Ina Opperman

By Ina Opperman

Business Journalist

SA can avoid prescribed assets if public private partnerships are managed better

Greater focus on public private partnerships can help to address the country’s multiple challenges, the DG of the National Treasury says.

If government manages public private partnerships better, then it can help the country to avoid prescribed assets.

Dr Duncan Pieterse, director-general of the National Treasury, says solutions for the challenges of the ongoing energy crisis, a deteriorating and unreliable logistics system, failing infrastructure and climate risks requires the technical and financial support of the private sector.

He was commenting on this year’s National Budget speech when minister of finance, Enoch Godongwana, said the private sector will be allowed to invest in infrastructure provision without the need for any form of prescription.

Pieterse pointed out that with the state’s plans to launch unique infrastructure instruments, driving private sector participation may not necessitate prescribed assets legislation. The term “prescribed assets” refers to government policy that requires investors, such as retirement funds, to hold a certain number of investments in government-specified assets, such as government or state-owned entities’ bonds.

“Examples of infrastructure provision include infrastructure bonds and special vehicles the private sector can use to participate in government investment.”

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Public private partnerships in the budget speech

Pieterse was a guest on the PSG Think Big webinar and the discussion centred on the topic of public private partnerships (PPPs) and their role in supporting some of the key state-led initiatives mentioned in the 2024 Budget Speech.

“The minister of finance always makes the point that we spent about 10 years trying to fix Eskom, instead of fixing the electricity sector. If we consider the latest reforms, among which the amendment of Schedule Two of the Electricity Regulation Act, the state is actively looking to attract private sector investment to drive a few important changes.”

Pieterse says it makes sense for the private sector to answer this call and from a balance sheet perspective, it makes sense for us to collaborate, whether it is to solve our transport issues or our need for energy generation.

“There is also no reason why PPPs cannot be called on to contribute towards developments in areas such as human settlements or the health sector. As the minister announced, we are calling for a ‘crowding-in’ of the private sector for this purpose,” Pieterse says.

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NHI: government must first focus on strengthening broader health care system

He also talked about the hotly contested topic of the National Health Insurance (NHI) Bill and more specifically, the R1.4 billion allocation to an NHI grant and explained that government will be taking a phased approach to its rollout.

“As a starting point, the focus for government must be on using its resources to strengthen the broader health system in preparation for the health system that we will need as a country in the future,” he said.

At a grassroots level in hospitals and within the existing healthcare systems, Pieterse says government must find ways to ensure that it can provide better value for money.

“Once this issue has been addressed, National Treasury, in collaboration with the department of health, can move on to consider how to support the move to a national health system from a fiscal perspective.”

Pieterse says Treasury will have to consider what the implications of the NHI will be for the overall fiscal framework and how to implement the various initiatives in a way that does not compromise what is envisioned through the budget.

“This will involve a lot of technical work and collaboration within inter-governmental departments and stakeholders. While the work is ongoing, it is indeed well underway.”

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