South Africa

1
South AfricasMunicipal 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 UnitHow 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

• Assess feasibility of MSP options
• Council decision on option (with MIIU advice)
• Prepare bid documents, draft contract
• Selection of public or private partner
• Negotiate sign contract
• Financial close -- begin implementation
• Initiate contract compliance monitoring

6
Completed MSPsTotal Values

• Contracts Values
• OM R 142 m
• OM plus Capex R 4,575 m
• Divestiture R 414 m
• Corporatisation R 50 m
• ----------
• Total R 5,181m

7
Benefits for the DisadvantagedDirect 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 DisadvantagedIndirect Service
Efficiencies

• Jnb Info Tech
• Dolphin Coast water
• Nelspruit water
• Jnb Fleet
• Jnb Market
• Jnb bus
• Eastern Cape IT

9
Benefits for the DisadvantagedEnvironmental
Improvement

• Thabazimbi waste
• Robertson waste
• WMLC waste
• Nelspruit water
• Dolphin Coast water
• Tzaneen waste
• Jnb Metro Gas

10
Benefits for the DisadvantagedMore 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
• Interest 2,806
• Padco reimburse 0
• TOTAL 25,496

17
MIIU Budget 1998-2000

• Revenues 98-99 99-00
• MPPP transfer 10,690 0
• DCD capital 12,000 8,000
• MTEF allocation 0 0
• USAID grant 0 5,400
• Interest 2,806 2,744
• Padco reimburse 0 0
• TOTAL 25,496 16,144

18
MIIU Budget 1998-2000

• Revenues 98-99 99-00 00-01
• MPPP transfer 10,690 0 0
• DCD capital 12,000 8,000 0
• MTEF allocation 0 0 4,006
• USAID grant 0 5,400 2,400
• Interest 2,806 2,744 2,745
• 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. 98-99 99-00
• BOD expenses 13 26
• DBSA admin fee 1,542 1,053
• General admin 307 475
• TOTAL 1,862 1,554

21
MIIU Budget 1998-2000

• Admin Expend. 98-99 99-00 00-01
• BOD expenses 13 26 26
• DBSA admin fee 1,542 1,053 1,435
• General admin 307 475 556
• TOTAL 1,862 1,554 2,017

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. 98-99 99-00
• MPPP projects 6,712 1,135
• MIIU pipeline 1,619 5,887
• TOTAL 8,331 7,022

24
MIIU Budget 1998-2000

• Project Expend. 98-99 99-00 00-01
• MPPP projects 6,712 1,135 360
• MIIU pipeline 1,619 5,887 15,023
• TOTAL 8,331 7,022 15,383

25
MIIU Budget 1998-2000

• Summary 98-99 99-00 00-01
• Revenues 25,496 16,144 9,292

26
MIIU Budget 1998-2000

• Summary 98-99 99-00 00-01
• Revenues 25,496 16,144 9,292
• Admin. Expend. 1,862 1,554 2,017
• Project Expend. 8,331 7,022 15,383

27
MIIU Budget 1998-2000

• Summary 98-99 99-00 00-01
• Revenues 25,496 16,144 9,292
• Admin. Expend. 1,862 1,554 2,017
• Project Expend. 8,331 7,022 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
• Interest 2,250
• Padco reimburse 90
• Success fees 1,425
• Donor grant 0
• TOTAL 10,765

30
MIIU Budget 2001-2004

• Revenues 01-02 02-03
• MTEF allocation 7,000 7,000
• Interest 2,250 500
• Padco reimburse 90 90
• Success fees 1,425 2,000
• Donor grant 0 15,000
• TOTAL 10,765 24,590

31
MIIU Budget 2001-2004

• Revenues 01-02 02-03 03-04
• MTEF allocation 7,000 7,000 7,000
• Interest 2,250 500 200
• Padco reimburse 90 90 90
• Success fees 1,425 2,000 1,675
• Donor grant 0 15,000 0
• TOTAL 10,765 24,590 8,965

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. 01-02 02-03
• BOD expenses 28 31
• DBSA admin fee 1,579 1,735
• General admin 1,768 2,293
• TOTAL 3,375 4,059

34
MIIU Budget 2001-2004

• Admin Expend. 01-02 02-03 03-04
• BOD expenses 28 31 34
• DBSA admin fee 1,579 1,735 1,900
• General admin 1,768 2,293 2,508
• TOTAL 3,375 4,059 4,443

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. 01-02 02-03
• 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. 01-02 02-03 03-04
• MIIU pipeline 19,025 17,550 8,500
  
• 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 01-02 02-03 03-04
• Revenues 10,765 24,590 8,965

40
MIIU Budget 2001-2004

• Summary 01-02 02-03 03-04
• Revenues 10,765 24,590 8,965
• Admin. Expend. 3,375 4,059 4,443
• Project Expend. 19,025 17,550
  8,500

41
MIIU Budget 2001-2004

• Summary 01-02 02-03 03-04
• Revenues 10,765 24,590 8,965
• Admin. Expend. 3,375 4,059 4,443
• 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 MIIUs value to local govt
• -- internships more local staff
• -- success fees revolving fund
• -- exit strategy succession planning

45
MIIU into the FutureMSPs after Demarcation

• The Municipal Reform Challenge
• Developmental local governance
• Financial sustainability
• Service delivery for all
• Coping with a changing environment

46
Municipal Reform Strategy

• Planning
• - IDPs, action plans
• Restructuring
• - Utilities, agencies, PPPs
• Performance Management
• - Performance-based contracting
• 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