Economic Development Minister Ebrahim Patel has called for a new dialogue on the appropriate structuring of public-private partnerships (PPPs) in South Africa, which was gearing up to implement a multitrillion-rand infrastructure roll-out over the coming two decades.

Speaking at the second yearly Economic Development Conference in Ekurhuleni on Thursday, Patel said there was an opportunity for the private sector to be integrated into the 17 strategic infrastructure projects, or Sips, outlined by the Presidential Infrastructure Coordinating Commission. The Sips included logistics, energy and water projects designed to catalyse growth and investment in five geographically defined regions, or corridors. Also included were housing, health, education, communications, science and cross-border projects and initiatives.

However Patel argued that future PPPs would have to embrace an "equitable risk transfer" to the private sector, as opposed to the models deployed in the recent past that had left the public sector bearing the bulk of the risk burden.

There was currently widespread unhappiness in the private sector about the stop/start nature of PPP projects, some of which had also been cancelled after protracted delays.

There was also some concern that the current infrastructure plan was overly dominated by State-owned companies and departments, with the private sector's role limited to buying government, or utility bonds and supplying material and technical inputs to projects.

Patel said there was a need to open a discussion on the "appropriate" structuring of PPPs.

But he also stressed that opportunities exist for innovative funding, "including accessing retirement funding as equity in infrastructure projects". No reference was made, though, to prescribing that specific resources be set aside by pension funds to support the infrastructure plan.

Patel received support for his appeal for more equitable partnerships with the private sector, as well as for seeking to mobilise domestic savings in favour of infrastructure, from renowned economist Professor Joseph Stiglitz.

The Nobel prize in economics recipient, who is currently associated with Columbia University, argued that skewed risk allocations were unhealthy. There was a need, therefore, to "look beyond the rhetoric" around partnerships in infrastructure and calculate the "cost of capital, who gains and who carries the risk".

"I don't worry about the issue of State versus non-State as much as I do about what is the most efficient delivery mechanism," he elaborated.

There was an important role, though, for building small and medium-sized enterprises around the infrastructure programmes.

Public sector efficiency in the area of infrastructure delivery could be safeguarded through sound procurement procedures and preproject analysis, as well as through ensuring high levels of public consultation around the proposed development, including a discussion around the costs. "One of the problems of having an economy with a high level of concentration is that you don't have as many voices as you could. That is another important reason for promoting competition in South Africa."

A number of East Asian economies had also successfully channelled pension funds in support of the infrastructure that had been developed to facilitate their rapid export-led growth strategies.

South Africa should, thus, consider the carrots and sticks needed to help direct domestic savings towards projects that would stimulate future growth and investment.

Stiglitz also welcomed South Africa's long-term focus on infrastructure, which he said would have both demand- and supply-side multiplier effects.

"We are in a distinctive time in the global economy, where we have vastly under-utilised resources . . . where demand does not equal supply," he said.

"The kind of infrastructure programme that South Africa is developing offers a model for countries for addressing the demand weaknesses created by the global economic crisis. You are expanding aggregate demand by expanding the level of public investment and creating the generator of new jobs. At the same time, the improvements in infrastructure are an important supply-side contributor - they will increase the productivity of the economy," he said.

The average returns associated with similar infrastructure programmes that had been pursued elsewhere had been high, even when the inevitable project failures where included in the calculation.

"Together with skills development and promoting innovation, [infrastructure] represents some of the best public investments an economy can make today."