1. South Africa’s Municipal Infrastructure Investment Unit Operations, Budget & Future Direction Ms. Gugu Moloi MIIU CEO

2. Operational Overview

3. The MIIU A government intervention to:  Facilitate private sector investment in municipal services – on a controlled, sustainable basis  Help create a market in MSP services to provide advice to local governments

4. The Project Preparation Unit: How Does it Operate?  Municipality applies for MIIU aid  Questionnaire helps conceptualise project  MIIU assesses chances for success & development impacts  Formal grant agreement signed  Municipality contributes partial funding  MIIU provides quality control

5. The Project Development Process 1.Assess feasibility of MSP options 2.Council decision on option (with MIIU advice) 3.Prepare bid documents, draft contract 4.Selection of public or private partner 5.Negotiate & sign contract 6.Financial close -- begin implementation 7.Initiate contract compliance monitoring

6. Completed MSPs: Total Values ContractsValues  O&M R 142 m  O&M plus Capex R 4,575 m  Divestiture R 414 m  Corporatisation R 50 m ---------- Total R 5,181m

7. Benefits for the Disadvantaged: Direct Benefits to Households: Project Households  Harrismith water 14,222  Thabazimbi waste 3,000  Nelspruit water 42,667  Tzaneen waste 12,000  Jnb Metro Gas 6,000  Jnb Bus 355,556 Total 433,445

8. Benefits for the Disadvantaged: Indirect Service Efficiencies:  Jnb Info Tech  Dolphin Coast water  Nelspruit water  Jnb Fleet  Jnb Market  Jnb bus  Eastern Cape IT

9. Benefits for the Disadvantaged: Environmental Improvement:  Thabazimbi waste  Robertson waste  WMLC waste  Nelspruit water  Dolphin Coast water  Tzaneen waste  Jnb Metro Gas

10. Benefits for the Disadvantaged: More Revenue for Services to Poor:  Jnb Metro Gas  Jnb Rand airport  Richards Bay airport  Pretoria airport  Nelspruit water  Dolphin Coast water  Jnb Parking

11. Budget Overview

12. Budget Structure 1. Revenues (DPLG capital, MTEF, donors, interest income)

13. Budget Structure 1. Revenues (DPLG capital, MTEF, donors, interest income) minus 2. Administrative Expenditures (BOD expenses, DBSA mgmt fee, office admin.)

14. Budget Structure 1. Revenues (DPLG capital, MTEF, donors, interest income) minus 2. Administrative Expenditures (BOD expenses, DBSA mgmt fee, office admin.) minus 3. Project Expenditures (costs of investigating & preparing MSP projects)

15. MIIU Budget 1998-2000 Goals:  Establish MIIU pipeline, begin disbursements  Establish financial mgmt, reporting, auditing procedures & policies  Complete MPPP projects  Acquire & allocate USAID funding to projects

16. MIIU Budget 1998-2000 Revenues:98-99 MPPP transfer 10,690 DCD capital 12,000 MTEF allocation 0 USAID grant 0 Interest2,806 Padco reimburse 0 TOTAL 25,496

17. MIIU Budget 1998-2000 Revenues:98-9999-00 MPPP transfer 10,690 0 DCD capital 12,0008,000 MTEF allocation 0 0 USAID grant 05,400 Interest2,8062,744 Padco reimburse 0 0 TOTAL 25,496 16,144

18. MIIU Budget 1998-2000 Revenues:98-9999-00 00-01 MPPP transfer 10,690 0 0 DCD capital 12,0008,000 0 MTEF allocation 0 04,006 USAID grant 05,4002,400 Interest2,8062,7442,745 Padco reimburse 0 0 141 TOTAL 25,496 16,144 9,292

19. MIIU Budget 1998-2000 Admin Expend.:98-99 BOD expenses 13 DBSA admin fee 1,542 General admin 307 TOTAL 1,862

20. MIIU Budget 1998-2000 Admin Expend.:98-9999-00 BOD expenses 13 26 DBSA admin fee 1,5421,053 General admin 307 475 TOTAL 1,8621,554

21. MIIU Budget 1998-2000 Admin Expend.:98-9999-00 00-01 BOD expenses 13 26 26 DBSA admin fee 1,5421,0531,435 General admin 307 475 556 TOTAL 1,8621,5542,017

22. MIIU Budget 1998-2000 Project Expend.:98-99 MPPP projects 6,712 MIIU pipeline 1,619 TOTAL 8,331

23. MIIU Budget 1998-2000 Project Expend.:98-9999-00 MPPP projects 6,7121,135 MIIU pipeline 1,6195,887 TOTAL 8,3317,022

24. MIIU Budget 1998-2000 Project Expend.:98-9999-00 00-01 MPPP projects 6,7121,135 360 MIIU pipeline 1,6195,887 15,023 TOTAL 8,3317,022 15,383

25. MIIU Budget 1998-2000 Summary:98-9999-00 00-01 Revenues 25,496 16,1449,292

26. MIIU Budget 1998-2000 Summary:98-9999-00 00-01 Revenues 25,496 16,1449,292 Admin. Expend. 1,8621,5542,017 Project Expend. 8,3317,022 15,383

27. MIIU Budget 1998-2000 Summary:98-9999-00 00-01 Revenues 25,496 16,1449,292 Admin. Expend. 1,8621,5542,017 Project Expend. 8,3317,022 15,383 Surplus/shortfall 15,303 22,871 TOTAL 15,303 22,871 14,763

28. MIIU Budget 2001-2004 Goals:  Maintain MIIU pipeline, accelerate disbursements  Confirm MTEF funding  Find new donor funding  New activities: interns, success fees, etc.  Target disbursements by category

29. MIIU Budget 2001-2004 Revenues:01-02 MTEF allocation 7,000 Interest2,250 Padco reimburse 90 Success fees 1,425 Donor grant 0 TOTAL 10,765

30. MIIU Budget 2001-2004 Revenues:01-0202-03 MTEF allocation 7,0007,000 Interest2,250 500 Padco reimburse 90 90 Success fees 1,4252,000 Donor grant 0 15,000 TOTAL 10,765 24,590

31. MIIU Budget 2001-2004 Revenues:01-0202-0303-04 MTEF allocation 7,0007,0007,000 Interest2,250 500 200 Padco reimburse 90 90 90 Success fees 1,4252,0001,675 Donor grant 0 15,000 0 TOTAL 10,765 24,5908,965

32. MIIU Budget 2001-2004 Admin Expend.:01-02 BOD expenses 28 DBSA admin fee 1,579 General admin 1,768 TOTAL 3,375

33. MIIU Budget 2001-2004 Admin Expend.:01-0202-03 BOD expenses 28 31 DBSA admin fee 1,5791,735 General admin 1,7682,293 TOTAL 3,3754,059

34. MIIU Budget 2001-2004 Admin Expend.:01-0202-03 03-04 BOD expenses 28 31 34 DBSA admin fee 1,5791,7351,900 General admin 1,7682,2932,508 TOTAL 3,3754,0594,443

35. MIIU Budget 2001-2004 Project Expend.:01-02 MIIU pipeline 19,025

36. MIIU Budget 2001-2004 Project Expend.:01-02 MIIU pipeline 19,025 Concessions 29% Metros 26% Dist. councils 25% Other local councils 20%

37. MIIU Budget 2001-2004 Project Expend.:01-0202-03 MIIU pipeline 19,025 17,550 Concessions 29% 29% Metros 26% 12% Dist. councils 25% 47% Other local councils 20% 12%

38. MIIU Budget 2001-2004 Project Expend.:01-0202-03 03-04 MIIU pipeline 19,025 17,5508,500 Concessions 29% 29% 34% Metros 26% 12% 0 Dist. councils 25% 47% 53% Other local councils 20% 12% 13%

39. MIIU Budget 2001-2004 Summary:01-0202-03 03-04 Revenues 10,765 24,5908,965

40. MIIU Budget 2001-2004 Summary:01-0202-03 03-04 Revenues 10,765 24,5908,965 Admin. Expend. 3,3754,0594,443 Project Expend. 19,025 17,550 8,500

41. MIIU Budget 2001-2004 Summary:01-0202-03 03-04 Revenues 10,765 24,5908,965 Admin. Expend. 3,3754,0594,443 Project Expend. 19,025 17,550 8,500 Surplus/shortfall 14,763 3,128 6,109 TOTAL 3,128 6,109 2,131

42. MIIU Budget 1998-2004 Conclusions:  Steady pipeline growth  Strong, early capitalisation created financial foundation  Importance of consistent MTEF allocations  Critical need for new donor funding  Administrative costs rise as technical transfer begins, offset by success fees

43. Lessons Learned & Future Direction

44. Lessons Learned – toward a comprehensive strategy  Need for private investment to supplement govt infrastructure finance  PPPs vs. bonds vs. grants – needed linkages  Measuring/monitoring govt performance  Sustaining MIIU’s value to local govt: -- internships & more local staff -- success fees & revolving fund -- exit strategy & succession planning

45. MIIU into the Future: MSPs after Demarcation The Municipal Reform Challenge  Developmental local governance  Financial sustainability  Service delivery for all  Coping with a changing environment

46. Municipal Reform Strategy 1.Planning - IDPs, action plans 2.Restructuring - Utilities, agencies, PPPs 3.Performance Management - Performance-based contracting 4.Capacity Development - Learning to supervise, not implement

47. Restructuring  Budget Analysis - Match actual revenues & costs  Organisational Redesign - Match structure & function  Partnerships - Assess partnership options - Find public & private partners

48. The MIIU Role in Reform  Discuss reform strategies in IDPs  Brief clients on reform requirements  Inform clients re other support programmes  Ensure MSPs fit restructuring needs Thorough feasibility investigations Consider all options Use performance-based contracts

49. Strategic Issues 1. Free Water policy Linkages between the three spheres of government Monitoring of municipal infrastructure investments Financial support to the unit to increase impact and capacitate local governance

50. Strategic Issues - cont. 2. Implementation of applicable legislation: The Municipal Systems Act The Municipal Structures Act Pending regulations 3. Communication about MSPs (private and public) 4. Linkages with strategic programmes of govt Integrated rural strategy Urban renewal programme

51. Summary  Best-practice procedures & policies  R5.2 billion in completed MSP projects  53 active projects  Lessons learned – the need for MSPs in infrastructure finance  The role of MSPs in municipal reform

52. Thank You. For more information visit… http://www.miiu.org.za