New wealth fund proposed for KwaZulu-Natal to boost projects
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A new wealth fund has been proposed for KwaZulu-Natal, aimed at ensuring the availability of finance for key catalytic projects that have the capacity to create employment.
The fund will primarily service projects that are partnerships between the government and the private sector and ensure they are completed on time and not hamstrung by financing.
This wealth fund will provide those involved in the partnership with quicker funding and lower interest rates than those offered by commercial banks, potentially reducing the need to apply for project funding through the Development Bank of Southern Africa (DBSA). According to KZN Finance MEC Francois Rodgers, the wealth fund will not rely solely on government contributions as private entities will also contribute.
He added that a bank has already committed to participating in the fund.
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The establishment of the fund is one of several resolutions taken during a meeting between the government and the business community last week. The meeting had been called to brief the business community on the new regulations on Private Public Partnerships (PPP) that are set to come into effect next month.
Other resolutions include the creation of a single-purpose vehicle designed to fast-track project approvals and ensure timely completion.
'This initiative is a huge step in ensuring that we undertake key projects, create economic growth, and generate job opportunities to grow the economy of this province,' said MEC Rodgers.
'On Friday, officials from the national treasury came to brief the business community on these changes to public-private partnerships (PPP). We had expected about 50 business people to attend, but over 100 attended,' added the MEC.
He explained that the purpose of the new regulations is to facilitate easier and quicker formation of PPPs to deliver projects that could benefit even municipalities. 'You know that a PPP, due to the current regulations, could take up to five years to establish.'
He said the new PPP regulations will attract private capital to public projects, providing financial benefits for private investors, as the project will remain under government ownership once completed.
'The fund will ensure that projects undertaken under the PPP framework have access to capital, which will be provided more quickly and at lower interest rates than those offered by commercial banks. This will be for catalytic projects; you cannot simply apply to this fund for a fast-food restaurant,' said Rodgers.
He noted that the fund will differ from the current KZN Growth Coalition, as it will involve external funding sources, not just government contributions.
Additionally, he added, it was agreed to also establish a single-purpose vehicle, overseen by the provincial treasury, to ensure that projects are approved promptly and, most importantly, are not delayed.
'The priority here is to trigger projects that will stimulate investment, create jobs, and grow the economy of the province,' said the MEC.
However, economic expert Dawie Roodt expressed concerns about the fund.
He said the primary task for the government is to create an environment where businesses can thrive. 'The role of the state is to provide essential services, such as safety, infrastructure, healthcare, and education, not to initiate various new projects. The government should focus on creating a friendly environment and allowing the private sector to take the lead.'
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