering personnel to the private sector because of politics in local government. “Infrastructure projects in municipalities are failing due to limited capacity and control. Capacity levels are at an all-time low and we have to get people into the public sector and increase our capacity in local government,” she said.

Lawless added that municipalities suffered from infrastructure project failures; limited maintenance of waste, sanitation and storm-water infrastructure; and ageing electricity distribution networks and equipment.

“Gauteng has a current estimated maintenance backlog of over R28 billion in surfacing roads, upgrading electricity networks, sewerage networks and water networks, to name a few. “

To enable municipalities to catch up on these backlogs, there was a need to harness the private sector “to break the back of development and upgrading needs, and assist with training of engineering personnel,” she added.

The advantages of harnessing the private sector in infrastructure development by municipalities were evident, said Lawless.

Both parties took risks and could make a profit. “The private sector also takes over municipal functions, helping municipalities become more efficient,” she added.

Strover Maganedisa, project adviser in the PPP unit in the National Treasury, said all municipalities could learn from the City of Johannesburg how to implement
a PPP.

Skills development

In the announcement of the PPP initiative for the Municipal Skills Development Programme, it was said that the project would be piloted by the partners in the Eastern and Western Cape in April this year.

Based on the successes and lessons learnt from this phase, a further two phases will be planned and implemented during the 2010/11 and 2011/12 financial years.

Salga chief executive Xolile George said unemployed information technology graduates would be placed in key government departments.

“Cornerstones of the programme are the creation of efficient systems, the provision of more skilled people, the promotion of good governance, and the driving of effective communication in local government,” he said.

Microsoft South Africa managing director Mteto Nyati said that over the next few years, the company would help the government to use technology to enhance service delivery. “We’ll do this by placing top graduates in local municipalities, training municipal employees, and providing specialised seminars for municipal managers.”

LG Seta CEO Sidwell Mofokeng said the placement of clued up information technology graduates would ensure the maintenance of current computer systems and correct upgrades when required, while at the same time helping staff to utilise the equipment to full capacity.

The DBSA, as specialist large infrastructure funder for government expansion, has a unit dedicated to supporting local government development.

“The demands of the information-based global economy mean that governments today require an advanced set of administrative tools,” said DBSA CEO, Paul Baloyi.