Several speakers participating in the Gauteng Investment Conference, last week, said clear, measurable objectives for public, private and public-private projects are necessary to hold all parties accountable and thereby sustain and drive investment.

South Africa's projects need to be properly aligned and business can serve as a sounding board to help identify problems with investment projects more quickly.

“Organised business is a resource for government and the relationship needs to be transformed from business as consultative partners to strategic partners, but this requires clear measurables, like in [Presidential structural reform initiative] Operation Vulindlela,” said business organisation South African Chamber of Commerce and Industry president Mtho Xulu.

For the private sector, for example, as part of the concept of social partnering, or compacting, and community-based negotiations, there has never been a template on how stakeholders can hold one another accountable.

“But, if we want to get to a $1-trillion economy in South Africa, then we need the cohort of business and public leaders to commit to this vision [of measurable goals], which will also bring public-private partnerships (PPPs) to fruition.”

The goals must be embedded in organisations' strategies and each party must be held accountable with measurable targets for every year so that the organisations can report on these targets and thereby influence other organisations to do so, he said.

Additionally, Gauteng Growth and Development Agency acting CEO Saki Zamxaka noted that Gauteng would collaborate with municipalities in the province and with the national government, but that these spheres of government must show what the development pipeline was that they were investing in and how this would impact on the economy.

The province was working with municipalities and national government to address gaps and faults, he added.

PARTNERSHIP EXAMPLES

“This conference demonstrates what is happening in the economy, but also highlights that many investments require investment by the municipality to facilitate them. For example, a data centre company had committed to invest R2-billion in a new data centre, but needed assurance about electricity supply.

“Similarly, the commitment to build a R2-billion chemical plant in Heidelberg, which will produce bleach, among other chemicals, and thereby reduce imports, required the construction of R75-million bulk infrastructure by the municipality. A lot of investment relies on bulk infrastructure being provided,” he illustrated.

In terms of coordination, there was always room for improvement, with a lot not being done and a lot more that could be done. However, as seen in practice, when stakeholders converged on a common interest or project, then it was easy for certain projects to move quickly, Zamxaka said.

“Further, we must get to the point where we depoliticise decision-making in South Africa. We have seen that politics does not mean much for the economy and the economy keeps moving. Business people should talk to the technocrats in government to keep driving projects,” he said.

Xulu expressed a similar sentiment, saying that Gauteng was not the property of the Gauteng government, but a public asset on which all residents' interests rely.

“We need to leverage our participation in various multinational fora and leverage our economic diplomacy to drive investment, but different government departments and spheres, as well as business, must align on projects and around a vision for the province,” he said.

In a separate panel discussion, Gauteng Infrastructure and Development and Cooperative Governance and Traditional Affairs MEC Jacob Mamabolo said there was a move away from traditional financing models and that the province was piloting different financing models.

However, it is crucial, in terms of PPP best practice, that projects be properly prepared for investment and development.

FIT-FOR-PURPOSE PUBLIC SECTOR

“Infrastructure generates lots of data. But, the construction sector and built environment is not leveraging new technologies as effectively as other sectors. We should look at using infrastructure technologies to automate many parts of the infrastructure delivery processes in our departments,” he said.

Additionally, in managing infrastructure delivery risks, government cannot rely on management by gut feel, but needs scientific, correct, reliable and credible data for consultants and communities to make decisions, he emphasised.

“Project management information systems are the way to go, and we are using technologies such as drones to monitor construction sites and progress. This enables us to build a portfolio of evidence to get value for money.

“Infrastructure projects are massive [undertakings] and cannot be managed by instance, and we must rather leverage smart technologies to manage risks, create value for money and deal with time, cost and quality metrics of project performance.

“Infrastructure technologies will be critical even for municipalities and is where we are heading. Government as a whole and all partners on projects need to have a transparent view of the truth of the project,” Mamabolo said.

GROWTH REQUIREMENTS

Meanwhile, Gordon Institute of Business Science economics, finance and strategy professor Adrian Saville highlighted that every country in the past 60 years that successfully transitioned from poverty to prosperity had high savings-to-GDP ratios and invested in fixed infrastructure.

“This investment must not be confused with financial investment. We are not talking about [investment in] unit trusts, but about gross fixed capital investment in highways, fibre networks, schools and warehouses.

“The fastest growing African economies, like Ethiopia, Rwanda and Tanzania, among others, have an investment to GDP ratio of 30% or higher.”

These insights were derived from studying data for 160 countries for the past 60 years and included data from countries as diverse as Chile, Costa Rica and Vietnam.

All countries that transitioned away from having low-income per capita economies had policies in place and institutions that effectively implemented the policies, and policy stability was the most important factor, he said.

Further, healthcare and education were necessary ingredients for a country to transform its economy, he added.

“A combination of this, namely ensuring that citizens receive the required care, sustenance and support during their first 1 000 days of life, is the single most important way to position a society and community for prosperity.

“Investment in the 300 days before birth and the first 700 days after birth represents the lowest investment in human capital and the highest returns on capital invested.”

Meanwhile, Saville highlighted Costa Rica as a good example of how a country successfully transitioned from a low-income country to a middle-income country in the space of 15 years.

“In Costa Rica in 1994, the country was reliant on agricultural exports, inflation was 100% a year, unemployment was 25% and it had the lowest per capita income of any country in the region.

“In the space of 15 years, it transitioned to a middle-income country with unemployment falling to 5%, inflation from 100% to 5% a year and its female participation in the workforce is now among the highest in the world,” he said.

The country's transition saw it partner with development finance institutions and large multinational companies, including computer equipment manufacturer Intel, which it allowed to design its engineering curriculum on the condition that it hired qualified Costa Rican engineers.

"Costa Rica opened its skies and brought tourists in and flew microprocessors out. It transformed its customs processes from a two-week, manual, paper-based system to a 24-hour tagging process.

"It transformed its unreliable and inefficient electricity supply system over three years into an electricity supply system that runs 300 days uninterrupted only on renewables," Saville illustrated.

“South Africa has some of the greatest solar resources in the world. If Costa Rica could do it, why don't we; or rather, if they can do it, shall we?” he posited.