The introduction of Public-private Partnerships (PPPs) in infrastructure provision has changed the way in which governments around the world now view infrastructure provision. However, the introduction of PPPs to deliver infrastructure has not benefited the broader public.  Although SMEs are important for employment creation, inequality and poverty reduction, the participation of SMEs (small and medium enterprises) in PPP projects is very low in developing countries. This is because PPP models in developing countries are developed based on those used in developed economies, and such models ignore the socioeconomic realities facing developing countries. The objective of this study is therefore to demonstrate that PPP projects in developing countries present an opportunity for growing the SME sector and create the needed jobs and contribute to poverty alleviation. The study has found that PPP projects have the potential to develop a sustainable SME sector, as it has found that SMEs do participate in PPP projects; however, their participation is curtailed by a number of challenges such as: lack of access to finance, limited human resources, low technological capabilities, and lack of access to markets. It also found that linking SMEs to PPP projects may address some of these challenges to a certain extent, especially if SMEs provide services to PPP projects during both the implementation and the operational phases of PPP projects. It also found that PPPs have not yet been identified by the South African government as one of the initiatives that can facilitate SME development. Most focus on PPP projects is only on ensuring that they include ownership by previously disadvantaged South Africans.  The study recommends that a policy be developed that will incentivise PPP firms to use SMEs in their projects and penalise those PPP firms that fail to comply with the policy imperatives.  It went on and found that the different South African government institutional initiatives or frameworks to support SMEs seem to be adequate; however, what is needed is a cohesive approach that links all these initiatives together and ensures that they support one another.

This paper presents arguments for and against cost reflectivity and pro-poor tariff policy in South African electricity supply from a regulatory perspective. This debate has been ongoing for decades in developing countries; however, there is still no clear direction on how countries should approach these two important competing policy positions. There are those that argue that achieving cost-reflective tariffs will attract private sector investment into the electricity supply industry (ESI) that will lead to much needed competition and reduced electricity tariffs. However, there are also those who argue that cost-reflective tariffs will make it difficult to achieve government social objectives of universal access through pro-poor tariffs, as cost-reflective tariffs will be unaffordable to the majority of the population. The fundamental question is what should come first, between cost-reflective tariffs and pro-poor tariffs in a developing country context, specifically in South Africa. This paper therefore attempts to examine the real trade-offs between pro-poor tariff policies and cost-reflective tariffs. The study attempts to answer one critical question: How can the electricity sector attract local and foreign investors, without necessarily affecting government social objectives such as universal access to electricity? The study finds that electricity consumers, and in particular poor households, have historically benefited from relatively cheap electricity and that tariffs have not been cost reflective. In other words, there is a mismatch between tariffs and the underlying costs of supplying electricity in South Africa. It also finds competing expectations between poor consumers and utilities. Consumers expect to receive electricity at an affordable price, while utilities argue that a good, reliable electricity supply’s tariffs must be matched with costs. Lastly, the study finds that it is difficult to achieve cost reflective tariffs in the short run, in an environment characterised by a high number of consumers dependent on government social grants and cross-subsidies. The study therefore recommends a gradual movement towards cost-reflective tariffs, together with the introduction of competition and energy efficiency and demand side management (EEDSM), in order to minimise the impact on the poor.Keywords: Tariffs, pro-poor, cost reflectivity, electricity, consumers

Poor delivery of infrastructure leads to inefficient pricing of these assets, which is passed through to consumers. Inefficient pricing is caused by a poor selection of a funding and financing method as well as project overruns. This article used a case-study approach to investigate if South African (SA) infrastructure projects were executed efficiently. It was found that the procurement method was not a reason for inefficient infrastructure delivery. Further, SA projects overran significantly by between 5 and 58%. The case of Transnet’s pipeline project was highlighted. Two case studies (Gautrain and e-tolls) are presented to highlight issues around funding. It was found that the user-pays mechanism of funding is efficient only if there is complete transparency and communication between the user of the infrastructure and other stakeholders. Given the findings, this paper ends with policy recommendations for regulators of utilities that will ensure that consumers are protected.

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There has been an increase in the number of governments that adopted public-private partnership (PPP) as an infrastructure delivery model. However, there are still misgivings about the role PPPs play in developing countries’ economies. The objective of this study is to address the question of whether the PPP model really benefits the public. This study follows a qualitative approach based on international review of literature on PPP experiences around the world. The results of the study indicate that, the PPP model can be a good vehicle for delivering public infrastructure projects in developing countries. However, for PPPs to meet the expectations of the public sector and the citizens there are certain aspects that need to be in place i.e. transparency, accountability, optimum risk allocation/sharing, and increased competition to name just a few. If a country implements its PPP programme properly, there are massive benefits compared to the public procurement approach that may accrue to consumers and the economy as a whole. Such benefits include reduced prices, which may also increase access to services. The study has elucidated valid from invalid arguments about PPPs and has established whether the PPP model is indeed the right vehicle for delivering infrastructure projects.