Municipal master plans critical for private-sector investment

Residents’ present and future needs must be considered

14 April 2022 - 09:17
By Emeka Umeche
Once a thriving town in Mpumalanga, Standerton has been run into the ground with all its municipal services and infrastructure collapsing over the years.
Image: Antonio Muchave Once a thriving town in Mpumalanga, Standerton has been run into the ground with all its municipal services and infrastructure collapsing over the years.

Municipalities in SA come up with several plans every few years to improve service delivery.

These include integrated development, local economic development, water and sanitation, integrated transport, electricity, etc. For some municipalities, the plans are done as a malicious compliance exercise, after which the document is shelved.

In addition to the doing what is required attitude, some municipalities tend to limit the benefits of infrastructure master plans to activities that provide information for decision making regarding the location of service delivery projects, framework for development of the specific infrastructure within their region, project prioritisation and integrating their infrastructure development plans.

These are all great benefits, however, to become concrete positives, the identified prioritised projects need to be implemented over the short, medium, or long term, as identified in the master plans.

This brings the critical question of how these projects are going to be funded. It is a well-known and established fact that public allocation for infrastructure funding in SA falls short of meeting the required targets, hence the need to bring in private-sector investment.

However, the appetite for private-sector investment in public infrastructure is minimal and its growth is slow. In addition, the private sector is apprehensive over investing in public infrastructure for several reasons, and one of the key apprehensions is the lack of a detailed and well-drawn out project pipeline list. This problem could be solved via the development of a well-defined infrastructure master plan by municipalities.

Infrastructure master plans in this context specifically relates to water and sanitation, integrated transport, electricity and solid waste management. Infrastructure master plans are strategic documents that define the growth-related objectives for a municipality and identify infrastructure priorities.

In a sense, these master plans present the vision of the municipality in terms of growth and shows the necessary projects to bring the vision to fruition. These infrastructure plans identify the necessary projects required to ensure that service delivery to the community is adequate in the present while also ensuring that future infrastructure demands are being identified and prioritised accordingly.

Several factors slow down the appetite of private sector investment in public infrastructure, including lack of surety that their investment will be protected, low rate of return on projects, risk of brand damage from public perception, higher transaction costs and lack of well-defined bankable project pipeline lists.

Municipalities can directly increase private sector investment by developing financially viable project pipelines via the development of well-defined infrastructure master plans which depict the necessary prioritised project pipeline.

Even the DBSA as part of its requirement for funding infrastructure projects requires the project to be identified in the municipality's integrated development plan.

The private sector is apprehensive of fragmented project rollouts as these have a higher risk of being set aside if not properly laid out and aligned to overall municipal development. The identification and communication of viable projects, which can be presented to the private sector is a major hinderance. Infrastructure master plans provide opportunities for municipalities to communicate viable projects to the private sector in a formal way, in order to attract investment from this sector.

Infrastructure master plans must be seen as the initial step in the process of defining and prioritising projects, which could be presented to the private sector. This will ensure that these plans go beyond the stage of just being drafted and shelved but rather be viewed as a blueprint for economic development via presenting identified projects in a structured manner.

This ensures that potential investors from the private sector are aware of these projects, and the communication gap that hinders the private sector from knowledge of these projects can be curtailed.

There is evidence from other countries that where public bodies and agencies have provided appropriately developed project pipelines, which identify and prioritise projects, they have seen a notable growth in private-sector investment in infrastructure projects.

Umeche is a senior consultant at Ntiyiso Industrialisation Consulting