Public-private partnerships can fill in the gaps and put out the fires, so everyone benefits.
Public-private partnerships, or PPPs, have existed for many years and are well known for the significant impact they can have on infrastructure development. By combining efforts, PPPs can maximise efficiency which can reduce costs and ensure that projects are completed on time. PPPs can also be structured as a shared value tool to mitigate insurance risk, which results in benefits for everyone involved, including the insurer and individuals.
Advantages of PPPs
Government initiatives go a long way towards addressing societal issues, but governments are limited by the resources they have available. According to McKinsey, PPPs have shown great success in addressing this gap, especially when helping keep infrastructure projects on track and on time. For example, when utilising PPPs, the UK Audit Office found a reduction of 70 percent in project budget overrun, and an Australian study of 54 projects revealed they were, on average, ahead of schedule by three percent (the average was 24 percent late for non-PPP projects).
Along with helping finance projects, the South African government understands the many benefits that come with PPPs, and that they are a critical component of addressing urgent infrastructure backlogs and creating jobs. In fact, per the latest Budget review, 34 PPPs worth nearly R90 billion had been completed in South Africa. In February 2024, National Treasury also gazetted proposed amendments to Regulation 16 to reduce the red tape in the planning and procurement of PPPs, hopefully making PPPs more attractive for the private sector.
Plugging the gap
A South African PPP that’s not only helping the public sector deliver on much-needed road infrastructure repairs but also enabling risk-mitigation is the Discovery Pothole Patrol.
Since 2021, the initiative – a joint private sector partnership between Discovery Insure and Avis Southern Africa – has engaged with the Johannesburg Roads Agency (JRA) to help repair the city’s potholes (it is estimated that the City of Johannesburg needs R37 billion to completely fix its roads – a tall order indeed). To date, Discovery Pothole Patrol has repaired over 213 000 potholes reported by residents via the Discovery Pothole Patrol app.
“As road users, many of us have incurred damage to tyres, rims, airbags, and even been involved in accidents due to potholes. It’s ongoing and extensive, and although municipalities and road authorities are trying to address this problem, there’s an opportunity for the private sector to assist public entities – like the Discovery Pothole Patrol”, says Robert Attwell, Discovery Insure CEO.
Attwell adds that, since its launch, the cross-sector partnership has helped reduce the frequency of Johannesburg pothole-related claims. “Not only does the initiative benefit Discovery Insure’s clients, but other insurers’ clients also benefit from safer roads. Our data shows that this initiative has led to a 20% reduction in pothole related claims.”
In the face of natural disasters or large-scale, unforeseen events, PPPs can also play an important role in mobilising resources and mitigating risk in affected communities. Fire Force, a Discovery Insure initiative in partnership with Advanced Emergency Management Solutions (AEMS), was established in 2022 as an emergency response to assist clients and non-clients in a fire emergency. Discovery Fire Force attends to, on average, four fires a week in the Johannesburg region.
Beyond the bumpy road
Through effective collaboration, PPPs allow the public sector to focus on bigger- picture issues, like policy and planning, and the insurance industry can provide technical expertise, management capabilities, and risk assessment. PPPs can also help address unemployment – a critical issue in South Africa.
Case in point: Discovery Pothole Patrol Academy is driving change through job creation and sustainable skills development. With the help of partial funding from INSETA, Discovery and Avis launched a pilot skills development programme in 2023, called the Pothole Patrol Academy, which involved 18 learners.
24 learners, who range in age from 22 to 34, are officially on board since 1 February 2024. The academy is accredited to offer a 12-month practical skills training programme in the form of an NQF Level 3 qualification, with the end goal that participants know how to transfer that knowledge to their own road construction small businesses.
“The risk landscape is continuously shifting and ever challenging, but, through effective collaboration, PPPs can help insurers curb the impact of risks and lead to better premiums for clients. They can also help government address gaps, and add shared value to society at large,” says Attwell.
