SA's economic development could be accelerated by use of more PPPs - Parsons
Thématique :
sud afrique
By: Christy van der Merwe - Published: 24 Oct 08
Inadequate State capacity to successfully implement programmes and projects was a critical issue facing an emerging market like South Africa, and one which often hampered economic development, said University of Pretoria Department of Economics Professor Raymond Parsons on Friday.
Addressing delegates at the Helen Suzman Foundation/Gordon Institute of Business Science Economic Policy Conference, he emphasised that “once it has been decided what government should do itself, and ensure is done by others, mechanisms must be put in place to ensure that delivery actually occurs”.
He argued that the ‘binding constraints’ to development have been identified, and that “by now we know what needs to be done… everything that need to be done has been pronounced upon again and again. Our growth has been held back, not by the lack of our imagination, but by our unwillingness, or inability, to follow through much of what we have decided needs to be done, and by a refusal to accept responsibility when there is a failure of delivery.”
Parsons said that increased use of public-private partnerships (PPPs) were one mechanism that could be used to ensure greater delivery.
Currently only about 3% to 5% of government’s infrastructural expenditure was allocated to PPPs, in terms of the Accelerated and Shared Growth Initiative for South Africa (Asgisa), and the National Treasury.
This, Parsons said, was low by world standards, and a target closer to 20% of infrastructural spending, would mobilise private financing flowing into public assets on a much bigger scale, perhaps as much as R100-billion.
This could also be even more helpful in a period in which global financial developments will make public financing considerably more difficult. “Yet we find that the roll-out of PPPs is seriously hampered by lack of capacity and skills in government departments and provincial authorities,” added Parsons.
Parsons also noted that “having identified the weakness in the capacity of the State to carry out its role in supporting economic development, Asgisa then assigns, to that same State, the primary function of implementing programmes to address those constraints”.
“Delivery requires sustained prioritisation. It demands consistent focus on the targets and the data that shows what progress has already been made, and will be made, over the next few years. It is not just a money problem,” said Parsons.
He stated that as long as South Africa, as a country, chose to be reliant on the public sector for so much of its transport, power and other infrastructural requirements, it was critical that the necessary investment to efficiently expand our capacity in these areas should take place.
“We must also acknowledge that the public sector also has very large social obligations. Yet it is going to be increasingly squeezed in the period ahead between financial stresses on the one hand, and citizen’s expectations on the other hand. It will be held accountable to ensure effective delivery,” reiterated Parsons.
He, therefore, suggested to the new government administration that it would be more realistic, and strike more resonance with the population, if in future it spoke more about the need for a ‘delivery State’. A State in which the quality and impact of public sector service was given overriding priority, especially at local level.
Meanwhile, Econometrix director and chief economist Dr Azar Jammine, who was also speaking at the conference, said that black economic-empowerment policies had a perverse effect on the public sector, as the private sector had absorbed “all the best brains”.
He said that private sector went “out of its way to attract the best brains from among previously disadvantaged society, in order to meet its scorecard requirements”, at the expense of the public sector, which was lacking in skills at many levels.
“It [the private sector] has absorbed all the best brains and left the public sector with relatively few - and so there is a huge chasm between public sector on one side, and the high level of efficiency of the private sector on the other side, and unfortunately, there is a lack of trust between the two,” Jammine added.
He said that the private sector, with most of the skills, should be helping the government to improve service delivery. “But the government then in return doesn’t have the trust to pass some of the responsibility on to the private sector, and so then we don’t get the progress on that score.”
He explained that the people whose responsibility it was to manage the rollout of the amenities and service delivery at ground level, and manage these projects critical infrastructure, were lacking in very basic skills.
“According to the South African Local Government Association, one in three municipal councillors cannot read or write. Half of local government officials do not have post-Matric qualifications. Two out of 10 local government officials don’t understand how tariffs are set up; two thirds of local council don’t understand their roles and responsibilities, or local government legislation; and 32% required adult basic education and training,” noted Jammine.
He added that much of the problem came with not being comfortable with the English language, and that resulted in many of the local government officials, which were entrusted with the rollout of service delivery, not having the confidence with which to take decisions, and implement and manage projects.
Inadequate State capacity to successfully implement programmes and projects was a critical issue facing an emerging market like South Africa, and one which often hampered economic development, said University of Pretoria Department of Economics Professor Raymond Parsons on Friday.
Addressing delegates at the Helen Suzman Foundation/Gordon Institute of Business Science Economic Policy Conference, he emphasised that “once it has been decided what government should do itself, and ensure is done by others, mechanisms must be put in place to ensure that delivery actually occurs”.
He argued that the ‘binding constraints’ to development have been identified, and that “by now we know what needs to be done… everything that need to be done has been pronounced upon again and again. Our growth has been held back, not by the lack of our imagination, but by our unwillingness, or inability, to follow through much of what we have decided needs to be done, and by a refusal to accept responsibility when there is a failure of delivery.”
Parsons said that increased use of public-private partnerships (PPPs) were one mechanism that could be used to ensure greater delivery.
Currently only about 3% to 5% of government’s infrastructural expenditure was allocated to PPPs, in terms of the Accelerated and Shared Growth Initiative for South Africa (Asgisa), and the National Treasury.
This, Parsons said, was low by world standards, and a target closer to 20% of infrastructural spending, would mobilise private financing flowing into public assets on a much bigger scale, perhaps as much as R100-billion.
This could also be even more helpful in a period in which global financial developments will make public financing considerably more difficult. “Yet we find that the roll-out of PPPs is seriously hampered by lack of capacity and skills in government departments and provincial authorities,” added Parsons.
Parsons also noted that “having identified the weakness in the capacity of the State to carry out its role in supporting economic development, Asgisa then assigns, to that same State, the primary function of implementing programmes to address those constraints”.
“Delivery requires sustained prioritisation. It demands consistent focus on the targets and the data that shows what progress has already been made, and will be made, over the next few years. It is not just a money problem,” said Parsons.
He stated that as long as South Africa, as a country, chose to be reliant on the public sector for so much of its transport, power and other infrastructural requirements, it was critical that the necessary investment to efficiently expand our capacity in these areas should take place.
“We must also acknowledge that the public sector also has very large social obligations. Yet it is going to be increasingly squeezed in the period ahead between financial stresses on the one hand, and citizen’s expectations on the other hand. It will be held accountable to ensure effective delivery,” reiterated Parsons.
He, therefore, suggested to the new government administration that it would be more realistic, and strike more resonance with the population, if in future it spoke more about the need for a ‘delivery State’. A State in which the quality and impact of public sector service was given overriding priority, especially at local level.
Meanwhile, Econometrix director and chief economist Dr Azar Jammine, who was also speaking at the conference, said that black economic-empowerment policies had a perverse effect on the public sector, as the private sector had absorbed “all the best brains”.
He said that private sector went “out of its way to attract the best brains from among previously disadvantaged society, in order to meet its scorecard requirements”, at the expense of the public sector, which was lacking in skills at many levels.
“It [the private sector] has absorbed all the best brains and left the public sector with relatively few - and so there is a huge chasm between public sector on one side, and the high level of efficiency of the private sector on the other side, and unfortunately, there is a lack of trust between the two,” Jammine added.
He said that the private sector, with most of the skills, should be helping the government to improve service delivery. “But the government then in return doesn’t have the trust to pass some of the responsibility on to the private sector, and so then we don’t get the progress on that score.”
He explained that the people whose responsibility it was to manage the rollout of the amenities and service delivery at ground level, and manage these projects critical infrastructure, were lacking in very basic skills.
“According to the South African Local Government Association, one in three municipal councillors cannot read or write. Half of local government officials do not have post-Matric qualifications. Two out of 10 local government officials don’t understand how tariffs are set up; two thirds of local council don’t understand their roles and responsibilities, or local government legislation; and 32% required adult basic education and training,” noted Jammine.
He added that much of the problem came with not being comfortable with the English language, and that resulted in many of the local government officials, which were entrusted with the rollout of service delivery, not having the confidence with which to take decisions, and implement and manage projects.
