Working the Conundrum in Public-Private Partnerships (PPPs) for Community Benefit in South Africa

Abstract

South Africa, like other African economies has been faced with funding constraints resulting in the inability to finance infrastructure development for its exponentially growing population. In recent years, the country has witnessed a wave of protests against poor service delivery especially in the poor communities. Post-apartheid, the government tried to privatize inefficient and unprofitable parastatals to improve service delivery. However, the move faced strong resistance from unions and community representatives who were against the user-pay privatization initiatives. With the growing frustration in the poor South African communities, the government has slowly been engaging the private sector to meet its perennial funding gap through Public-Private Partnerships. Although PPPs have enabled the government to access private finance for investment in infrastructure, it has been widely argued that PPPs are a reincarnation of the controversial and unpopular privatization concept that failed in the past. This study investigates the success of public-private partnerships in financing infrastructure development in South Africa. The study conducted interviews and applied capital budgeting techniques to examine the success of government goals and the net benefit from public-private partnerships. The results show that government overestimates the extent to which public-private partnerships can solve infrastructure and service delivery problems. Hence, the findings suggest that the public see PPPs as private entities created to siphon the coffers of government. Thus, this study recommends improved transparency in PPPs management for government to gain public trust.