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Call for KZN public, private partnership, warning of disinvestment over state of city, province

Organised business has called for greater co-operation between the private sector and the government, especially on major projects.

President Cyril Ramaphosa. File Picture.

Published May 16, 2022

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DURBAN - ORGANISED business has called for greater co-operation between the private sector and the government, especially on major projects, warning that the current situation had the potential to lead to disinvestment in eThekwini, and KwaZulu-Natal as a whole.

The sentiment was expressed when organised business met President Cyril Ramaphosa and some members of his Cabinet yesterday in a meeting organised by KZN Premier Sihle Zikalala.

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Speaking on behalf of business, the co-chairperson of the KZN Growth Coalition, Moses Tembe, said that as KZN was busy with rebuilding efforts after the floods, there were far more opportunities than challenges. He added that the business community was committed to rebuilding.

“We are of the view that huge investment could be unlocked in the private sector if we begin to look at some of the regulations we have raised with the Treasury, especially in KZN, around the funding of infrastructure, especially in municipalities. We are of the view that the private-public partnership (PPP) model as a funding model needs to be pursued more actively,” said Tembe.

In a presentation shared at the meeting, the Durban Chamber of Commerce and Industry outlined the impact of last month’s floods on businesses.

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It said that 1 152 formal businesses had sustained damage, some as a result of being in flood zones, while others were affected by blocked drains and landslides.

It said that while businesses were affected across the board, the most hard hit were the wholesale or retail trade and manufacturing sectors.

The presentation also outlined the rates income at risk in Durban due to the flooding damage – the Bayhead area had the highest income in danger.

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It also outlined the significant impact on the South Durban basin, which contributes 31% of Durban’s GDP and represents 25% of the property rates base.

“The city is likely to lose 1.5 to 1.8% of GDP due to the floods,” the presentation said.

It also said: “The current situation has the potential to lead to disinvestment in the city and province of KwaZulu-Natal.”

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It said the business sector was deeply concerned about water and sanitation issues. “Urgent intervention is needed. The lack of infrastructure maintenance of the stormwater drainage system and the canals along the south of Durban and Bayhead were contributing factors to the recent flooding.”

Tembe pointed out that business had a lot to contribute because it had a skills base that could be of assistance to the government.

In addition to this, the business community had also called for the public sector to be professionalised, saying this was crucial in building a capable developmental state. Other concerns raised by organised business include:

  • Ageing infrastructure in municipalities, especially in relation to the supply of water and electricity.
  • Crime and grime, as well as intimidation tactics being used by so-called “business forums”. Tembe said the government needed to regain the trust and confidence of the business community. In the presentation, the business community called for:
  • Rehabilitation and maintenance of key infrastructure such as canals and stormwater drainage systems.
  • A road network audit to be conducted. For the business community to be provided with early warning notifications regarding natural disasters.
  • Financial support from the national government for the city and province.

Speaking on the private-public partnership (PPP) model, University of Pretoria academic Professor Heinrich Bohlmann said that while there had been talks for the model to be pursued, it had not been implemented in the past. “What has happened is that it (the PPP model) has been pursued on a very small scale, but in recent months we have heard President Ramaphosa preaching it more,” said the academic. He added that given the lockdown and its effects on South Africa’s economy, there was greater scope for the model to be put to good use.

“The lockdown resulted in job losses for many people, and that meant that the government’s tax base shrunk massively. Bearing in mind that government projects are funded by tax, it means that some of them may take a lot to implement because there is just not enough money generated from taxes. So this is an opportune moment for the PPP model to be pursued,” Bohlmann said.

He added that such an approach would also help to create employment opportunities in a country that had a very high unemployment rate.

According to the academic, there had been instances in many countries where this approach had been used to undertake massive projects with a great deal of success.

Ramaphosa outlines action plan after floods

President Cyril Ramaphosa said yesterday that the government would help the people of the province rebuild their lives and to help business get back on their feet after devastating floods damaged infrastructure and led to loss of lives.

At a meeting with KZN organised business in Durban yesterday, Ramaphosa was joined by ministers Pravin Gordhan, Nkosazana Dlamini Zuma, Fikile Mbalula and KZN Premier Sihle Zikalala.

Chief executives of some of the biggest companies and employers in the province raised several issues including the damaged rail system and how it was adding to daily logistic expenses.

“As government, we are firmly committed to give the business community in KwaZulu-Natal all the necessary support, resources and technical capacity to recover from these catastrophic events. The KwaZulu-Natal economy is a vital part of the national economy.

“The economic reconstruction and recovery under way across the country in the aftermath of the Covid-19 pandemic cannot succeed without the swift, comprehensive and sustainable recovery of the economy of KwaZulu-Natal,” Ramaphosa said.

Ramaphosa said the Port of Durban was crucial to the national and continental economy, and progress was being made in terminal clearing, rail line water draining and reopening, stormwater jetting and the repair of sea walls.

He said capacity for port traffic had been restored and the port has handled more than 100 vessels since April 13. Tugs are all operating at full capacity.

Ramaphosa said Transnet was dealing with rail infrastructure damage but this was likely to take some time given the extent of the damage.

“A number of road repair projects have been identified with an immediate focus on the N2 and N3 highways. The necessary systems are being put in place so that those are not delayed and that they proceed as quickly as possible.”

The interruptions to rail have impacted the delivery of exports to the port, with automotive and citrus produce particularly affected.

He said discussions were under way between Toyota and eThekwini on what measures were needed to restore the Toyota plant in Prospecton to full capacity, but also to address what was needed to secure resilience for the future.

“We have had discussions in today’s meeting on measures to provide financial support to both big and small businesses in distress. It is critical that this support is mobilised as a matter of urgency to ensure that businesses can stay afloat and that jobs can be sustained.

“This disaster proved to us that we are not (that) ready to deal with natural disasters,” the president added.

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