A chapter based on this presentation would make the important contribution of portraying the thinking in civil society, particularly the new social movements in South Africa. Many of the arguments, while very contentious, are relevant, and should be engaged with. Presumably the book would also be disseminated to civil society organisations, and including this contribution might contribute to a better understanding on both sides. However, to my knowledge the paper has not been written up, and one would have to request the presenter to put some time into writing a paper that is fully substantiated, and also replies to the questions that were raised.
Approaches to delivering services in cities in sub-Saharan Africa – Karin Pearce (CEO Municipal Infrastructure Investment Unit)
This presentation emphasised that the choice is not between public or private options, but cost tariffs, and how they are paid in a sustainable way (user vs. tax payer), transparency in performance measurement, and how to overcome fiscal constraints (loans etc.). Public-private partnerships (PPPs) did not take off in the expected way. Private participation in PPPs peaked in 1997 and has dropped since. Many projects (including the Nelspruit Concession) had to be renegotiated. There has been a decline in investor appetite in PPPs, as well as grassroots opposition. Only 5% of the world’s water services are held privately.
In SA the role of the private sector is seen in lessening the fiscal burden. The Municipal Infrastructure Investment Unit (MIIU) was set up to facilitate deals for municipalities. However, there is still a substantial financial gap. The two water concessions in SA had to be re-negotiate, one of which is now successful. Investor appetite is low for various reasons. The presenter acknowledged the impact of organised labour and anti-privatisation movements. There still remains a lack of capacity within municipalities to negotiate and manage contracts. This is very similar to the experience internationally. The World Bank still believes that PPPs can work better. However, in South Africa there is renewed emphasis on public-public partnerships (though different from previous monopoly public providers). The principles of public-private partnerships are now applied to public-public partnerships, capital has to be raised in the market, and transparency and accountability are important. The idea is to compete fairly with public-private-partnerships.
The presentation also pointed to the experience of community-public partnerships, specifically in the Brazilian city of Porto Alegre. It also emphasises the need to understand the economic base, so that services and tariffs can be differentiated to different user groups. In a case like Orange Farm, there is a need to incentivise consumer behaviours. However, basic access must be guaranteed.
David Kithaki of UN-Habitat asked what has generated the demand, or is this simply assumed.
Other comments were on the Triple P (?) model, and the Dolphin Coast Agreement.
The reply was that the Dolphin Coast case seems to have been resolved. She also referred to the Mexican example, in terms of municipal bonds (?). She would welcome any suggestion for a financial solution through which people did not have to pay.
Suitability for the book
This presentation would make a very important contribution to the book, giving insights into current issues around municipal service delivery in South Africa. It is a refined response to the previous presentation, and definitely one that civil society organisations and activists must engage with. At this stage the presentation is in the form of a well-structured and fairly dense power point. I don’t think it will take the presenter much to turn this into a written chapter. She could be requested to build in some of the local examples she referred to in the presentation, that are not in the power-point. She could also expand on the Port Alegre case, and any other relevant cases from the South.
Approaches to financing service delivery in cities in sub-Saharan Africa – Reginald Max (Infrastructure Finance Cooperation, INCA)
This presentation gives a sub-Saharan Africa perspective on financing service delivery. It gives the broader context, in which national and local governments operate and finance nearly all service delivery, with a gradual recognition of private sector participation. There is still very little competition, little autonomy in financial management, and users have little opportunity to voice demands. With an increasing trend towards fiscal decentralisation, mandates of local governments are increasingly unfunded, therefore the need for local governments to find viable financing possibilities. There have been financial market reforms towards greater efficiency.
A potential solution is to attract funding resources, using the potential of the local financial market architecture (?). Sub national debt markets should be created to issue short term notes and long term bonds. The debt instruments may be municipal treasury bills, municipal treasury notes, revenue anticipation notes, revenue bonds, and general obligation bonds. Clearly this will involve conditionalities, both at the micro level (disclosure requirements, budgeting and tariff setting, etc.) and the macro level (reforms, standardisation and capacity building).
The presentation commented on the World Bank’s Local Capital Development Project, which is based on an analysis of municipalities, the financial market, and legislation and regulatory frameworks, and then recommends amendments and assesses the choice available to municipalities. Here the presentation pointed to risks, for instance that “sub national borrowers have not repaid their debts, because they believe they will be bailed out by government.” Other problems have been around untransparency of sub national borrowers, assuming governments provide guarantees. The presentation concludes with some recommendations to this World Bank project, including full participation by all stakeholders, in the context of a wider financial sector reform.