South Africa enacted changes to its public finance laws that will reduce red tape for projects valued at R 2 billion or less, creating an opportunity for the private sector to partner with the government. Also, the amendment to Regulation 16 of the Public Finance Management Act introduces the concept of unsolicited proposals, where a company can now pitch ideas to state institutions instead of first waiting for the government to request bids.
In an environment where infrastructure requires significant funding, and municipal revenue from rates and taxes and borrowings from traditional Banks and Development Financial Institutions are insufficient, municipalities can now source alternative means of funding essential services.
“However, to attract investors and funders, municipalities will need to have robust and audited financials; strong corporate governance and accountability, have a good credit rating, and have the expertise to restructure their balance sheets”, says David Joubert.
Apart from conducting their own due diligence, investors will draw on the findings of the Auditor General which provides them with a telling picture of a municipality’s health and viability.
Other factors which an investor will consider before placing own, client or pension funds into a
region include:
- The separation of powers between the administrative and political arms of a municipality. Ideally, they’ll want a scenario where the two arms work closely together but have a proven respect of boundaries.
- An inter-departmental team approach to projects with the ability to manage and implement projects efficiently and effectively.
- Project management skills, particularly in areas such as engineering and technology.
“Municipalities which do not receive favourable audits from the AG will find it increasingly challenging to attract investment or sway funds from performing municipalities. Even performing municipalities will need to up their games as they compete with each other for funding – they’ll need to develop their people’s skills, attract the right talent and embrace technology to improve service delivery and attractiveness for funders”.
David Joubert
Municipal Manager
Weskus District Municipality.
Weskus District has been awarded 14 consecutive clean audits by the AG, and has demonstrable project management skills, effective people development programmes, a proven record of implementation, and is a leader in technology projects such as smart city development.
