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agement and lack of innovation. Despite the challenges of being a small country with limited water resources and high population density, Singapore has been cited as an excellent example of heavy infrastructure investments through public-private partnerships (PPPs). The initiatives have yielded positive rapid economic growth outcomes. Concerning water supply, the bulk of Singapore’s water is sourced from Malaysia, with 30% wastewater recycling and 10% desalination (Jones 2015). It can be noted that the success of PPP projects requires sound technical un- derstanding, managerial support, good financial manage- ment, political support, a compatible legal and regulatory framework, and risk management (Biygautane et al. 2019). The intrinsic characteristics and existing problems in PPPs are that they demand better risk allocation between PPPs and cooperative solid relationships (Zou et al. 2014).
The PPP has been regarded as a preferred alternative to project financing as it offers benefits such as value for money, potential delivery (particularly for large-scale projects), provision of sector-wide cooperation, funding from the private sector, capital building and creation of synergy, potential to increase the volume of business, possibility of attaining high efficiency and quality, ability to promote competitiveness and fair competition, better risk allocation, mutual benefit to the private and public sector, and greater asset utilisation (Kajimo-Shakantu et al. 2014). Therefore, a PPP is an agreement between the public and private sectors in which private industry provides particular government services, tasks, and responsibilities (Sastoque et al. 2016).
Water can bring long-term stability to the economy and social development (Hao et al. 2019). Methods for decoupling economic relationships between economic growth and resource consumption have been developed to compare the change rate of economic development from water consumption (Cai et al. 2019; Wang and Wang 2020). This study seeks to determine the socio-economic benefits of water provision through PPP external water supply schemes. The study considered the decoupling and decomposition of water services from economic growth at Emalahleni Local Municipality (ELM).
Literature review
Public infrastructure is essential for economic and social activities as it complements private sector investments and economic growth by reducing the cost of production (Frone and Frone 2014). Germaschewski (2013) recorded that an increase in infrastructure investment by approxi- mately 7% on developing countries such as South Korea and Malaysia has yielded economic growth results of roughly 1–2%, indicating that growing economic demands on emerging economies require considerable infrastruc- ture investments. Approximately 79% of African countries
have high water shortages and challenges related to water infrastructure provision, maintenance and operation. Kate- ja (2012) mentioned that maintaining and upgrading exist- ing infrastructure requires approximately 7% of the devel- oping country’s Gross Domestic Product (GDP). However, their average spending is around 3%. Global economy and financial recessions have proven that fragmented private or public sector investments are inadequate to stimulate socio-economic developments unless a joined corpora- tion exists (Frone and Frone 2014). Germaschewski (2013, alluded that government investments are generally based on increased taxes, whereas the tax revenue in emerging markets is low and may not meet the required demands. He also indicated that high taxes reduce the household’s disposable income and adversely affect individual wealth generation, negatively affecting private investments.
Private co-financing of infrastructure projects augments the limited government budgets. It provides more reliable cost-benefit analysis, project profitability and risk alloca- tion (Hammes and Mandell 2019). It provides benefits such as private financing, bringing required expertise, modern innovation, technologies and practical strategies that re- duce project risks (Kumari and Sharma 2017). Cui and Sun (2019) reported that PPP project financing increases the economic value of infrastructure output and facilitates overall infrastructure development. Taxes, land value cap- ture, tax increment financing, and PPPs are some methods explored in public infrastructure finance. Loans from com- mercial banks have predominantly been the instrument of PPP project finance, followed by a growing momentum of project bonds while governments provide debt guar- antees (Li et al. 2017). There has been a positive interest from insurance companies, sovereign wealth funds and pension funds for long-term investments in infrastructure (Li et al. 2017). African infrastructure development has been encouraged by the support from developed trading countries, but this has since declined due to low project revenue as local currencies are lower than foreign capital, there is a decline in international interest rates, privatisa- tion of public enterprise, and security of creditor commer- cial banks loans (Dailami and Leipziger 1998).
Infrastructure projects are expensive and require long-term debt capital. Developing countries are associated with high development costs, unreliability and low efficiency (Ameyaw and Chan 2013); such challenges emanate from a lack of technical and administrative capacity to develop, implement, operate and maintain assets (Dithebe et al. 2019). These countries also suffer from limited infrastructure investment laws, project financing institutes, limited access to loans, insufficient revenue (taxes and tariffs), and poor procurement and planning (Dithebe et al. 2019). Chan and Ameyaw (2013) allude to this fact by affirming that public utilities render water services that are inadequate for the
44 | Proceedings of the conference on Public innovation, develoPment and sustainability