Coega and East London industrial development zones (IDZs): the financial and socio-economic impact of the Eastern Cape IDZs and their prospects

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The aim of this article was to assess the financial and socio-economic impact of the two Industrial Development Zones (IDZs) emanating from the public-private partnerships (PPPs) arrangement in the Buffalo City and Nelson Mandela Metropolitan Municipalities, located in the Eastern Cape of South Africa. The metropolitan municipalities, despite the introduction of PPPs, are still faced with serious socio-economic challenges such as slow economic growth, increased poverty levels, unemployment and mostly stagnant infrastructure development as a result of underfunding. In addition, metropolitan municipalities remain obliged to deliver on their constitutional mandate, which is the provision of services to communities consistent with the Municipal Financed Management Act (MFMA) and Municipal Systems Act (MSA). Municipal financial planning and management leads to the development of methods to achieve sound financial performance in municipalities in line with service delivery demands. Sound municipal financial performance enables the municipalities to provide goods and services to all citizens.
The study adopted a quantitative research approach, where a structured questionnaire was administered to 50 purposely selected participants. A core finding of the study suggested that the metropolitan municipalities benefited from the IDZs PPP arrangements where project planning, development and management skills were transferred to government officials, impacting on improved service delivery. A key recommendation forwarded suggests that both the national government and metropolitan municipalities need to champion PPP procurement through the enhancement of the Municipal Public Private Partnership Implementation Framework. The study concluded that a regulation, such as the aforementioned, without a structured implementation plan, eminently jeopardizes an investor’s interest in PPP arrangements, with negative financial consequences for the state.

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    • Figure 1. Theoretical Proposition 1: PPP cost efficiency
    • Figure 2. Theoretical proposition 2: PPP project management
    • Figure 3. Theoretical Proposition 3: PPP - RISK SHARING/TRANSFER
    • Figure 4. Theoretical proposition 5: policy framework
    • Figure 5. Theoretical proposition6: socio-economic impact of PPP projects
    • Table 1. A five (5) year audit opinion analysis
    • Table 2. Economic indicator in terms of basic welfare