MMANNINI ANNETTE MAHLOKO EXPLORING ALTERNATIVES OF FUNDING FOR INFRASTRUCTURE IN THE ECONOMIC DISTRESS MMANNINI ANNETTE MAHLOKO

Rev. Dr. Mmannini Annette Mahloko INTRODUCTION South Africa have a responsibility to invest in its infrastructure. Needs for infrastructure investment Solid Level of Population Growth Resources boom Competitive in the international market Maintain the quality of life enjoyed by current and future generations : sustainable economic growth . Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

Rev. Dr. Mmannini Annette Mahloko INTRODUCTION Grant More than 80% of ELM infrastructure projects, Other municipalities depend solely on MIG South Africa needs the best alternative funding model to ease the burden Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

Rev. Dr Mmannini Annette Mahloko GOVERNMENT FOCUS National, Provincial and Local sphere of Government focus. Leveraging government funds with private sector investment. Efficiency dividend that private sector involvement can bring in project delivery , and Management and/or from maximising the ability to earn a return on/of investment Tuesday, May 01, 2018 Rev. Dr Mmannini Annette Mahloko

Rev. Dr. Mmannini Annette Mahloko FUNDING CHALLENGES Current Funding Structure Both Private Sector and Government have important roles to play in infrastructure funding Adequate commercial opportunity Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

INFRUSTRUCTURE FUNDING ALTERNATIVES 1. PPP 5. Government Grant 2. Bank Term Loans MUNICIPALITIES 3. Project Bonds 4. Collective Borrowing Tuesday, May 01, 2018 Rev. Dr Mmannini Annette Mahloko

PUBLIC PRIVATE PARTNERSHIP (PPP) Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

PUBLIC PRIVATE PARTNERSHIP (PPP) Public-Private Partnership is governed by chapter 11 of the MFMA, Supply Chain Management (in part 1) and PPPs (in part 2).2 Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

Why PUBLIC PRIVATE PARTNERSHIP (PPP) A commercial transaction between a municipality and a private party in terms of which the private party: Performs a municipal function for or on behalf of a municipality, or acquires the management or use of municipal property for its own commercial purpose; or both performs a municipal function for or on behalf of a municipality and acquires the management or use of municipal property for its own commercial purposes. Assumes substantial financial, technical and operational risks. Tuesday, May 01, 2018 Rev. Dr Mmannini Annette Mahloko

Rev. Dr. Mmannini Annette Mahloko BANK TERM LOANS Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

Rev. Dr. Mmannini Annette Mahloko BANK TERM LOANS A term loan is a monetary loan that is repaid over a set period of time. Usually it involves an unfixed interest rate that will add additional balance to be repaid. Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

BANK TERM LOANS BENEFITS Process easy to facilitate Quick and easy to secure Flexible terms Amortising Bullet Term loans usually last between one and ten years, but may last as long as 30 years in some cases. Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

Rev. Dr. Mmannini Annette Mahloko PROJECT BONDS Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

Rev. Dr. Mmannini Annette Mahloko PROJECT BONDS Open up alternative debt funding avenue Strict monitoring and disclosures Higher costs and capital requirement Institutional investors participate in infrastructure Tuesday, May 01, 2018 Rev. Dr. Mmannini Annette Mahloko

Rev. Dr Mmannini Annette Mahloko PROJECT BONDS Instrumental can be fixed or floating Unsecured Competitive Pricing Tuesday, May 01, 2018 Rev. Dr Mmannini Annette Mahloko

.Rev. Dr. Mmannini Annette Mahloko COLLECTIVE BORROWING Pool Financing Joint effort by municipalities to lend funding for infrastructure projects. Joburg,Tshwane, Ekurhuleni Sedibeng, Mgolale City Tuesday, May 01, 2018 .Rev. Dr. Mmannini Annette Mahloko

.Rev. Dr. Mmannini Annette Mahloko MIG OBJECTIVES Tuesday, May 01, 2018 .Rev. Dr. Mmannini Annette Mahloko

.Rev. Dr. Mmannini Annette Mahloko MIG OBJECTIVES ■ Fully subsidise the capital costs of providing basic services ■ Distribute funding for municipal infrastructure in an equitable, transparent and efficient manner which supports a co-ordinated approach to local development and maximises developmental outcomes ■ Assist in enhancing the developmental capacity of municipalities, through supporting multi-year planning and budgeting systems Tuesday, May 01, 2018 .Rev. Dr. Mmannini Annette Mahloko

.Rev. Dr. Mmannini Annette Mahloko MIG OBJECTIVES ■ Provide a mechanism for the co-ordinated pursuit of national policy priorities with regard to basic municipal infrastructure programmes, while avoiding the duplication and inefficiency associated with sectorally fragmented grants. Provide a mechanism for the co-ordinated pursuit of national policy priorities with regard to basic municipal infrastructure programmes, while avoiding the duplication and inefficiency associated with sectorally fragmented grants. Tuesday, May 01, 2018 .Rev. Dr. Mmannini Annette Mahloko

.Rev. Dr. Mmannini Annette Mahloko MIG OBJECTIVES ■Provide a mechanism for the co-ordinated pursuit of national policy priorities with regard to basic municipal infrastructure programmes, while avoiding the duplication and inefficiency associated with sectorally fragmented grants. Tuesday, May 01, 2018 .Rev. Dr. Mmannini Annette Mahloko

.Rev. Dr. Mmannini Annette Mahloko CONCLUSION ■WITH ALL THESE ALTERNATIVE FUNDING MODELS, THE MUNICIPALITIES HAVE A RESPONSIBILITY TO FOLLOW THE PRESCRIPTS TO THE LATER. Tuesday, May 01, 2018 .Rev. Dr. Mmannini Annette Mahloko

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