ART has a role to play in successful public-private partnerships

Public-private partnerships (PPP) are nothing new: governments around the world (even in developed countries) increasingly acknowledge that the private sector can contribute significantly to service delivery, and the development and maintenance of infrastructure. The model is so successful because it is not just money that the private sector brings to the table but also its planning, technical and management capability.

In South Africa there are numerous examples of the effectiveness of this model – even if many of the existing ‘partnerships’ have not actually been formalised. Take for instance the co-operation between the South African Police Service and the local security industry. There is no doubt that the latter play an important role in combating crime, the incidence of which would be much higher without the security industry’s intervention.

Transport, municipalities, education and health care are just some of the other areas where PPPs can, and already do, make a significant difference. Certainly the government recognises the contribution that PPPs can make to alleviate poverty, and improve infrastructure and service delivery. All indications are that this model will play an ever greater role in the future, even though the government’s well-documented desire to form close PPPs has placed it on a collision course with trade unions, which would rather have government focusing on building capacity in the public sector than forming partnerships that lead to outsourcing, which could result in retrenchments.

In his 2010 budget speech, minister of finance, Pravin Gordhan, reported that government will “continue to broaden the use of public-private partnerships in the health sector, in particular to improve our hospital system”. And Free State University rector, Jonathan Jansen, advocates PPPs as a solution for the country’s ever deepening education crisis.

But one of the big issues that could inhibit the formation of PPPs is the potential mismanagement of funds, which could be the deal breaker for the private sector. Unfortunately, it’s sad but true that the shadow of corruption that taints many public departments will inhibit the private sector’s appetite for PPPs.

However, the alternative risk transfer industry – and cell captives in particular – could bring to the table a regulated and ring-fenced structure that would provide the ideal platform to provide and manage the funding for PPPs. The cell captive structure also has many other facets that could enhance the PPP model; for instance, the ability to provide liability cover to contractors. Many PPP projects favour the use of black economic empowerment contractors – which often are small business that do not have access to the proper liability cover.


For further information please contact:
Herman Schoeman, MD of Guardrisk
Telephone: 011 669-1001

Issued by:
Melanie Davis, PR@Work
Telephone: 011 615-3309 / 083 225 7450