SOCIO-ECONOMIC IMPACT OF PUBLIC-PRIVATE PARTNERSHIPS ON RURAL DEVELOPMENT IN THE EASTERN CAPE PROVINCE: SELECTED CASES by SIVIWE MDITSHWA Thesis submitted in fulfillment of the requirements for the degree Doctor in Public Management in the Department of Public Administration and Governance in the Faculty of Business and Management Sciences at the Cape Peninsula University of Technology Supervisor: Prof R Hendrickse Co-supervisor: Prof RG Duffett District Six Campus September 2020 CPUT copyright information The thesis may not be published either in part (in scholarly, scientific or technical journals), or as a whole (as a monograph), unless permission has been obtained from the University DECLARATION I, SIVIWE MDITSHWA, declare that the contents of this thesis represent my own independent work, and that the thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it embodies my own views and not necessarily those of the Cape Peninsula University of Technology (CPUT). __________________ 21 September 2020 Signed Date ii ABSTRACT The study reflects on the socio-economic spin-offs and challenges of the public-private partnership (PPP) implemented in the Eastern Cape’s two local government metropolitan municipalities. The two metropolitan governments are characterised by two central urban points, namely East London in Buffalo City and Port Elizabeth in Nelson Mandela Bay. The Buffalo City Metropolitan Municipality acquired its metropolitan status in 2012, whereas the Nelson Mandela Bay Metropolitan acquired its metropolitan status early in 2000 (Freund, 2014:6). The study concentrates on public-private partnerships after the 1994 South African democratic dispensation in line with the National Treasury Public-Private Partnership Practice Note Number 2 of 2004. The study intends to assess the socio-economic aspects of two public-private partnerships, namely Coega and the East London industrial development zones in the Nelson Mandela Bay and Buffalo City metropolitan municipalities. The assessment is limited to socio-economic and infrastructure spin-offs resulting from the public-private partnership arrangement (the East London Industrial Development Zone (ELIDZ) and the Coega Industrial Development Zone (IDZ) in this case) entered into by the Eastern Cape Provincial Government in the geographical location of two municipal (metros) governments. Despite the introduction of the two industrial development zones’ public-private partnership arrangement in the two metropolitan regions, the metropolitans are still confronted with immense socio-economic development challenges, which have manifested in, for example high poverty levels, increased unemployment, slow local economic growth and mostly stagnant infrastructure development. In her State of the Province Address in 2007, the then Premier of the Eastern Cape Provincial Government committed to the adoption of a public- private partnership approach. For any economy to develop, critical factors such as structured infrastructure development and public-private partnership development-oriented policies could be the primary drivers of viable economies. Consequently, the adoption of the public- private partnership approach was meant to fast track the provision of services, with a particular focus on infrastructure development and rural-economic development as vehicles for socio-economic development in the province. As a result, the Coega IDZ and the East London IDZ came into existence. There was great uncertainty about the prospective success of these huge public-private partnership projects with a huge capital booster. Despite the level of uncertainty, the public-private partnership iii arrangement, in the form of industrial development zones, was the biggest intervention that the Eastern Cape had seen since 1994. This study follows a quantitative research method. For data collection, a structured questionnaire was disseminated to respondents at each of the metropolitans to tap into their practical experiences of their respective IDZs. Fifty (50) questionnaires were disseminated, of which 38 were returned, which accounted for a 76% response rate, making it acceptable for the analysis and interpretation of data. The data was processed using SPSS and Microsoft Excel. Consistent with the research project, the key findings reveal that both the metropolitans benefit largely from the industrial development zone–public-private partnership arrangement to the extent that project planning, development and management skills were transferred to the metropolitans’ officials for improved delivery of service. What also emerged was that public-private partnership procurement requires the South African government’s serious attention to ensure sustainable municipal socio-economic and rural economic reforms. What emerged from the findings above was that national government, provincial government and the metropolitan government need to champion public-private partnership procurement through the Public-Private Partnership Implementation Framework. This is highlighted by the fact that the PPP regulations in South Africa do not have a structured implementation plan, which, in turn, jeopardises investors’ interest in the public-private partnership arrangement. iv ACKNOWLEDGEMENTS I find it appropriate to convey my heartfelt appreciation to the following people and organisations for the assistance received from them. The successful completion of this thesis has been the result of encouragement, guidance and unconditional love from a number of persons and organisations or institutions. I am, therefore, grateful to the following: First and foremost, I give thanks to the Almighty God who inspired me with His supreme wisdom, knowledge and understanding. Further appreciation goes to the following persons: My promoter, Professor R. Hendrickse, for her professionalism and academic competence. She offered me enormous guidance and demonstrated deep insight into her field. She was a real source of inspiration to me. My co-supervisor, Professor R.G. Duffett who went out of his busy schedule to assist me with data analysis and interpretation chapter. He offered me great academic guidance and professional assistance in the completion of this study. Professor M. Dassah who assisted me with the revision of my thesis to an acceptable academic level, thank you so much Prof for your professional guidance. My mentor, Professor MS Binza for his contribution in the beginning of my PhD project and his continuous encouragement. Ms Sipokazi Bukani, from the Faculty & Innovation Development Unit, for her continuous support and encouragement since the beginning of my PhD journey, even during difficult times. The Buffalo City Metropolitan Municipality (BCMM) and Nelson Mandela Bay Metropolitan (NMBM) municipality for having permitted me to embark on the study. I am also thankful to the municipal officials for the information they provided during the data-collection process. All the members involved in the project for their cooperation during the data-collection process. My entire family for their unconditional support. I am grateful to everyone who assisted me with primary and secondary sources of information. v DEDICATION This thesis is dedicated to my parents, Milton Mzamo Mditshwa and Edith Zandile Mditshwa, who believed in me. May the Almighty God bless you. This work is also dedicated to my wife, Cikizwa Sakhele Mditshwa, who has supported me throughout this journey. vi TABLE OF CONTENTS DECLARATION ......................................................................................................... ii ABSTRACT .............................................................................................................. iii ACKNOWLEDGEMENTS .......................................................................................... v LIST OF FIGURES................................................................................................... xv LIST OF TABLES ................................................................................................... xvi ABBREVIATIONS AND ACRONYMS .................................................................. xviii CHAPTER ONE ......................................................................................................... 1 INTRODUCTION AND BACKGROUND .................................................................... 1 1.1 INTRODUCTION ............................................................................................. 1 1.2 CLARIFICATION OF TERMS AND CONCEPTS............................................. 6 1.3 PROBLEM STATEMENT ................................................................................ 9 1.3.1 Background to the research problem ................................................ 10 1.4 RESEARCH QUESTION ............................................................................... 14 1.5 RESEARCH OBJECTIVES ........................................................................... 14 1.6 RESEARCH METHODOLOGY...................................................................... 14 1.6.1 The quantitative research method ..................................................... 15 1.7 SIGNIFICANCE OF THE STUDY .................................................................. 16 1.8 EXPECTED OUTCOME AND RESULTS ..................................................... 17 1.9 ETHICAL CONSIDERATION ........................................................................ 17 1.9.1 Ethical issues ...................................................................................