Public Sector November 2024

PUBLIC SECTOR

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SHAPING SOUTH AFRICA’S PUBLIC SERVICE

Re ecting on 30 years of democracy, this inaugural issue explores the state of the country’s public service to determine what is working and what needs to change. Public-private partnerships have played a pivotal role in South Africa’s development. Collaboration between sectors is essential for sustainable progress, from infrastructure projects to the energy transition and the vision for smart cities. Success stories, such as the Gautrain and the N3 Toll Concession, show the impact of effective partnerships. At the same time, ongoing projects such as Lanseria’s smart city initiative not only highlight the potential for

8 PUBLIC-PRIVATE SECTOR PARTNERSHIPS

How PPPs have helped the government deliver public services.

13 PROFILE – THE GAUTRAIN

We look at the lessons to be learnt from the successful Gautrain Rapid Rail project.

THE ENERGY TRANSITION

With government capacity and funding running thin, public-private partnerships are essential to expediting a just energy transition.

Rebuilding the public sector to deliver on its constitutional promise requires greater accountability, governance and leadership.

ROOTS OF THE WATER CRISIS?

We determine whether South Africa’s water woes result from ageing infrastructure or poor management.

innovation in urban planning, but also inspire us about the possibilities for the future.

However, inadequate public infrastructure investment and the country’s water crisis, continue to threaten progress. Addressing these issues requires accountability and more robust governance. It’s crucial to commit to long-term, sustainable solutions and strong leadership to overcome these challenges.

It’s clear that a united approach, driven by innovation, partnerships and accountability, will shape the next chapter of South Africa’s journey.

Editor, Busani Moyo

20

EV TRANSPORT MARKET

Is South Africa really ready for an EV-future? 27

DIGITAL TRANSFORMATION

Embracing cloud-based infrastructure and arti cial intelligence. 28

THE SMART CITY

We explore how South Africa’s digital transformation is advancing.

EMPLOYMENT EQUITY

Unpacking the Employment Equity Act amendments. 33

THE EMPLOYMENT RELATIONSHIP

A look at the impact and implications of the NHI on employee bene ts and the employer-employee relationship.

Challenges and opportunities in public infrastructure investments.

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THE IMPACT OF PUBLIC-PRIVATE PARTNERSHIPS ON SOUTH AFRICA’S DEVELOPMENT

Public-private partnerships have been crucial in alleviating pressure on the government to deliver public services in the past 30 years, writes BUSANI MOYO

South Africa’s journey towards inclusive social transformation driven by inclusive economic growth continues to unfold. One of the most important pillars of the country’s aspirations has been the rise of public-private partnerships (PPPs) – an important tool for dealing with some of the country’s stubborn challenges, including poverty and inequality.

PPPs have not just been a catalyst for development, but have also played a massive role in bridging the gaps in government capacity, availability of resources and technical expertise. Over the past 30 years, PPPs have played an instrumental role in nurturing innovation, creating jobs and ensuring the general public, including in under-resourced areas, has access to essential services. Notwithstanding, the effectiveness and equity of these partnerships remain a source of debate, as questions around transparency, accountability and long-term sustainability still shape the discourse of their impact on South Africa’s development path.

We look at the role of public-private partnerships across different government spheres, showcasing South Africa’s signi cant achievements in the past 30 years through PPPs and emphasising their contributions to service delivery and development.

THE ROLE OF PPPS IN DELIVERING INFRASTRUCTURE AND SERVICES

It is generally assumed that PPPs can signi cantly facilitate the delivery of services and infrastructure, but is this the case? Lucien Pierce, a Phukubje Pierce Masithela Attorneys director, responds: “PPPs provide a well-structured and regulated method of delivering services and infrastructure in South Africa.” He adds: “They provide an element of certainty as to how a project will be managed and have clear

guidelines on the types of human resources and skills required to improve a project’s prospects of success. PPPs, therefore, improve the prospects of citizens receiving better value for money because of the reduced prospects of failure and the better management of taxpayers’ money.”

“PPPS, THEREFORE, IMPROVE THE PROSPECTS OF CITIZENS RECEIVING BETTER VALUE FOR MONEY BECAUSE OF THE REDUCED PROSPECTS OF FAILURE AND THE BETTER MANAGEMENT OF TAXPAYERS’ MONEY.” – LUCIEN PIERCE

Jackwell Feris is a director in the Dispute Resolution Practice and the sector head of Industrials, Manufacturing and Trade at Cliffe Dekker Hofmeyr (CDH). CDH focuses on providing legal support to clients within the African continent. Feris co-authored the article “Unlocking South Africa’s Infrastructure Development and Investment Opportunities: Amendments to the PPP Regulations”, with Keloabetse Seleka, a senior associate responsible for dispute resolution at the same rm. Asked about the role of PPPs in delivering services to the public, Feris says: “PPPs are a useful tool that can be used by the government to ensure delivery of basic services, such as water, electricity and healthcare, by concluding contracts with the private sector for public infrastructure projects such as the development of new roads, hospitals and energy.” He adds: “When planned properly, PPPs can provide for one industry, such as transport, but can also indirectly contribute to other markets such as trade and manufacturing.”

Jackwell Feris

Lucien Pierce

Gautrain Rapid Rail project

N3 Toll Road route

Unlocking South Africa’s Infrastructure Development and Investment Opportunities: Amendments to the PPP Regulations

RE AD

HAS SERVICE DELIVERY IN SOUTH AFRICA BENEFITTED FROM PPPS?

If PPPs have a role in delivering public services and infrastructure, the best way to measure their success in this role would be through analysing what has been achieved. In this regard, Feris says: “If we look at PPPs over the past 30 years, it would be hard to argue that they haven’t contributed towards service delivery in South Africa.”

Pierce also agrees that South Africa has indeed bene tted from PPPs. He notes: “PPPs have certainly assisted with service delivery. Consider the Chief Albert Luthuli Hospital PPP: it has been critical to ensure proper planned replacement and maintenance of medical equipment and IT systems.”

If Feris and Pierce believe South Africa has successfully leveraged PPPs for service delivery, reputation management strategist and media commentator Solly Moeng is not too convinced. “We haven’t been successful in leveraging private-public partnerships (PPPs) for service delivery,” he comments. Moeng supports his reasoning: “The prevailing approach from our governing party involves expecting the private sector to provide all the capital while retaining complete control over management and decision-making, which is fundamentally awed.” He gives the example of the “mishandled SAA-Takatso deal”, which collapsed in March 2024, resulting in the Takatso Consortium walking away without purchasing 51 per cent of the national airliner.

THE FUTURE OF PPPS

While there may have been some challenges in tapping the full potential of PPPs in South Africa, these partnerships have been shown to be effective in alleviating government pressure regarding infrastructure development and service delivery. Asked what the future of

SUCCESSFUL PPPs IN THREE DECADES

The proposal that public-private partnerships (PPPs) in South Africa have been, to a large extent, effective is relatively easy to support. Here are some examples of the most successful PPPs initiated in democratic South Africa.

N3 TOLL ROAD

“I think one of the earliest PPPs in our democracy that has done very well for several reasons, is the N3 Toll Road –concluded in 1999,” says Jackwell Feris, a director in the Dispute Resolution Practice and sector head of Industrials, Manufacturing and Trade at Cliffe Dekker Hofmeyr.

“The N3 Toll Road is a crucial transport node linking the Durban Harbour Port to Gauteng and covers four of South Africa’s provinces. The N3 Toll Road is a real-life example of a successful PPP that has contributed to substantial economic growth and alleviation of poverty through infrastructure development, creating job opportunities for all types of businesses that operate on the N3 Toll Road.”

GAUTRAIN RAPID RAIL LINK

The Gautrain Rapid Rail Link is one of the most revolutionary PPPs in democratic South Africa. It was made possible by a collaboration between the Gauteng Provincial Government and Bombela Consortium. The project aimed to address the congestion on Gauteng roads and encourage more people to use public transportation. It improved mobility between Johannesburg, Pretoria and OR Tambo International Airport and contributed to economic development through job creation, infrastructure investment and environmental sustainability.

PPPs looks like, Feris responds that despite legislation-related uncertainties “the government has identi ed PPPs as a tool to support and revive the economy and has shown a keen approach to PPPs for the future”. He says proof of this is in President Cyril Ramaphosa’s speech in Parliament on 18 July 2024, in which he said: “We are simplifying the regulations on public-private partnerships to enable

IN KWAZULU-NATAL

Lucien Pierce, a director of Phukubje Pierce Masithela Attorneys, refers to the “Inkosi Albert Luthuli Hospital in KwaZulu-Natal where a private party was appointed to oversee noncore functions such as the planned replacement and maintenance of medical equipment and IT system”. A document produced by the Wits Business School on behalf of the National Treasury PPP unit says: “This was the first PPP to run its entire course under the regulations issued in terms of the Public Finance Management Act (PFMA) 1999.”

RENEWABLE

ENERGY

INDEPENDENT POWER PRODUCER PROCUREMENT PROGRAMME

Feris identifies the Renewable Energy Independent Power Producer Procurement Programme “as a globally recognised best–practice public-private partnership initiative”. He adds: “Since its inception, the programme has significantly changed the energy and economic landscape of South Africa by ensuring the availability of energy and guaranteeing socioeconomic development.”

greater investment in both social and economic infrastructure development.”

Moeng believes that the success of PPPs in the future depends on the government changing its ways. “Effective PPPs require the government to allow the private sector to contribute capital and appoint competent individuals for service delivery without political interference. There is simply no alternative path for success,” he concludes.

INKOSI ALBERT LUTHULI HOSPITAL

Wind turbines, Western Cape

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KEY INGREDIENTS OF A SUCCESSFUL PUBLIC-PRIVATE PARTNERSHIP

Lessons from the Gautrain Rapid Rail project

MWANGI GITHAHU spoke to experts and examined some of the critical elements that ensured the success of the Gautrain Rapid Rail Link project

Asuccessful public-private partnership (PPP) hinges on a set of critical elements that ensure the alignment of interests, ef cient implementation, and long-term sustainability of a project.

The Gautrain Rapid Rail project, a strategic asset valued at R45-billion, is one of Africa’s biggest PPP transport-interest infrastructure ventures and is often regarded as a benchmark for successful PPPs in South Africa.

The Gautrain project is also the rst rapid rail transport system implemented in South Africa. Given its scope and novelty, sound management of all different parts of the project is required.

Gautrain Management Agency (GMA) chief executive Tshepo Kgobe says although the Gautrain was planned and implemented as a transport project, it is also an economic development project.

It focuses on reaching the objectives of stimulating economic growth and job creation, promoting investment and new development.

SUCCESS FACTORS

Regarding the PPP aspect of the Gautrain Project, Kgobe points out that no PPP would be viable without sound contract management.

“Effective contract management in any large business undertaking equates to the effective running of the business. This is because the business contract functions as a blueprint of every aspect of the business.”

Every PPP contract management process entails challenging features unique to the PPP in question.

Kgobe explains: “In the case of the Gautrain, the effectiveness of the different nature of the functions performed during the development and operational periods posed the challenge for contract management. Changes had to be made to reach the nal destination.”

Meanwhile, Gautrain’s current operator concession expires in March 2026 – end of its 19.5-year term.

Kgobe says the costs of establishing this long-term asset will have been paid off by then, allowing the post-2026 Gautrain project to reap the economic bene ts.

Gavin Noeth, senior consultant infrastructure and projects at CMS South Africa, a full-service commercial law rm, says the rigorous application of the procurement law framework contributed to the success of the Gautrain Project’s PPP.

“The Gautrain Management Agency (GMA) had excellent management and appointed experienced transaction advisors. Most importantly, there was the political will to get the project done and it was properly managed.”

Noeth adds that ethical conduct and integrity, both within procuring institutions and bidders, are vital as they reduce, if not eliminate, corruption and incompetent bureaucrats.

With regard to broader lessons applicable to other PPPs in South Africa, Noeth says if, over the last 24 years, procuring institutions had learnt how to follow and apply the regulations instead of avoiding them or seeking shortcuts, PPPs today would run like clockwork.

“The early rounds of the Independent Power Producer (IPP) procurement programme were successful for the same reasons as the Gautrain. That is evidence the PPP regulatory regime works if followed properly.”

Unitrans People senior business development manager Bazil Govender says: “Public-private partnerships formalise the much-needed collaboration between the government and the private sector, bringing all stakeholders to the table.

“This approach eliminates fragmentation, allowing everyone to work towards a common goal while achieving commercial, social and transformation objectives.”

Govender adds that while neither the government nor the private sector had the complete resource capacity to implement the necessary solutions independently, the power lay in working together.

KEY CHARACTERISTICS OF A PPP

According to the National Business Initiative, an independent business movement of nearly 100 South African and multinational member companies, the critical characteristics of a public-private partnership include:

• A long-term contract between the public and private sector for a clearly defined project (contracts are typically 5 to 30 years in duration).

• Private sector involvement in design, construction, financing and implementation.

• The private party sources most or all of the finance required.

• Payment to the private party occurs based on agreed-upon outputs related to the provision of services and infrastructure.

• Requires the transfer of risk from the public to the private sector.

“THE GAUTRAIN MANAGEMENT AGENCY HAD EXCELLENT MANAGEMENT AND APPOINTED EXPERIENCED TRANSACTION ADVISORS. MOST IMPORTANTLY, THERE WAS THE POLITICAL WILL TO GET THE PROJECT DONE AND IT WAS PROPERLY MANAGED.” – TSHEPO KGOBE

Tshepo Kgobe

Gavin Noeth

Bazil Govender

THE POWER OF PARTNERSHIPS IN THE ENERGY TRANSITION

With government capacity and funding running thin, public-private partnerships are essential to expediting a just energy transition, writes ANTHONY SHARPE

Although the immediate threat of load shedding has receded, at least temporarily, South Africa is by no means out of the dark and smoky woods of its energy crisis. Years of mismanagement, underinvestment, corruption and political meddling have left the country facing a considerable dilemma: the desperate need to keep the lights on to stem the damage to people’s livelihoods and the economy while also decarbonising the energy sector.

This is no mean feat. Electricity Minister Kgosientsho Ramokgopa estimated that load shedding cost South Africa’s economy around R1.6-trillion in lost goods and services production in 2023 alone, along with 860 000 jobs in a country with staggering unemployment. Eskom claims it spent

R1.1-billion on diesel in April this year. Home and business owners have increasingly turned to solar power, collectively spending R65-billion of their own money to install more than 4.4GW of rooftop solar systems, according to Mark Swilling, professor and co-director of Stellenbosch University’s Centre for Sustainability Transitions. Then there’s the fact that South Africa is the largest polluter in Africa, mainly because Eskom is the world’s largest single emitter of sulphur dioxide, according to the Center for Research on Energy and Clean Air, exceeding the total power sector emissions of any country except India.

To add to all this, public debt has spiralled out of control, with the government desperately short of the capital needed to implement key infrastructure repair and expansion projects. This means alternative investment is desperately needed.

“IPPS HAVE BEEN VITAL IN DIVERSIFYING THE ENERGY MIX AND REDUCING CARBON EMISSIONS IN SOUTH AFRICA.” – PROFESSOR DANIELLE NEL-SANDERS

A HYBRID MODEL

Public-private partnerships (PPPs) have formed an integral part of the energy landscape for quite some time now, albeit in a hybrid form, says Professor Danielle Nel-Sanders of the University of Johannesburg’s School of Public Management, Governance and Public Policy.

“Independent power producers (IPPs) form part of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). They differ from traditional PPPs in that the REIPPPP is an energy auction, so it doesn’t fall under the standard de nition for a PPP as provided by the National Treasury.”

With the REIPPPP now in its seventh bidding window and more than 100 projects completed so far, Professor Nel-Sanders says IPPs have been vital in diversifying the energy mix and reducing carbon emissions in South Africa. “It also has an important economic impact as fuel price variations don’t impact the quantity of electricity produced or the performance of the system. Moreover, the programme links with the Sustainable Development Goals.”

The hybrid nature of IPPs is critical because it creates less work for a cash-strapped and inef cient government. “In a conventional PPP, the private sector would develop the asset or infrastructure over a 10–25-year period, at the end of which it would be handed over to the public sector,” explains Professor Nel-Sanders. “In the IPP model, the asset is managed by the private sector, while the product – the electricity – is transferred to the grid. That’s important because if the public sector took over these assets, local government would be tasked with maintaining them as they’re at the coalface of service delivery – they don’t have the capacity to do this.”

LIBERALISATION ON THE RISE

The lack of government and Eskom capacity has been the mother of increased liberalisation for the renewable energy sector. Ulrich Terblanche, a senior analyst for large-scale renewable energy systems at GreenCape, says the market has recently opened up for greater private-sector participation in the form of energy projects where power plants are built for private off-takers. “These plants are not running through

PUSHING THE POLICY AND PARTNERSHIPS ENVELOPE

Achieving a swift and just transition will require innovation not just in financing and partnerships, but also in the broader policy environment governing our power regime.

Professor Danielle Nel-Sanders of the University of Johannesburg says giving renewable energy a policy space was a good start, but more urgent movement on this is needed – this can help facilitate broader, more inclusive partnerships.

“The Indlulamithi South Africa Scenarios 2030 emphasise that the best-case scenario for South Africa would be a grassroots approach.

The REIPPPP (Renewable Energy Independent Power Producer Procurement Programme) is a partnership between the government and the private sector. It would be beneficial to open up to more multistakeholder partnerships where you involve communities too,” says Professor Nel-Sanders.

the REIPPPP, and the power generated is not sold to Eskom; it’s private entities wheeling electricity through the Eskom network to a private company that pays for it directly.”

Despite being a direct sale, these private entities must comply with the regulatory authorities, such as the National Energy Regulator of South Africa (NERSA), and are committed to using Eskom’s transmission network. However, Terblanche says this re ects the expansion of liberalisation from generation to trading, with private electricity traders registering with NERSA, effectively increasing competition for Eskom.

THE TRANSMISSION QUESTION

One major bottleneck facing the expansion of renewable energy across the country is the transmission grid. This is because the grid was designed to convey electricity from large, centralised power plants, primarily located in

Mpumalanga, to other areas of the country. On the other hand, renewable energy is much more decentralised with most new generation capacity being built in the Western Cape, Northern Cape and Eastern Cape. With a reported expansion backlog of some 14 000km, Eskom needs more capacity and the billions needed to build out the grid to the degree required to connect the proliferation of large-scale renewable projects.

“It’s not just that there are solar plants in other provinces,” says Terblanche, who points out that with solar photovoltaic technology costs having dropped, it’s viable to build plants in areas with less sunshine, such as Mpumalanga, because there is grid availability. “However, the network as a whole is quite an outdated system. As an economy grows and shifts, you need to upgrade and maintain power lines. But as Eskom will nd it very dif cult to access loans, they’re looking at how they can fund this through the private sector.”

Historically, the private sector has not been involved in grid expansion, so the long-term implications are unknown. For this reason, the government has been collaborating with the International Corporation on nancing solutions to enable private-sector investment in this eld without negatively impacting Eskom or the scus.

“When for-pro t companies get involved, they naturally have to nd a way to make money,” says Terblanche, “so the big question becomes affordability. People here are very cognisant that a privately owned transmission network has a major risk of cost escalation. So, you still want the national transmission company to own the infrastructure, even if it’s been funded or built by a private entity, but then you need to look at whether or not tariffs have to be increased to pay private entities for the use of the infrastructure, for example.”

Terblanche points out that this shift will prompt a signi cant rethink of tariffs. “Should the electricity price be broken up between paying for generation, distribution and transmission costs? Regardless, restructuring tariffs will be essential for now, not just how we pay for electricity, but also how we monitor the impact of these different aspects of the electricity network.”

“THE NETWORK AS A WHOLE IS QUITE AN OUTDATED SYSTEM. AS AN ECONOMY GROWS AND SHIFTS, YOU NEED TO UPGRADE AND MAINTAIN POWER LINES.” – ULRICH TERBLANCHE

Professor Danielle Nel-Sanders

GREATER ACCOUNTABILITY IS IMPERATIVE

Accountability in the public service must be a human capital imperative if South Africa is to rebuild the public sector adequately, write IMRAAN MAHOMED and PHETHENI NKUNA , directors in the Employment Law practice at Cliffe Dekker Hofmeyr

Civil servants are meant to be the engine room of Batho Pele. However, the passage of time has shown that the lack of accountability has seen this principle become a platitude.

The Auditor-General’s 2022/2023 Annual Integrated Report highlights the need for the public service to deliver on its constitutional promise by embracing a culture of performance, transparency, accountability and integrity. The Auditor-General (AG) emphasised the need to instil accountability across all disciplines. The AG intends to implement a culture shift charter and develop an accountability ecosystem to drive appropriate behaviours and actions. One of the bene ts of an ecosystem is the widening of the currently narrow lens.

Post-apartheid, South Africa’s bureaucracy grew exponentially but the expansion did not translate to ef ciencies. In some areas of the economy, there has been total collapse. The state urgently needs to focus on accountability.

our public institutions. It demands political, line management and HR specialist co-operation, anchored by strategic and general management. Accountability calls for public servants to be answerable for their actions and responsible for the consequences when duties and commitments are not met. Addressing professionalisation alone is insuf cient – professionals must also be accountable. This is what drives the private sector and its success globally.

Accountability should not be restricted to reporting mechanisms and investigation procedures but must encompass the obligation that public servants and institutions provide reasons for their actions (or inactions).

WHAT IS NEEDED?

The National Development Plan: Vision 2030 acknowledges that a capable, ethical, and developmental state is realisable only with a professionalised public service workforce and improved leadership, governance and accountability. Professional capability implicates both quali ed employees and robust systems and processes. The public service must now get to a point of existence as a service and not be beholden to the political head. There has been con ation at all levels of government and in most state-owned entities (SOEs) between the political head and the operations. While the political heads would be responsible for policy development, the implementation must be left to the technocrats and professionals employed. This calls for a level of autonomy that will enable professionals to deploy their technical and business pro ciency.

Sanctions and enforceability are imperative. Public servants cannot be answerable without consequences where they fall short. There must also be institutional reform that will insulate consequence management from political interference. Consequence management must be decisive, swift and, of course, within the law.

The Zondo Commission identi ed the “improper in uence over appointments and removals” as a key element in state capture. Meaning that accountability in the space of human capital was stripped out with palpable effects.

Further education is also key in ensuring improvement in public sector performance and ensuring existing civil servants meet basic requirements and continue to do so throughout their careers.

The Zondo Commission recommended the establishment of a body tasked with the

identi cation, recruitment and selection of SOE board members, CEOs and CFOs. Should this recommendation carry as government forges ahead with establishing a holding company for SOES, which will be responsible for governance, nancial management and remuneration standards, there must also be a right-sizing of the public service. There is a need to review existing and develop t-for-purpose performance management systems. Reforming the approach to disciplinary processes is also paramount. The public sector must exit restrictive collective agreements with organised labour that tie it to unnecessary lengthy and formalistic disciplinary and poor performance management processes.

It is high time the state embraces the spirit of the Labour Relations Act (LRA), 1995 to “decriminalise” internal processes to achieve the intent of the law and consequently save taxpayer money. Part of the broader conversation involves tough decisions around automating standard civil tasks and embracing the fourth industrial revolution.

The reality is that we have already been thrust into an evolving technological economy and must adapt the public service so that it truly achieves Batho Pele and nothing less.

Effective human resources management is a prerequisite for the overall success of

ACCOUNTABILITY CALLS FOR PUBLIC SERVANTS TO BE ANSWERABLE FOR THEIR ACTIONS AND RESPONSIBLE FOR THE CONSEQUENCES WHEN DUTIES AND COMMITMENTS ARE NOT MET.

Imraan Mahomed

Phetheni Nkuna

WHAT ARE THE ROOTS OF SOUTH AFRICA’S WATER CRISIS?

Are South Africa’s water woes down to ageing infrastructure or simply poor management, asks TREVOR CRIGHTON

South Africa is a water-scarce country where every drop is precious. Yet, in 2022, the cost of nonrevenue water – water produced but “lost” before it reaches the end consumer – was estimated at 40–50 per cent of supply, costing the country R15–20-billion.

Municipal water and sanitation engineer Lubabalo Luyaba says it’s important to differentiate between national and municipal water infrastructure when examining the problem.

“National infrastructure is operated and owned by the Department of Water and Sanitation (DWS) and Water Boards and typically referred to as ‘bulk infrastructure’ that supplies industry, agriculture and municipalities, not households,” he explains. “Municipal water infrastructure, operated and owned by the 144 municipalities, is what affects us as end users, and the two should not be ‘lumped together’.”

MANAGEMENT VERSUS MAINTENANCE

infrastructure is mainly behind our water challenges. Poor management refers to the entire infrastructure life cycle – planning, construction, operation, maintenance, upgrades and refurbishment,” he says.

“The reliability of recently constructed systems – typically in lower-income areas – is generally worse than older systems in metros and secondary cities. If ageing infrastructure was the problem, why are many relatively new activated sludge wastewater treatment plants performing as badly as older plants? Look at water losses, whether physical or apparent, they are not highest in older suburbs or municipalities with older infrastructure. They are rampant in areas where the system is not maintained.”

experiencing increased and more prolonged water outages and/or unreliable water supply, ageing infrastructure, which has been neglected and unmaintained over the past couple of decades, is one of the predominant causes,” she says.

Professor du Plessis explains that an estimated R330-billion investment will be required for South Africa’s water sector over the next 10 years, including major infrastructure refurbishment and improved maintenance.

“If we look at the current state of the City of Johannesburg’s and eThekwini’s water supply infrastructure, it needs investment within the medium term to avoid serious de ciencies. In most major urban areas, the water supply systems have been operated at full capacity and will not be able to meet growing demands unless proactive measures are taken to decrease consumption, refurbish critical components of the systems and expedite key bulk water augmentation projects that have been delayed,” she says.

Luyaba believes that ageing municipal water infrastructure is not behind most or many of the problems, though it remains an issue that must be addressed. “I think poor management of

University of South Africa Associate Professor Anja du Plessis, a water management expert, says the causes of various water challenges across the country are context-speci c and vary in magnitude. “In the case of the major metropolitan areas within Gauteng that are

“IN MOST MAJOR URBAN AREAS, THE WATER SUPPLY SYSTEMS HAVE BEEN OPERATED AT FULL CAPACITY AND WILL NOT BE ABLE TO MEET GROWING DEMANDS UNLESS PROACTIVE MEASURES ARE TAKEN.” – PROFESSOR ANJA DU PLESSIS

FAST FACT

Inefficiency in infrastructure delivery needs to be urgently addressed. Between 2011 and 2022, access to water only increased by 0.1 per cent (91.2 to 91.3 per cent) and sanitation by 11.5 per cent (71.3 to 82.3 per cent), despite an investment of nearly R20-billion per annum into municipal water and sanitation.

Source: “Unwilling or Unable? A critical reflection on the state of municipal water services 2019–2024”, Luyaba et al

Luyaba says, at present, the bottom line is that not a single municipality has enough money to simultaneously upgrade, operate, maintain and refurbish all their infrastructure while charging affordable and equitable tariffs. “Regardless of the original issue, it’s now a question of money,” he says.

HEALTH CONCERNS

Professor du Plessis says the systemic collapse of the country’s wastewater treatment works and the sharp rise in the number of local authorities failing to meet minimum compliance standards are also of major concern as they affect the environment and human health.

“The continued overall decline in the country’s water supply services is quite clear when looking at established trends. The ndings contained in DWS reports and ongoing research point to a culture of neglect, noncompliance and systemic collapse. Dysfunctional local municipalities and noncompliant wastewater treatment works affect distribution, supply and quality, consequently leading to all of these aspects becoming concerning challenges across the country,” she explains.

Professor Anja du Plessis

Lubabalo Luyaba

CAN SOUTH AFRICA ESTABLISH AN EV TRANSPORT MARKET?

While battery-electric trucks are ready for the market, the government can help improve public infrastructure and provide subsidies to achieve cost parity, writes RODNEY WEIDEMANN

Last year, the Department of Trade, Industry and Competition (dtic) released the Electric Vehicle White Paper Government incentives and nancial support will be directed towards the automotive manufacturing industry to support local electric vehicle (EV) production in the medium term.

Olaf Petersen, vice president of sales and marketing at Daimler Truck Southern Africa, asks whether the South African market is ready for such electri cation.

“Essentially, the market for battery-electric trucks is still emerging although there is a growing readiness to adopt this technology, as evidenced by the positive feedback from our customer trials.

“To make battery-electric trucks and any new CO2-neutral technology viable, three key factors are essential: products, infrastructure and cost parity. These factors work like a multiplication equation – if any of them is zero, the overall viability is zero.”

He notes that while manufacturers may already have the products ready for the market, the signi cant

“Essentially,

the market for battery-electric trucks is still emerging although there is a growing readiness to adopt this technology.” – Olaf Petersen

challenges in rolling out such EVs remain the issues of infrastructure and cost parity.

“Establishing the necessary charging infrastructure in any country to support battery-electric trucks cannot happen overnight. It will take time and signi cant investment. Additionally, because this is a new technology, it is currently more expensive. This is why government support is needed to incentivise the shift to CO2-neutral products through tax reductions,” adds Petersen.

INCENTIVE TO CHANGe

Greg Cress, sustainable energy and e-mobility lead for Industry X at Accenture Africa, says success in this space will result from everyone contributing rather than expecting the government and manufacturers alone to solve the challenges.

“Retailers should consider how they are attracting customers with EVs to their location by offering innovative EV charging solutions at shopping centres. Logistics and supply chain

EXTRACT FROM THE ELECTRIC VEHICLE WHITE PAPER 2023

Implementing procurement programmes for public transport, corporate fleets, yellow metal and state-owned vehicles can serve as a crucial policy tool in driving early-stage electric vehicle (EV) adoption in South Africa.

Procurement programmes are essential for stimulating demand for EVs, prompting automakers to make more EVs available in the local market. They can also facilitate the deployment of publicly accessible charging infrastructure.

companies should consider the positive impact on their bottom line that a transition to an electric delivery eet will make,” he suggests.

“Fuel retailers, meanwhile, should consider what a reimagined customer experience means at their service stations and their future loyalty strategy around EV charging. Finally, municipalities should consider developing the necessary EV infrastructure support policies for small and medium enterprises willing to invest in building suburban and rural charging stations.”

With this kind of support, Petersen says the goal of reducing CO2 emissions can be met. Battery-electric trucks will deliver far cleaner and more sustainable modes of transportation. “Additionally, these trucks offer quieter operation, contributing to reduced noise pollution,” adds Petersen.

Cress indicates that South Africa is standing at the crossroads of signi cant decisions around EVs and that over the next 12–18 months, we will have to make the right choices across all industries.

The Electric Vehicle White Paper 2023

DOW N LOAD

Olaf Petersen

LEADING AFRICA’S CLIMATE AGENDA AT COP29

The DEVELOPMENT BANK OF SOUTHERN AFRICA is playing a crucial role at the climate conference by highlighting Africa’s potential to advance to a just transition and green growth economy

As the world gathers at COP29 in Baku, Azerbaijan, Africa stands at a crossroads, facing a future shaped by profound climate challenges and opportunities. The continent, rich in natural resources and yet vulnerable to the ravages of climate change, requires a tailored response. The Development Bank of Southern Africa (DBSA), as a prominent development nance institution (DFI), is championing solutions that balance environmental sustainability with inclusive economic growth. From 11 to 22 November, COP29 will serve as a pivotal platform for Africa to raise its voice, ensuring that the unique needs of its people are not overlooked. With climate

impacts already reshaping livelihoods across the continent, intensifying droughts, ooding and rising temperatures, COP29 offers an essential opportunity to spotlight Africa’s pressing need for sustainable solutions that address both climate change and support socioeconomic progress.

As Africa transitions to a low-carbon economy, DFIs, such as the DBSA, play a key role in promoting sustainable growth and addressing socioeconomic disparities. A cornerstone of this mission is Climate Information and Early Warning Systems (CIEWS), essential for guiding adaptation strategies that help vulnerable communities build resilience against climate impacts.

DBSA SUPPORTED PROJECTS

The DBSA, a leader in climate nance, demonstrates a just transition through projects such as South Africa’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). By nancing wind and solar initiatives, the DBSA supports the country’s move from carbon fuels, cutting emissions and creating green jobs in underserved communities. The Lesotho Highlands Water Project, which supplies clean water to South Africa and generates hydroelectric power for Lesotho, further strengthens energy security and fosters regional collaboration.

Beyond renewable energy, the DBSA supports climate-resilient infrastructure and water infrastructure projects, such as irrigation initiatives that assist smallholder farmers facing unpredictable weather patterns. These investments are critical for food security and local livelihoods. In urban areas, the DBSA invests in electric vehicle infrastructure across major cities, aiming to reduce emissions, generate green jobs and improve public access to ef cient transportation.

COLLABORATION WITH AND SUPPORT FOR GOVERNMENT ENTITIES

The Development Bank of Southern Africa (DBSA) has extensive experience collaborating with all three types of local government entities: metros, secondary governments and resource-constrained towns. The DBSA recognises the unique challenges and capabilities of each sector, requiring customised responses to drive economic growth and infrastructure development.

FOCUS AREAS

1. Energy. As a leading lender in renewable energy, the DBSA supports Africa’s equitable energy transition. It finances diverse technologies, generation, transmission and distribution projects, addressing the continent’s growing energy demands.

2. Information and Communications Technology (ICT). The DBSA finances and prepares ICT projects, including international connectivity, backbone infrastructure, data centres and fintech solutions. Its investments stimulate job creation, reduce inequality and drive economic growth.

A FOCUS ON ECONOMIC GROWTH AND EMPOWERING COMMUNITIES

A just transition also addresses socioeconomic challenges that disproportionately impact African communities. Integrating CIEWS is vital to this approach as accurate climate data enables decisions that directly bene t those most at risk. The DBSA’s focus on clean energy, skills development and community initiatives reinforces its commitment to ensuring all Africans bene t from a sustainable future.

At the climate conference, which is currently underway, the DBSA is advocating for Africa’s potential as a key player in the global green economy. Africa’s abundant solar and wind resources position the continent as essential to the low-carbon transition. Realising this potential requires collaborative action among governments, businesses and communities. By encouraging policies linking climate action with social equity, the DBSA aims to extend the green economy’s bene ts

3. Transport. The DBSA pursues infrastructure investments in bridges, roads, bus stations, railways, airports and seaports. The support enhances regional integration, socioeconomic development and global competitiveness.

4. Health. The DBSA finances public and private healthcare infrastructure projects, prioritising sustainable development and alignment with the Department of Health’s policies. Its focus includes hospitals, clinics and healthcare services in rural communities.

5. Education. The DBSA funds education sector projects, encompassing private and public initiatives. Collaborations with other entities address infrastructure challenges, student housing and online learning platforms.

6. Water and sanitation. The DBSA offers financial and nonfinancial solutions to address South Africa’s water and sanitation infrastructure challenges. Its programmes promote water reuse, reduce nonrevenue water and support private sector participation.

across Africa, enhancing public health, economic growth and quality of life. Climate nance is crucial to safeguarding Africa from climate risks. Nearly half of Africa’s least-developed countries lack multihazard early warning systems, leaving them vulnerable to climate disruptions. With the support of CIEWS, the continent can make informed decisions in areas such as water security and infrastructure, which are critical to achieving the Paris Agreement and Sustainable Development Goals.

In collaboration with the Global Water Partnership, the DBSA is advancing climate-resilient water infrastructure across Africa. By mobilising public-private resources, the DBSA supports the deployment of CIEWS, empowering communities to proactively address climate risks. This co-operative approach links nance with climate action and prioritises community engagement, ensuring sustainable, locally relevant solutions.

COP29 OFFERS AN ESSENTIAL OPPORTUNITY TO SPOTLIGHT AFRICA’S PRESSING NEED FOR SUSTAINABLE SOLUTIONS THAT ADDRESS BOTH CLIMATE CHANGE AND SUPPORT SOCIOECONOMIC PROGRESS.

SERVICE OFFERING

The DBSA provides comprehensive support, including:

• Project planning and preparation.

• Financial solutions, such as credit enhancements and guarantees.

• Collaborations with development finance institutions and multilateral development banks.

• Sector expertise and advisory services.

The DBSA’s focus areas and service offerings aim to:

• Enhance regional integration and socioeconomic development.

• Drive economic growth and competitiveness.

• Improve access to essential services, such as healthcare, education, water and sanitation.

• Support sustainable development and infrastructure growth.

By partnering with the DBSA, local governments and private sector entities can access expertise, funding and support to unlock Africa’s growth potential.

As global climate efforts align with Africa’s needs, the DBSA is working to build a resilient and prosperous future for the continent. Through collaborative efforts, we can protect the vulnerable, amplify Africa’s voice and create a sustainable, brighter future for all.

REVOLUTIONISING PUBLIC SERVICES

By embracing cloud-based infrastructure and artificial intelligence, South Africa’s Department of Home Affairs can positively revolutionise the provision of services. By

KIMBERLEY MUTANDIRO

South Africa’s growing population has increased the demand for the Department of Home Affairs’ (DHA) services, leaving the department’s old computerised systems unable to cope.

Although the DHA has had a computerised system for some time, that system is infamous for being slow, if not of ine. This has resulted in long queues at DHA of ces nationwide, frequent errors and inef ciencies. Such situations frustrate the department’s clients, putting additional pressure on staff.

DIGITAL ERA TO THE RESCUE

The digital era and its new transformative methods have changed how businesses perform in South Africa and globally.

A 2024 report published by the Africa Policy Research Institute identi es South Africa as one of the top countries scoring above the global average in the United Nations E-government Index. This index measures the degree of a country’s advancement in providing online services, telecommunication connectivity and human capacity. South Africa’s above-average score is attributed to many public sector organisations embracing digital transformation to increase ef ciency and foster better service delivery.

TRANSFORMING THE DHA INTO DIGITAL-FIRST-CLASS INSTITUTION

The new Home Affairs Minister, Leon Schreiber, recently announced that DHA has embarked on a journey to transform into a digital- rst-class institution. Yashimita Bhana, CEO of Nihka Technology Group, an information technology rm, believes that by embracing the shift towards digital transformation, the DHA can meet the growing demand for digital services, ensuring simple and reliable access.

Bhana applauds some of the strides the department has made in modernising its services, for example, the e-HomeAffairs platform allows citizens to apply for smart IDs and passports online, reducing the need for in-person visits and speeding up processing times. Another initiative, the Automated Biometric Identi cation System, enhances security by using biometric data to verify identities.

“By adopting these technologies, the DHA is taking concrete steps to reduce the risk of errors or fraud. From the perspective of these initiatives, a strong foundation can be laid for

even more advanced digital services in the future,” comments Bhana.

This means the DHA can better manage the high volume of applications it receives and ensure services are delivered more consistently. New digital systems would enable sensitive information to be protected with advanced encryption and biometric veri cation, reducing the risk of identity theft or fraud.

CALLS FOR COMPLETE OVERHAUL

While the department’s efforts are applaudable, experts recommend a complete overhaul of the DHA’s services to cloud-based infrastructure by building systems that are scalable and responsive to users’ needs. This would ensure the system can handle large traf c volumes without slowing down or crashing.

A fully digital Department of Home Affairs would provide a seamless experience for all citizens. People could apply for services, such as IDs and passports, through a single online portal that is simple to navigate, says Nazareen Ebrahim, CEO of Naz Consulting International, a rm that helps companies leverage arti cial intelligence (AI) to optimise productivity and marketing. She believes the entire process – from submitting an application to receiving con rmation – would be digitised, meaning fewer visits to DHA of ces and shorter queues. Bhana notes that the DHA should investigate using AI to automate repetitive tasks and blockchain technology for document veri cation. These methods will help to increase ef ciency and security in issuing and processing documents. Establishing digital hubs in areas with limited internet access could help ensure people from all over the country have access to the department’s e-services while providing a seamless, uninterrupted experience.

“As that user journey online becomes more seamless and intuitive, this fosters processing with no lags on the system and higher security; we should be able to give digital citizens a better user experience,” Ebrahim says.

“A FULLY DIGITAL DEPARTMENT OF HOME AFFAIRS WOULD PROVIDE A SEAMLESS EXPERIENCE FOR ALL CITIZENS. PEOPLE COULD APPLY FOR SERVICES, SUCH AS IDS AND PASSPORTS, THROUGH A SINGLE ONLINE PORTAL THAT IS SIMPLE TO NAVIGATE.” – NAZAREEN EBRAHIM

Yashimita Bhana

Nazareen Ebrahim

SOUTH AFRICA’S VISION FOR SMART CITIES: LANSERIA AND BEYOND

ITUMELENG MOGAKI finds out if South Africa is really ready for the complexities of a fully digital future

In 2019, President Cyril Ramaphosa outlined an ambitious vision for South Africa’s future: creating smart cities to drive economic growth, sustainability and technological advancement.

Central to this vision was a proposed smart city near Lanseria between Johannesburg and Pretoria. Ramaphosa’s announcement marked a crucial milestone in the country’s long-term infrastructure strategy, aiming to position South Africa at the forefront of digital urbanisation. According to the government’s blueprint, the city will incorporate smart energy systems, advanced public transportation networks and arti cial intelligence (AI)-driven urban planning to minimise resource consumption while enhancing residents’ quality of life.

Earlier this year, various media reports revealed that Human Settlements Minister Mmamoloko Kubayi, in response to a fellow member of parliament’s questions, stated that the rst phase of the Greater Lanseria Master Plan, which includes the smart city development, has been completed. However, the bulk infrastructure to support the area’s development still required signi cant investment.

ALIGNING WITH NATIONAL DEVELOPMENT PLAN GOALS

The development of smart cities such as Lanseria aligns with the National Development Plan 2030, which aims to address inequality, unemployment and economic stagnation. By creating smart, digitally interconnected urban spaces, the government hopes to promote inclusive growth and improve public services through technology. The Lanseria project encourages public-private partnerships, enabling collaboration between government agencies and private investors to drive innovation and infrastructure development.

CHALLENGES AND OPPORTUNITIES

While the vision for smart cities is bold, it faces signi cant challenges, particularly regarding infrastructure readiness, energy supply and digital literacy. South Africa’s energy issues remain a substantial obstacle to the realisation of

smart cities as reliable power is crucial for the operation of digital infrastructure. However, according to experts, the government’s focus on renewable energy integration within smart cities could alleviate some of these challenges and contribute to a more sustainable energy future.

Additionally, urbanisation pressures and housing shortages mean smart cities must address broader societal concerns. The Lanseria project aims to incorporate mixed-use developments, integrating residential, commercial and industrial zones while ensuring access to essential services such as healthcare, education, and transport.

“SOUTH AFRICA’S SMART CITY INFRASTRUCTURE IS GRADUALLY ADVANCING, FOCUSING ON INTEGRATING 5G, INTERNET OF THINGS, CLOUD-BASED SYSTEMS AND EDGE COMPUTING INTO URBAN PLANNING.” – RUDIE OPPERMAN

TECHNOLOGICAL INFRASTRUCTURE READINESS

Rudie Opperman, manager for engineering and training for Africa at Axis Communications, a security system supplier, says South Africa’s smart city infrastructure is gradually advancing, focusing on integrating 5G, internet of things (IoT), cloud-based systems and edge computing into urban planning.

“The roll-out of 5G networks in key urban areas re ects the country’s commitment to

Rudie Opperman

high-speed, low-latency communication, essential for applications such as autonomous vehicles and smart grid management,” Opperman explains.

“IoT adoption is also on the rise, as cities deploy smart technologies to optimise energy usage, monitor public spaces and manage traf c. Cloud-based infrastructure and edge computing enhance the data centres needed to support these smart initiatives and minimise latency.”

However, Opperman highlights that scaling these solutions across diverse urban and rural areas presents challenges.

“South Africa’s smart city development is in its early stages compared to global leaders such as Singapore, Barcelona and Dubai. While these cities have heavily invested in advanced technologies, data analytics, and integrated systems, South Africa faces unique challenges, including socioeconomic disparities, infrastructure gaps and complex regulatory environments,” he says.

“While South Africa may not yet match the technological sophistication of leading smart cities, its focus on sustainable and context-speci c solutions provides a strong foundation for future progress. By continuing to address infrastructure limitations and enhancing cybersecurity measures, South Africa can gradually bridge the gap with global smart city leaders,” he adds.

Contrary to Opperman’s gradual growth views, Jon Kornik, CEO and co-founder of Plentify, a provider of smart energy solutions for homes and businesses, says: “South Africa’s telecommunications infrastructure is not strong enough to replicate smart city approaches from other countries.

“This was especially the case during the higher stages of load shedding where we witnessed nodes of the cellular networks repeatedly fall over. This lack of reliability is untenable for applications that need low latency and high-reliability data,” Kornik explains.

URBANISATION AND SMART LIVING

Opperman says Smart City initiatives present innovative solutions to South Africa’s urbanisation challenges, including housing shortages and traf c congestion. “Using data analytics and IoT sensors, cities can make data-driven decisions to optimise land use, zoning policies and affordable housing initiatives. This approach also addresses socioeconomic disparities while fostering inclusive communities.”

In terms of traf c congestion, Opperman says smart traf c management systems are critical. “By deploying Axis network video solutions

“A COMBINATION OF ADVANCED TECHNOLOGY, STRICT SECURITY PROTOCOLS AND ONGOING TRAINING FOR CITY SYSTEM OPERATORS WILL HELP CREATE A SAFE AND RESILIENT SMART CITY ENVIRONMENT IN SOUTH AFRICA.” – KEVIN WOTSHELA

and intelligent transportation systems, cities can monitor and control traf c ow in real-time, reduce bottlenecks and improve public transport ef ciency.

“Additionally, integrating smart lighting systems with Axis cameras optimises energy consumption, further easing traf c ow. Smart parking systems, using IoT sensors, alleviate congestion by guiding drivers to available parking spaces, minimising time spent searching,” adds Opperman.

CYBERSECURITY AND PRIVACY CONCERNS

“These data-driven approaches not only address immediate urbanisation challenges but also support a more sustainable, integrated city model that adapts to future needs.”

INCLUSIVITY AND SOCIAL IMPACT

To ensure inclusivity in our smart cities, Opperman believes that strategies must focus on addressing the digital divide and socioeconomic disparities. “Key among these is implementing inclusive zoning regulations to encourage mixed-income developments and affordable housing. Axis Communications supports digital literacy initiatives, working with local governments and organisations to train marginalised groups and communities on using smart technologies,” he says.

“Data-driven equity analysis further helps identify disparities in access to smart city resources and informs investment in digital infrastructure. By incorporating these strategies, South African cities can build more connected and inclusive communities, ensuring equal access to the bene ts of smart city living.”

On the subject of key cybersecurity risks associated with smart cities and how South Africa should address these concerns, Kevin Wotshela, MD of Magix Security, a provider of next-generation cybersecurity solutions, says a primary cybersecurity risk related to smart cities is the widespread use of IoT devices. “While integral to the ef ciency of smart cities, these devices can be exploited by attackers as they often serve as entry points into critical city infrastructure, including traf c management systems, energy grids and essential public services.

“Another signi cant vulnerability in smart cities is the collection and sharing of vast amounts of personal and demographic data. While critical for ef cient management, this data becomes a prime target for cybercriminals. Sensitive information, including nancial and biometric data, can be exposed if systems lack proper encryption and security measures,” he explains.

“Proactive vulnerability management is essential. A combination of advanced technology, strict security protocols and ongoing training for city system operators will help create a safe and resilient smart city environment in South Africa.”

In conclusion, Opperman says collaboration between government, the private sector and local technology providers is critical to overcoming building smart city initiatives. “Investments in robust infrastructure, expanded 5G networks and secure IoT adoption, bolstered by regular cybersecurity audits, are critical for South Africa’s digital transformation. A modular, exible approach to upgrading smart city systems will further support this progress.”

Kevin Wotshela

THE NATIONAL HEALTH INSURANCE AND EMPLOYEE BENEFITS

Cliffe Dekker Hofmeyr’s AADIL PATEL , director and head of the Employment Law practice, and FIONA LEPPAN, director in the Employment Law practice, discuss the impact of the NHI on employee benefits

The National Health Insurance Bill (“NHI’’), passed by the National Council of Provinces on 6 December 2023 and assented to by President Cyril Ramaphosa on 15 May 2024, is now an Act of Parliament. The discussion about a national health system that achieves, at point of need, universal health coverage for all people has been long and controversial and continues to attract scrutiny and criticism from all sectors of society.

Even though the NHI Act has been signed into law, it is not in force and effect. However, when it does take effect it would still take time for the NHI Fund and its related structures to be established and become fully operational. The envisaged implementation period is signi cant with some stakeholders indicating the optimal achievement of the NHI system and infrastructure could take decades to realise. The NHI Act may also be open to notable challenges during its establishment, contributing to implementation delay.

Once the Minister of Health declares the NHI to be ‘’fully implemented’’, medical schemes would be precluded from offering

most of the basic services they currently provide, so healthcare services, products and treatment a person might want to procure outside of the ambit of the NHI, if this is would even be permissible, would need to be paid for privately by that person. The impact on persons with current comprehensive private medical cover is yet to be determined.

IMPLICATIONS FOR EMPLOYERS AND EMPLOYEES

Offering private healthcare bene ts is an important mechanism that assists employers in attracting new talent and retaining employees. As healthcare costs rise, businesses are forced to pay higher medical subsidies, which impacts their pro t line, but increasing premiums also affects their employees who would then have less disposable income. The NHI could negatively impact the employment relationship regarding existing healthcare subsidies, post-retirement medical aid arrangements and other related employee bene ts provided by employers, which could increase the tax burden on employees ultimately reducing their disposable income.

To retain employees, employers may have to consider different ways to offer employees equivalent medical aid bene ts that they can privately access, but this would potentially be costly. Employers may also need to restructure employees’ remuneration due to an increased tax burden to nance the NHI.

Noting the potential increased costs of medical aid, it is unlikely that employers would or could offer employees additional or post-retirement medical aid bene ts.

It is not clear to what extent an eligible person who would otherwise be covered by

the NHI Fund, once it becomes operational, can choose to procure private healthcare. One should have a choice but the dilemma would be the cost of affording compulsory contributions to the NHI and payment for private healthcare with the consequence that any such choice is eroded.

Other health services offered by employers, for example, health clinics, HIV/AIDS treatment and occupational health services, could also be at risk if the NHI is implemented in its current form.

Media publications report there are plans afoot to reach a compromise with those who for compelling reasons oppose the NHI in its current form. The new administration appears to be adopting a more conciliatory approach in that regard – a positive step.

As the NHI has not been implemented and regarding the need for sensible amendments to the Act, there is no urgency for employers to amend the current bene ts they offer employees, and they would be best placed not to do so at this stage. Patience seems to be the game. Importantly, all role players should engage and comment on any changes that may be published so their concerns are noted.

THE NHI COULD NEGATIVELY IMPACT THE EMPLOYMENT RELATIONSHIP REGARDING EXISTING HEALTHCARE SUBSIDIES, POST-RETIREMENT MEDICAL

AID ARRANGEMENTS AND OTHER RELATED EMPLOYEE BENEFITS.

Fiona Leppan

Aadil Patel

HUMAN RIGHTS DAY

Highlighting the journey of justice, equality, and human dignity.

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PURSUING EMPLOYMENT EQUITY REPRESENTATION

Cliffe Dekker Hofmeyr’s YVONNE MKEFA and NADEEM MAHOMED, both directors in the Employment Law practice, unpack the context, targets and operational demands of amendments to the Employment Equity Act

The Employment Equity Act (EEA), promulgated in 1998, provides a legislative framework to bolster the goals of South Africa’s broader transformation agenda and ensure all employees have equal access to opportunities and workplaces are free from unfair discrimination. One of the EEA’s aims is the implementation of employment equity as a tool to redress the impact of discrimination and enhance workforce representation that aligns with the country’s diverse demographic in relation to race, gender and disability. Despite the implementation of legislation shortly after the introduction of South Africa’s democratic dispensation, the data indicates that equitable representation remains elusive at the higher levels of management and the workforce.

ASSESSING THE AMENDMENTS

It is within this context that certain of the recent amendments to the EEA must be assessed. One of the major amendments empowers the Minister of Employment and Labour to set targets for each economic sector and requires designated employers to achieve these targets over a ve-year period. This intervention is aimed at accelerating transformation in the workplace and circumventing any alleged reluctance on the part of designated employers to prioritise transformation through moving towards a representative workforce that aligns with the diversity of South Africa’s economically active population at all occupational levels.

The status of the obligation on designated employers before the amendments meant that a designated employer was required to design and implement an Employment Equity (EE) plan in line with their contextual realities

and the economically active population demographic. The purpose of the plan is to ensure improved equitable representation at all levels of the workforce and to be in a position to report on the progress made towards achieving the targets set out in the plan.

The introduction of sector targets by the government removes the discretion of a designated employer to set their own targets based on several factors. The consequence of this is that designated employers will now be required to comply with a set target, based on race, gender and disability, for senior levels of management as well as the professional and skilled levels of its workforce. If there is noncompliance, the designated employer

The purpose of the plan is to ensure improved equitable representation at all levels of the workforce.

may use the mechanism provided to justify such noncompliance, which ultimately will be assessed by the Department of Employment and Labour.

The response to the introduction of speci ed sector targets by government has been varied. Some have argued that this intervention is necessary to more readily achieve the aims of the EEA as the last two decades have demonstrated uneven or unsatisfactory progress. However, many stakeholders have concerns regarding the introduction of the sector targets, which may function as a quota that could potentially constitute an absolute barrier for certain groups of people to enter the workforce or in terms of promotion opportunities.

Other concerns relate to transitional arrangements between the current status quo and when the amendments are effective as well as speci c sectoral realities and challenges that exist, which may create dif culties for at least some designated employers to achieve the sector targets and accordingly will result in undue burdens on the business operations of these designated employers.

Whatever a party’s view, the amendments were signed into law. The effective date of the amendments has not yet been announced. Currently, there is no obligation to comply with the draft sector targets issued for comment. Nonetheless, designated employers are advised to prepare for their introduction and to review and consider their employment equity compliance in line with the EEA amendments going forward.

MANY STAKEHOLDERS HAVE CONCERNS REGARDING THE INTRODUCTION OF THE SECTOR TARGETS, WHICH MAY FUNCTION AS A QUOTA THAT COULD POTENTIALLY CONSTITUTE AN ABSOLUTE BARRIER

FOR CERTAIN GROUPS OF PEOPLE TO ENTER THE WORKFORCE.

Nadeem Mahomed

Yvonne Mkefa

FUNDING PUBLIC INFRASTRUCTURE INVESTMENT

Infrastructure investment can grow the economy, create investment and improve lives, writes EDWIN NAIDU

Public infrastructure investment is often seen as an important driver of economic growth and a vital engine for reducing unemployment, especially in emerging and developing economies, according to University of Johannesburg academic Professor Lumengo Bonga-Bonga.

Citing Ethiopia’s rapid growth in the past decade, mainly achieved through public infrastructure investment supported by unconventional macro- nancial policies, Professor Bonga-Bonga says contrary to some belief, public infrastructure investment crowds in private investment in the long run.

His study, “The Impact of Public Infrastructure Investment on South Africa’s Economy: Evidence from Social Accounting Matrix and Computable General Equilibrium-based Approaches”, shows public investment can boost the supply of electricity, gas and water and have a positive effect on private investment and economic growth.

“Public infrastructure expenditures, which enter the production function as inputs and contribute positively to nal output, include the provision of roads, railway networks, airports and harbours,” says Professor Bonga-Bonga.

CREATING JOBS AND GROWING THE ECONOMYY

Professor Bonga-Bonga says his study, published by Springer Nature in August, reveals that increasing public economic infrastructure can effectively stimulate the economy and positively impact labour.

While investing in public economic infrastructure is critical in creating much-needed new jobs, Professor BongaBonga says, as a case study, the infrastructure expenditure related to the 2010 FIFA World Cup positively impacted the

economy as shown by the change in gross domestic product.

MAJOR PROJECTS UNDERWAY TO STIMULATE THE ECONOMY

A review of Parliamentary Oversight on the State of Infrastructure Development in South Africa from 2019 to 2024 from Parliament’s Research Unit provides an overview of the infrastructure and an in-depth analysis of the envisioned role of infrastructure in driving socioeconomic progress in South Africa, particularly in the context of the objectives after the 2024 general election.

“South Africa faces a critical imperative to invest substantially in public infrastructure. This need has been well-documented and recognised due to persistent challenges in delivering and maintaining infrastructure services across the nation,” the study notes.

While the National Treasury is responsible for managing the government purse, the Department of Public Works and Infrastructure is focused on co-ordinating, managing, monitoring and unblocking policy and regulatory obstacles to attract investor con dence.

“Many of these reforms involve pooling resources with the private sector, multilateral development banks and development nance institutions to fund infrastructure investment more effectively,” the study continues.

AIM TO FAST-TRACK DELIVERY OF PROJECTS

The 2024 Budget Review states: “The National Treasury is leading a new initiative to review the institutional arrangements for strategic

infrastructure with the aim of fast-tracking the delivery of projects.”

The expected outcomes are more apparent institutional arrangements to deliver strategic infrastructure and a streamlined system, leading to a more robust pipeline of credible infrastructure projects, faster, more ef cient, cost-effective infrastructure delivery and greater access to various forms of nancing.

Through the National Infrastructure Plan 2050 (NIP 2050), published in a March 2022 Government Gazette by the then-Minister of Public Works and Infrastructure, Patricia de Lille, the government wants to promote dynamism in infrastructure delivery, address institutional blockages and eradicate weaknesses that hinder success over the longer term.

Professor Bonga-Bonga’s study concludes that economic infrastructure is more amenable to private-sector funding, especially with cash ows from infrastructure users. This is especially so for pure economic infrastructure, such as commercial ports, and mixed economic infrastructure, such as municipal water or electricity supply.

The head of the public sector at Nedbank Commercial Banking, Monei Seleho, says targeted investments in infrastructure, primarily roads, sanitation, water and energy, have a strong multiplier effect on creating new jobs and supporting livelihoods and, importantly, are a powerful tool for sustainable progress and economic growth.

“For example, a modern and well-maintained road network ensures cost-effective mobility of goods for businesses, while investments in sanitation and water will help municipalities to achieve the Sustainable Development Goals of universal and equitable access to safe and affordable drinking water and sanitation for all,” she adds.

PROFESSOR BONGA-BONGA’S STUDY CONCLUDES THAT ECONOMIC INFRASTRUCTURE IS MORE AMENABLE TO PRIVATE-SECTOR FUNDING, ESPECIALLY WITH CASH FLOWS FROM INFRASTRUCTURE USERS.

Professor Lumengo Bonga-Bonga