Increased cooperation between business and the government is a viable way to improve the delivery of basic services such as water, electricity and infrastructure. However, regulations are hindering the process.

A closer relationship with businesses is vital for the government, which has made a point of its desire to improve service delivery. However, bureaucracy and prohibitive municipal regulations are raising questions about whether a close partnership between the two is viable.

In October 2011, for example, car insurance company Dial Direct was banned from repairing potholes on Johannesburg roads after the Johannesburg Roads Agency (JRA) said it had to “formalise” the process.

Dial Direct was spending roughly R1 million a month on the project, which made use an innovative Jetpatcher machine, transported on the back of a truck. The highly efficient team had managed to fill close to 40 000 potholes.

It took less than five minutes to repair most holes and was costing less than a third of what the JRA was paying to repair a hole.
Not only did Dial Direct fund the entire operation, which ran for just nine months, but it also provided jobs for 27 staff.

Bradley du Chenne, a senior executive at Dial Direct, was deeply disappointed when the JRA said the company could not continue its work while the process was being formalised.
“Everyone was very satisfied with the repair quality,” he says. “We wanted to resolve the matter urgently. We were entering the summer period, with heavy storms coming. It’s pothole high season.”

Du Chenne says another company had wanted to use similar technology to repair to the holes, but wanted to be paid for it. “The JRA have invited us and others to tender, which is strange when you are not getting paid for it,” he says. “I’m so disappointed. So much time and energy was put into this initiative.”

Du Chenne says the company was receiving good exposure from the exercise, but it was more about good corporate citizenship and contributing to the community.
“It’s not something you can measure directly, but it was more than a brand-building initiative.”

Johannesburg mayoral committee member Rihana Moosajee explains that the city welcomes public–private partnerships (PPPs), but is guided by the Municipal Finance Act.
“The partnership was signed as a pilot for six months, but that had lapsed,” she says. “We had indicated the need to evaluate the success of the partnership. We appreciate the partnership, but it is important to appreciate that these issues are guided by a municipal finance framework.”

In another case, insurance company Outsurance formed a partnership with the Johannesburg Metropolitan Police, where it trained and placed pointsmen at ‘problematic’ intersections. More than 200 pointsmen were employed, with 150 on duty in Johannesburg.

“We had a team of mobile and static pointsmen who would go around and do all of that,” says Outsurance co-founder Willem Roos.

“It worked well. The pointsmen were trained by the JMPD. We paid all the employees’ salaries and the cost of managing the operation. It wasn’t costing the city a cent, Roos explains.
“We benefited because it was talked about in the media and we had marketing benefits from it. It was more than that, though. It was about being a good corporate citizen.”
The city, however, felt that this project also had to go through a tender process.

“We were very surprised when the contract came up for renewal and suddenly we received a letter saying that that we had to take the pointsmen off the street,” explains Roos. He was puzzled, given that it was not costing the city money and it was Outsurance’s idea. “But we understood the city’s side,” he says.

“We receive benefits from it – and other parties, who think they can do something similar, should also have a chance to tender for the process,” he says. “We believe red tape is not always bad. We want to comply with spirit and letter of the law.”

The city has allowed the Outsurance pointsmen back on the streets temporarily while it draws up tender documents – but, 18 months later, there is still no sign of a solution to this issue.
Mbulelo Musi of the Department of Co-operative Governance and Traditional Affairs says the government has no choice but to work with businesses if wants to improve the delivery of services to its people.

“Given the lack of resources and expertise in the government, there is no choice but to form close partnerships with businesses,” he says.
“In many areas, we are already working very closely, but we want to increase the cooperation in 2012.”
One of the major projects being mooted by the government will see big businesses ‘adopt’ a municipality.

“We would like to see business working very closely with municipalities to make sure that basic services like water, electricity and infrastructure are delivered without any glitches,” Musi says.

“We would also like to see economic development at the local level.”

Many regulations are, however, inhibiting business, Musi says.

“One of critical things for us is to find ways of creating an easier environment for them to work in.

“We need to look at regulations that are less inhibiting and that will create an enabling environment for business.

“We must work to enable businesses, so that they can enhance the development of our communities.”

This, he says, is an interactive process that needs to be done with business.

SA Chamber of Commerce and Industry chief operating officer, Peggy Drodskie, says while the ‘adopt a municipality’ project is a good idea, regulations and corporate governance issues are stopping many businesses from going ahead with PPPs.

“One of our members indicated to us they would love to become involved in assisting local authorities on a PPP basis, but they couldn’t because they were the bankers for the local municipality,” explains Drodskie. “There was a corporate governance issue with that. So there are funny angles with this. It’s not as simple as it seems.”

Drodskie says a lot depends on how local authorities handle regulations.

“I know, for example, that in Cape Town businesses find it very difficult to get public–private projects going. The city always wants lengthy discussions before starting anything,” she says. “So, it seems as though it depends on the municipality concerned and how flexible it is.”

Still, helping a community free of charge is not something that a company should have to tender for, she says. “If you’ve got help to give, then give it. If there were dozens of companies fixing potholes, that could only be a good thing.”