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Published:
Last Updated:
22 Sep 2017

Value for Money: Identifying/Screening PPP Proposals in South Africa

In 1997, the South African Cabinet approved an inter-departmental task team to create a package of policy, legislative, and institutional reforms to create an enabling environment for PPPs. To facilitate this work, several pioneering PPPs were carried out by the South African Roads Agency, Department of Public Works and Correctional Services, South African National Parks, and two municipalities. The lessons learned from these preliminary projects helped in the development of a strategic framework for PPPs in 1999. The Parliament of South Africa passed the Public Finance Management Act (PFMA) in 1999. In 2000, the National Treasury enacted Treasury Regulation 16 in terms of the PFMA, which outlined the definitions and functions of PPP. This led to the establishment of the PPP Unit within the National Treasury and the publication of the Public Private Partnership Manual in 2004, which has since been updated to reflect changes to law and policy.

The Government Technical Advisory Centre (GTAC) provides specialized analytical support to the National Treasury for the assessment of proposed large infrastructure investments. Project appraisals of megaprojects are undertaken to determine the likely economic and financial viability of the project, particularly where financial support is being requested from the fiscus. GTAC also performs related types of analysis, such as the likely impact of infrastructure investments on the financial sustainability of public utilities, financial cost comparisons of different elements of proposed investment programs, and potential funding mechanisms for infrastructure projects and programs. GTAC’s aim is to ensure that support is provided to the government in identifying public projects that offer the greatest value for money and contribute the most toward promoting economic growth and social welfare. The Capital Projects Unit has developed in-house methodologies for assessing projects and programs.

GTAC seeks to assess proposals based on their value for money. Value is the economic and social activities the infrastructure supports, and money is the cost to put the infrastructure in place. The Capital Projects Unit assesses a proposal’s value for money by examining its social and economic context, demand, viability, financial aspects, and project deliverability.

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