How public-private partnerships can pick up the economy post-lockdown
- The Supplementary Budget Review confirmed the devastating effect of Covid-19 on the South African economy.
- Private-public partnerships will become increasingly important as the economy starts to recover.
- Digital technologies can play a key role in enhancing the delivery and management of public–private partnerships through driving innovation, augmenting capacity and transforming business models.
If the COVID-19 pandemic wasn’t enough of an indication, the Supplementary Budget Review confirmed that this decade was off to a very rocky start for the economy. During the tabling of the special adjustment budget, Finance Minister Tito Mboweni said the South African economy is now expected to contract by 7.2% in 2020 – the largest contraction in nearly 90 years!
In a time of crisis, there’s no use in passing the buck and it will take a joint venture between public and private entities to recover the economy. The coronavirus will certainly also offer new resilience opportunities for innovators as the public-private partnership (PPP) market recalibrates, David Baxter writes on the World Bank Blog.
Fortunately, from a legislative point of view, the PPP framework and Public Finance Management Act in South Africa has been in place for years. “The timing is perfect to mobilise the utilisation of the PPP model and it is now more paramount than ever before to deliver economic growth for the public interest,” Tumi Moleke, Head of the PPP Unit at Treasury recently said.
“Public–private partnerships are by nature large-scale projects that draw on a multitude of resources,” says Vino Govender, the Executive of Strategy, Mergers and Acquisitions and Innovation at Dark Fibre Africa. “While these projects have a public-service-delivery component to them, they also deliver value to private industry partners, hence there are business- and operating-model components to them too.” The twofold value of PPPs make it a model that can build an inclusive economy that generates job opportunities and delivers affordable and quality essential services in uncertain times like these.
At the Sustainable Infrastructure Development Symposium held virtually on 23 June, President Ramaphosa also noted that economies are looking to infrastructure as one of the key sectors to stimulate economic recovery from the impact of Covid-19. Representatives from both the public and private sectors discussed how they could cooperate on infrastructure renewal projects in energy, transport, water and human settlements, agriculture, district development and also digital infrastructure.
Unlike 90 years ago when the economy experienced a similar contraction, stakeholders now have digital technologies at their disposal to make collaborations even more efficient. According to Govender, Digital technologies can play at least three key roles in enhancing the delivery and management of public–private partnerships:
1. It drives innovation
Innovation can efficiently solve problems faced by society and digital technologies play a key role in driving innovation. By bringing resources and expertise from across geographies together to work on complex projects, connectivity provides the platform for communication, collaboration and creative problem solving.
In the construction and infrastructure environments for example, building information modelling (BIM) is a digital platform that allows a multidisciplinary team to collaborate on projects rather that each one of them working on their own set of inputs independently. An entire multidisciplinary team inclusive of structural, geotechnical, electrical, surveying, IT, and building-management engineers can provide their inputs and obtain their outputs on a single building, structural, and information model so that problems can be identified and solved collaboratively.
2. It augments capacity
Capacity is linked to resources, and one of the most critical resources in large scale PPPs is time. Since these projects are largely linked to public service delivery, timing is key and regular service-delivery protests indicate just how important these services are to the livelihood of South Africans. Technologies like IoT, data analytics, artificial intelligence, digital twins, and virtual reality, can come together to deliver the management of services’ assurance and availability.
In the airline industry for example manufacturers have deployed sensors on the jet engine that obtains and sends back data in real-time. The data is analysed to identify any possible risks and to take proactive measures such as informing the pilot on what to do if a risk arises. The very same process can be applied to a power station, a dam wall, and a wind turbine. The value that digital technologies delivers is the predictive and proactive management of these assets that leads to lower total cost of ownership and higher levels of service availability.
3. It transforms business models
Digital technologies have fundamentally changed the way services are produced, purchased, and consumed. We experience this in our daily lives with services such as Gmail, online banking, Takealot.com, Uber, and Netflix, to mention a few. One of the common ways in which these services have disrupted their traditional predecessors is that they delivered a consumption-based proposition to market. Consumers were able to consume these services when and where they wanted to and only pay for what they consume.
Digital technologies have also disrupted the traditional models and introduced new consumption-based models in infrastructure businesses. As consumers, we are already experiencing such consumption models in PPP-based services such as toll roads, but these can extend into the B2B space as well.
This post was sponsored by Dark Fibre Africa and produced by BrandStudio24.