South Africa’s Municipal Infrastructure Investment Unit

South Africa’sSouth Africa’sMunicipal Infrastructure Municipal Infrastructure

Investment UnitInvestment Unit

Operations, Budget

& Future Direction

Ms. Gugu Moloi

MIIU CEO

Operational OverviewOperational Overview

The MIIUThe 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

The Project Preparation Unit:The Project Preparation Unit:How Does it Operate?How 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

The Project Development The Project Development ProcessProcess

1. Assess feasibility of MSP options

2. Council decision on option (with MIIU advice)

3. Prepare bid documents, draft contract

4. Selection of public or private partner

5. Negotiate & sign contract

6. Financial close -- begin implementation

7. Initiate contract compliance monitoring

Completed MSPs:Completed MSPs:Total ValuesTotal Values

Contracts Values O&M R 142 m O&M plus Capex R 4,575 m Divestiture R 414 m Corporatisation R 50 m

---------- Total R 5,181m

Benefits for the Disadvantaged:Benefits for the Disadvantaged:Direct Benefits to Households:Direct 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

Benefits for the Disadvantaged:Benefits for the Disadvantaged:Indirect Service Efficiencies:Indirect Service Efficiencies:

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

Benefits for the Disadvantaged:Benefits for the Disadvantaged:Environmental Improvement:Environmental Improvement:

Thabazimbi waste Robertson waste WMLC waste Nelspruit water

Dolphin Coast water Tzaneen waste Jnb Metro Gas

Benefits for the Disadvantaged:Benefits for the Disadvantaged:More Revenue for Services to Poor:More Revenue for Services to Poor:

Jnb Metro Gas Jnb Rand airport Richards Bay airport Pretoria airport Nelspruit water Dolphin Coast water Jnb Parking

Budget OverviewBudget Overview

Budget StructureBudget Structure

1. Revenues(DPLG capital, MTEF, donors, interest income)



minus

2. Administrative Expenditures(BOD expenses, DBSA mgmt fee, office admin.)



minus

2. Administrative Expenditures(BOD expenses, DBSA mgmt fee, office admin.)

minus

3. Project Expenditures(costs of investigating & preparing MSP projects)

MIIU Budget 1998-2000MIIU 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

MIIU Budget 1998-2000MIIU 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

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


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


Admin Expend.: 98-99

BOD expenses 13

DBSA admin fee 1,542

General admin 307

TOTAL 1,862


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


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


Project Expend.: 98-99

MPPP projects 6,712

MIIU pipeline 1,619

TOTAL 8,331


Project Expend.: 98-99 99-00

MPPP projects 6,712 1,135

MIIU pipeline 1,619 5,887

TOTAL 8,331 7,022


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


Summary: 98-99 99-00 00-01

Revenues 25,496 16,144 9,292


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


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


Goals: Maintain MIIU pipeline, accelerate

disbursements Confirm MTEF funding Find new donor funding New activities: interns, success fees, etc. Target disbursements by category


Revenues: 01-02

MTEF allocation 7,000

Interest 2,250

Padco reimburse 90

Success fees 1,425

Donor grant 0

TOTAL 10,765


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


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


Admin Expend.: 01-02

BOD expenses 28

DBSA admin fee 1,579

General admin 1,768

TOTAL 3,375


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


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



MIIU pipeline 19,025



MIIU pipeline 19,025

Concessions 29%

Metros 26%

Dist. councils 25%

Other local councils 20%


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%


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%


Summary: 01-02 02-03 03-04

Revenues 10,765 24,590 8,965


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


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


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

Lessons Learned &Lessons Learned &Future DirectionFuture Direction

Lessons Learned – Lessons Learned – toward a comprehensive strategytoward a comprehensive strategy

Need for private investment to supplement govt infrastructure finance

PPPs vs. bonds vs. grants – needed linkages Measuring/monitoring govt performance Sustaining MIIU’s value to local govt:

-- internships & more local staff

-- success fees & revolving fund

-- exit strategy & succession planning

MIIU into the Future:MIIU into the Future:MSPs after DemarcationMSPs after Demarcation

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

Municipal Reform StrategyMunicipal Reform Strategy1. Planning

- IDPs, action plans

2. Restructuring - Utilities, agencies, PPPs

3. Performance Management - Performance-based contracting

4. Capacity Development - Learning to supervise, not implement

RestructuringRestructuring Budget Analysis

- Match actual revenues & costs

Organisational Redesign - Match structure & function

Partnerships- Assess partnership options

- Find public & private partners

The MIIU Role in ReformThe 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

Strategic IssuesStrategic 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

Strategic Issues - cont.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

SummarySummary 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

Thank You.For more information visit…

http://www.miiu.org.za

South Africa’s Municipal Infrastructure Investment Unit

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