Public Works Minister Dean Macpherson with Ithala properties executive Malusi Mthuli, and managing director of Willpower Consulting Shaun Scott during a panel discussion at the Build KZN Better Conference at the Durban ICC. Picture: Karen Singh
A panel discussion at the Durban ICC on Tuesday during the Build KZN Better Conference brought to light the pivotal role that public-private partnerships could play in enhancing infrastructure development in KwaZulu-Natal (KZN).
Public Works Minister Dean Macpherson, one of the key panellists, emphasised the significance of Ithala SOC, particularly as the institution navigates a tough legal battle to avoid liquidation.
“I hope that a solution is found for Ithala because it has a big role to play in the plans that the MEC, the premier, and myself have for KwaZulu-Natal. Ithala could be a real economic catalyst, transactional advisor, and financial institution.”
Macpherson noted that South Africa does not have a shortage of projects but lacks a funding pipeline due to the scale of money needed.
“The net effect of getting these two things right is to be able to build confidence in the construction sector.
“We’ve got a long way to go. We've got to crack this infrastructure funding so we have more projects going, but I think that we are now giving effect to the promise that we made around turning South Africa into a construction site under the exporting site,” said Macpherson.
Concerning the construction mafia, the minister said to attract investment there needs to be policy certainty.
“The business community must be able to have a line of sight into what our thinking is, into what our policy proposals are, and then to have robust and honest engagement about how to be able to guarantee people’s investment,” said Macpherson.
The minister said the government is committed to working through issues. “I think that when sensible heads come together, we’ll be able to prevail and provide even more security to the business community.”
Malusi Mthuli, who is the properties executive of Ithala, said there is an immeasurable amount of opportunities out there for the private sector to participate in.
“In the past seven months, we really accelerated our drive towards bringing in private sector capital.”
Mthuli said the game of property is capital intensive and for Ithala’s portfolio to grow, they need good partnerships.
“In the past seven months, we’ve closed just over R100 billion worth of new business on the back of leaseholds, which is long-term leasing, and we are currently sitting on a pipeline of R600 million that we are hoping to convert and close within the next two or three months.
“If we continue at this tempo, nothing stops us from actually generating R2 billion’s worth of inward investment coming into our portfolio and enabling a market that finds it a great struggle to break the barriers to participate in the commercial property market,” he said.
Mthuli said Ithala has a significant role to play in the property market. “Unfortunately, for a developmental state like South Africa and the province, the supply side of capital needs to show more appetite to unlock more opportunities and take a view of smaller start-up businesses backed by hard thoughts and hard research that looks to be plausible, and put the money in there so that such businesses can thrive.”
Shaun Scott, managing director of Willpower Consulting, added that when they talk about taking public infrastructure and doing something with the private sector, it falls under this notion of public procurement.
Scott said in his research over the past 10 years, he has found that South Africa right now is one of the least regulated countries in the world when it comes to public procurement. This will change with the Public Procurement Act that has been enacted.
He suggested that public procurement should be a lot more creative and move away from the current procurement process which makes it difficult to move to the next step of the process.
“We want to have innovation. If you want to have creativity, we want to bring in sustainability, we’ve got to be more creative with the methods that we use. We cannot consider an open public tender as the only way, or PPP as the only way. How about having a design contest where you award through a competition, where there’s a jury and there’s a presentation and the jury decides the winner,” said Scott.
He also advocated for moving towards public-community partnerships. “How can we have the community be part of and integral to the procurement process?”
Head of real estate at eThekwini Municipality, Thapelo Mmusinyane, said the municipality’s policy says that it will not sell property unless it is for exceptional circumstances, for example, affordable housing.
Mmusinyane said in an effort to foster conditions to gain equitable access to property, the municipality stated: “If you have a long-term lease, you might be in the same position as somebody that has a title deed.”
He said this is what eThekwini has done in terms of policy to make it more accessible in terms of the level of participation, as one of the barriers with regard to entry into commercial property is access to capital. With leasing, you get the property without the upfront capital needed to purchase it.
karen.singh@inl.co.za