KZN finance MEC praises advantages of public-private partnerships

TimesLIVE

23-05-2025

The KwaZulu-Natal Treasury believes government-private sector collaborations offer the best solution to addressing the province's ongoing fiscal challenges.
KwaZulu-Natal is one of the provinces that are most affected by the country's economic struggles, including fiscal constraints, rising debt and high social demands.
The province has faced further challenges including infrastructure backlogs, the aftermath of the social unrest a few years ago, natural disasters and an almost R70bn cut in its baseline budget in the past four years, which is almost half of its current allocation of R158bn.
The provincial government has since identified increased collaboration with the private sector as a key strategy to counter these challenges.
On Friday, finance MEC Francois Rodgers hosted the inaugural private-public-partnership (PPP) summit in Durban.
Rodgers noted that the approach of treating the private sector as an adversary had led to costly failures and inefficiencies in state institutions, which was unsustainable in the current fiscal environment.
'The days of government competing with the private sector in the economic sector has proved to be both costly and a failed policy direction. Poor policy choices such as the habitual bailout of state-owned entities has played a destructive role on our national fiscus, ultimately affecting the equitable share allocation to the provincial fiscus.
'It is estimated that R560bn was used over 10 years to bail out some of our state-owned entities. This could well have been better directed to provinces and local government.'
He said the government's strategic alliance of increased private sector involvement was crucial in the policy direction of the new administration to lower borrowing over the medium term.
He added the premier's office was in the process of establishing an economic development desk to accelerate public sector participation in key projects. When properly structured, PPPs will combine the best of both sectors: allowing the province to tap into the strengths of the private sector in efficiency, innovation and capital while maintaining public sector governance and development goals.
Rodgers noted, however, that PPPs should not to be seen as a magic solution but were a valuable tool that could help, especially in times of fiscal constraints.
'In the current fiscal climate KZN's infrastructure needs — spanning logistics, health care, housing, water, sanitation and energy — far exceed what the public purse can afford. According to provincial estimates, we require tens of billions in new investments over the next decade just to maintain momentum. Government alone cannot fund this.'
The advantages of PPPs include accelerating infrastructure delivery, Improved efficiency in public services, attracting new investment and spurring job creation.
He said this had already been demonstrated in other provinces like Gauteng and the Western Cape where health PPPs have improved hospital infrastructure and patient outcomes.
Rodgers said there were opportunities in the transport and logistics sector including the ongoing N3 corridor linking Durban to Gauteng and the Port of Durban; housing and urban development as well as energy and renewables.
For this to work though, government needed to create a conducive environment for business to trust and invest in.