ADD NAME/TITLE HERE Training & Capacity Development for Councillors & Human Settlements Officials
National Technical Capacity Development StrategyDepartment of Human Settlements Ensuring sustainable capability to achieve Outcome 8 Policy Objectives and Outputs
Outcome 8:Create sustainable human settlements & improve quality of household life • Upgrade well-located informal settlements • Accredit municipalities (devolve Housing function) • Develop affordable rental housing stock • Release well-located State land for residential development • Implement FLISP • Implement a home loan guarantee scheme (MDI)
Does SA have the capacity to achieve Outcome 8…? Yes, but… • Needs better organization • Must to be directed more • Gaps in several areas • Too sluggish/ slow to perform Not really, but… • It is possible with better organization and focus • Can be developed • Must be Assembled/ mobilized • Can be Grown and inspired • There is capacity across the 3 spheres of Government & Entities • Optimal (re)organization and sharper focus is needed • There are gaps in very important & specialized areas • Need to shift practitioner Understanding and mindset/ attitudes • Urgency in performance & delivery, but capacity is displaced
Graphic Demonstration HUMAN SETTLEMENTS ULTIMATE “PRODUCT”
Rationale for Revision of Capacity Dev. Strategy • To ensure the availability of requisite capacities to deliver sustainable human settlements; • To ensure that capacity development covers individual, institutional, and delivery environment capacities, in the National, Provincial Munics • To ensure that capacity is in place for the three spheres of government to perform functions provided for in the Constitution & Housing act, • To ensure that Capacity Development is coordinated within the HS sector
Revised Strategy • FOCUS OF CP STRATEGY • Outcome 8 Outputs • Informal Settlements Upgrade • Municipal Accreditation • Aff. Rental Housing Stock • Fast State Land Release • Finance-Linked Ind. Subsidy P • Home Loan Guaran Scheme Capacity Assembly Skills and Knowledge Delivery Chain Process Management Institutional Reforms • Special Measures: • Programme Management • Policy Knowledge & Skills • Attitudes and Mindset • Capacity Assembly & deployment 2012/13 MTEF Plan APP
Human Settlements Development • Set HS policy objectives, outputs and outcomes • Manage the planning and programming • Manage and direct the inputs (resources) • Manage the processing of development • Manage and account for outputs • Contracting management • Procurement Management
Technical Capacity Development Measures Impact/ Delivery
Sector Professionalisation process Technical Capacity Development
BACKGROUND • INITIAL TALKS SINCE LATE 1990s • CIH ASSISTANCE IN 2000 • DHS INITIATIVE • RESEARCH IN 2005 • ESTABLISHMENT OF PROFESSIONAL BODY APPROVED
WHY PROFESSIONALISE? • Effective service delivery and governance and formally educated officials • Increase career specialists • Promote lifelong learning • Set standards to accredit graduate programmes • Create a Body of specialised knowledge • Professional Socialisation of the Practitioners • Facilitative management and intergovernmental relations • Protect beneficiaries and promote their wellbeing
STRATEGIC DRIVING FORCES • Continuing professional development • Transformation through: - Education - Quality assurance - Good management practice • Establishment of HSPB
STRATEGISING OF OBJECTIVES • Educate: life-long, quality assurance • Establish HSPB, register members • Establish Code of Conduct, service delivery • Effective governance, skills, relations • Professional socialisation
CORE ACTIONS REQUIRED • Education • Establish HSPB, promotion • Register members • Professional/ethical conduct • Practice of human settlements practitioners • Knowledge base promotion • Network
EDUCATION • SAQA, CHE and DoHE approvals • HSPB requirements • Approved courses • Need for distance learning • Life-long learning • Career path planning
ESTABLISHMENT HSPB • DHS functions - Education promotion - Professional behavior - Practice of HS practitioners - Knowledge base promotion - Register practitioners - Networking • Bill, enactment • Council composition • Establish office and appoint staff • Promote HSPB
REGISTRATION OF MEMBERS • Types of membership - Practitioner, no qualification - Candidate, registered NQF5 + - Technician, NQF6, practical - Professional, NQF7, practical • Selection committee
PROFESSIONAL/ETHICAL CONDUCT • Code of Conduct - Promote excellence - Protect public • Implementation - Rewards - Discipline
PRACTICE OF HUMAN SETTLEMENTS PRACTITIONERS • One-stop shop • Provincial help desks • Internet access • Electronic contact
KNOWLEDGE BASE PROMOTION • Library: reference works, books • Circulars to members • Research • Interaction with related bodies
NETWORKING AND COMMUNICATING • Departments • Bodies
South African Constitution/Bill of Rights • Amongst other provisions, Section 152 (1) of the Constitution declares that municipalities should “ensure the provision of services to communities in a sustainable manner”, …. “ promote social and economic development” and , “encourage the involvement of communities and community organizations in the matters of local government”
…but note that the South African Constitution/Bill of Rights…. …does not guarantee right to housing by the poor….there are a number of reasons, including the fact that within RSA, right to housing is linked to right to land…
Addressing challenges associated with informal settlements Three possible frameworks may address these challenges • Legal framework…viewing informal settlements as a legal problem.. –Settlement upgrading and ‘legalization’ –South African bill of rights • Economic Framework…viewing informal settlements as an economic problem –Liberization of economic markets –‘Free’ competition to drive economy –Government subsidies for home loans • Social Framework…viewing informal settlements as a social problem –Free education –Government subsidies for home loans –Emancipation and awareness
MAJOR STAKEHOLDERS: Public -private partnerships: Enabling Affordable Housing DevelopmentsRural & Urban Settlements in a Changing Landscape
Table of contents • Background • What are PPPs? • The Case for PPPs • Key Challenges in PPPs in Local Government • Where have PPPs been used in Local Government? • Case Studies of partnerships with Local Government in Affordable Housing • Considerations by Municipalities during the formation of partnerships • The Role of the DBSA in infrastructure project development • Contact details
Government’s plea to Private Sector “We made it very clear from the outset that government alone cannot implement the Local Government Turn-Around Strategy (LGTAS) effectively. We need everybody involved, the private sector, trade unions, State-owned Enterprises (SOEs), NGOs, CBOs, experts, municipal residents and whoever else. “ YunusCarrim Deputy Minister of Local Government, 2010
Setting the context . . . • Economic growth is leveraged off infrastructure; • Municipalities responsible for delivering water, wastewater & sewerage treatment, electricity reticulation, local road and housing projects; • Housing cannot be seen in isolation – other “critical drivers” for successful human settlements; • Access to social & economic opportunities, proper infrastructure, mixed use mixed income settlements, mixed typologies such as medium-high densities; • SA’s infrastructure demands thus require innovative finance, technical skills and significant capital to meet the infrastructure backlogs, affordable housing backlogs whilst still achieving integrated human settlements; • “While Public Sector is accountable for ensuring that public services get delivered, it is not, in many cases, the best service provider in terms of cost, quality and ability to manage commercial risk”; • Use private sector financial resources to “ease pressure on budget”.
What is a PPP? Definition of a PPP; • A commercial transaction between a municipality and a private party in terms of which: - • the private party performs a municipal function for or on behalf of a municipality, and/or acquires the management or use of municipal property (for its own commercial purposes) in accordance with output specifications; • and assumes substantial risk transfer (financial, technical and operational); • in return for a benefit (payment by municipality and/or fees collected from service users); • Municipality retains major role, either as purchaser of services or enabler. In the broadest sense, PPPs can cover many types of collaboration between the public and private sectors to deliver policies, services and infrastructure.
Municipality role as purchaser of services or enabler: Councillors and officials have the following roles: • Municipalities need to be more efficient and responsive. • The provision of sustainable infrastructure for poor people. • Municipalities need to continuously create additional revenue to finance housing needs. • State and other well-located land should be used for the provision of affordable, high-density housing.
What is not a PPP . . . • A simple outsourcing of functions where substantial financial, technical and operational risk remains with Municipalities; • A donation of a public good by a private party; • Commercialization of a public function by the creation of a State-Owned Enterprise; • A PPP does not constitute borrowing by Municipalities.
A Typical PPP Structure Municipality (Makes Payments, Receives Services) Direct Agreement Shareholders Agreement PPP Agreement Financing Agreement Lenders Private Party (SPV) Equity & BEE Operations subcontract Construction subcontract Construction subcontractor Operations subcontractor
The Case for PPPs • Address infrastructure and service delivery backlogs; • Access to Private Sector funding leading to faster implementation; • Efficient pooling of resources through optimum use of private sector financial, management, skills and expertise; • Risks are managed and shared better as there is allocation of risks to party best suited to manage it; • On time and on budget delivery. “The continuous under spending of capital budgets reaffirm the need for a regulated infrastructure planning framework that would ensure that projects are delivered on time and on budget.” PPP takes longer to prepare BUT it delivers
Housing Backlog Barometer • 2.1 million estimated backlog • 2 500 informal settlements • 12 million without decent houses Source: ‘DHS Annual Report 2010/2011
Challenges in PPPs • Determining the appropriate level of risk transfer; • Objectives not clearly defined; • Capacity constraints on both sides; • More focus on basic services to change lives: water, electricity, health, education, housing. Particularly in Municipal PPPs: • Complex legal requirements –requirements for undertaking feasibility studies; • Process set out for procurement of services perceived to be cumbersome; • Perceived credit risk of municipalities by financiers – based on reliance on grant funding/revenue collection efficiencies; • Perception of PPPs as privatisation of state-owned assets and sometimes labour concerns.
Housing public-private partnerships • Land Provision for Affordable Housing developments • Social Housing projects where municipality (through subsidiary) is off-taker; • Infrastructure Provision; infrastructure funding by government through subsidies, as well as allowance of bulk infrastructure rebates to developers in cases where private sector funds some bulk infrastructure; • Enhancing the Inner Cities; • Joint ventures to upgrade public space for better living environments • Inner city Regeneration programmes
Case Studies of successful public-private partnership in Affordable Housing
JPC Case Study • JPC Mission: manage the property assets of the COJ, maximising the social, economic and financial value of the COJ’s property portfolio…” • JPC leveraged R8.6bn private sector property construction investment within the 2008/09 financial year; • Example of project where COJ availed land for development to private sector developers for development of integrated human settlements: • Jabulani CBD: • Land was acquired from JPC for development; • Over 4,000 housing opportunities • JPC finalized the zoning rights for all developments in precinct and environmental approvals. • Public and private sector funding leveraged to complete development.
ICPS Case Study • Inner City Property Scheme: initiative of COJ in partnership with private sector to address urban decay & rejuvenate CBD; • Replace Better Buildings Programme – which was hampered by long expropriation processes, provision of transitional housing for tenants, etc; • Broad Based BEE ownership of property portfolio through Newco; • COJ transfer properties into Newco that are dilapidated, abandoned, illegally occupied through a development lease with buy-option; • COJ involved in provision of transitional housing for tenants in buildings to be refurbished; • Public and Private sector funding to be sourced to redevelop the portfolio.
Access to Capital: Funding Considerations Structural and natural mitigants for: repayment, construction completion, market, institutional, social and environmental risks. Typically entails: • Ability to execute projects on time, within budget by developer; • Mitigants for cost overruns; • Adequate security – e.g. mortgage bond and cashflow security; • Sponsor “skin in the game” to retain senior debt at acceptable levels; • Acceptable off-take agreements; • Strong contractor and professional team; • Operating and maintenance agreements with capable party. PPPs give the state financial flexibility (through access to debt) to undertake more projects.
Other Considerations • Public sector wants to retain control to maintain max social benefit, private sector wants reasonable financial return – balance must be struck; • Successful PPPs require that the contracting municipality be adequately resourced in terms of financial capability and human resources at the project development, project evaluation and tendering stages. This way municipality can extract optimal PPP benefits; • Due to potentially high complexity and resultant transaction costs, the size of the project matters; • Need to package projects that have sufficient revenue streams to attract private sector funding and absorb transaction costs, in sector where affordability is a challenge.
The Role of the DBSA in the development of infrastructure & human settlements
Why our involvement in project development? “ Our Development Finance Institutions are capable of raising capital and co-financing investments of the private sector, state entities and municipalities. These are considerable strengths – they mean that we do not have to rely on expensive external finance or complex structured investments. No good project will be short of funding. “ PravinGrodhan, Minister of Finance, South Africa Budget Speech 2012
Our project development solutions . . . • Co-funding of projects with sponsors and other role players such as Treasury; • Project and Programme Management expertise; • Procurement process managed by the DBSA internal procurement team; and • In-house specialist in Human settlements, Water, Energy, Transport, Health etc. Typical Challenges: • Incomplete projects due to insufficient funding; • Poor Project &Transaction Advisor management leading to cost overruns and delays; • Poor procurement process leading to projects stalling and potential legal action; • Inadequate understanding of the project concept to supervise and manage Transaction Advisors.
DBSA selection criteria • Sector Fit – Project must be in a priority sector; • Development impact – Project must improve the quality of life; • Principle of co-funding – Project must be co-funded with sponsors; • Commitment of sponsor – Project must be supported by the highest decision-making authority; • Institutional capacity to implement the project – Does the project sponsor need additional capacity to implement the project? • Funding mechanism – clear cost recovery/upfront funding mechanism must agreed at outset.