Socio-economic impact of public-private partnerships on rural development in the Eastern Cape Province: selected cases

Abstract

The study reflects on the socio-economic spin-offs and challenges of the public-private partnership (PPP) implemented in the Eastern Cape’s two local government metropolitan municipalities. The two metropolitan governments are characterised by two central urban points, namely East London in Buffalo City and Port Elizabeth in Nelson Mandela Bay. The Buffalo City Metropolitan Municipality acquired its metropolitan status in 2012, whereas the Nelson Mandela Bay Metropolitan acquired its metropolitan status early in 2000 (Freund, 2014:6). The study concentrates on public-private partnerships after the 1994 South African democratic dispensation in line with the National Treasury Public-Private Partnership Practice Note Number 2 of 2004. The study intends to assess the socio-economic aspects of two public-private partnerships, namely Coega and the East London industrial development zones in the Nelson Mandela Bay and Buffalo City metropolitan municipalities. The assessment is limited to socio-economic and infrastructure spin-offs resulting from the public-private partnership arrangement (the East London Industrial Development Zone (ELIDZ) and the Coega Industrial Development Zone (IDZ) in this case) entered into by the Eastern Cape Provincial Government in the geographical location of two municipal (metros) governments. Despite the introduction of the two industrial development zones’ public-private partnership arrangement in the two metropolitan regions, the metropolitans are still confronted with immense socio-economic development challenges, which have manifested in, for example high poverty levels, increased unemployment, slow local economic growth and mostly stagnant infrastructure development. In her State of the Province Address in 2007, the then Premier of the Eastern Cape Provincial Government committed to the adoption of a public-private partnership approach. For any economy to develop, critical factors such as structured infrastructure development and public-private partnership development-oriented policies could be the primary drivers of viable economies. Consequently, the adoption of the public-private partnership approach was meant to fast track the provision of services, with a particular focus on infrastructure development and rural-economic development as vehicles for socio-economic development in the province. As a result, the Coega IDZ and the East London IDZ came into existence. There was great uncertainty about the prospective success of these huge public-private partnership projects with a huge capital booster. Despite the level of uncertainty, the public-private partnership arrangement, in the form of industrial development zones, was the biggest intervention that the Eastern Cape had seen since 1994. This study follows a quantitative research method. For data collection, a structured questionnaire was disseminated to respondents at each of the metropolitans to tap into their practical experiences of their respective IDZs. Fifty (50) questionnaires were disseminated, of which 38 were returned, which accounted for a 76% response rate, making it acceptable for the analysis and interpretation of data. The data was processed using SPSS and Microsoft Excel. Consistent with the research project, the key findings reveal that both the metropolitans benefit largely from the industrial development zone–public-private partnership arrangement to the extent that project planning, development and management skills were transferred to the metropolitans’ officials for improved delivery of service. What also emerged was that public-private partnership procurement requires the South African government’s serious attention to ensure sustainable municipal socio-economic and rural economic reforms. What emerged from the findings above was that national government, provincial government and the metropolitan government need to champion public-private partnership procurement through the Public-Private Partnership Implementation Framework. This is highlighted by the fact that the PPP regulations in South Africa do not have a structured implementation plan, which, in turn, jeopardises investors’ interest in the public-private partnership arrangement.