Recognising that there is an increasingly favourable environment for urban development partnerships in South Africa, there is a need to step up the identification and design of suitable projects led by local government in anticipation of new funding for urban infrastructure, Financial Sector Charter targets and continued growth in the property market. This one-day seminar gave participants the opportunity to discuss the potential for urban development partnership projects and the support and incentives that are available for these projects.

Funding and financial incentives

MR Sithole Mbanga, CEO of the SA Cities Network, welcomed everybody to the Seminar and outlined the objective of discussing the incentives and grants that support urban development partnerships with some of the institutions that manage and administer these instruments. He emphasized the learning aspect of the discussions and encouraged everybody to take notes, share experiences and challenge positions.

Neighbourhood Development Partnership Unit, National Treasury

Li Pernegger presented a detailed overview of the new Neighbourhood Development Partnership Grant and discussed the other national grants like housing subsidies, the Public
Transport Infrastructure and Systems grant, and MIG.

In introducing the NDP grant, she outlined the key objective which is to provide municipalities with assistance to develop appropriate project proposals for property developments in townships and new residential neighbourhoods that include the construction or upgrading of communities facilities and, where appropriate, attract private sector funding and input. The problem statement that underpins the NDP grant is driven by problems of township underdevelopment. Townships have marginal and undiversified economies; there is a persistence of spatial and economic apartheid, with townships continuing to be spatially divided from functioning economic centres in the urban fabric. Most investment in township areas is to address service backlogs, but there is very little forward-looking development of strategic infrastructure. Yet 60% of the urban population in SA lives in the townships.

The vision for the NDP grant is improved quality of life of township residents through the creation of economically viable and sustainable nodes. This is to be achieved by directing public investment to promote selected township nodal projects that are supported by private sector investment.

The NDP grant has two elements:

• It provides municipalities with funding for technical assistance that is required to design and assemble suitable neighbourhood development projects. This support can even be
  used for wide area planning and township upgrading strategies beyond the scope of the specific neighbourhood.
• It provides municipalities with a capital grant to cover the costs of land, buildings and other infrastructure that will contribute to the development of neighbourhood nodes and
  provide community facilities in underserved neighbourhoods.

The NDP grant is a longer term initiative with a strong focus on project process and operational support in terms of post project area management. The project portfolio is expected to amount to a funding contribution of approximately R10 billion over a ten year period, with funding for approximately 100 projects. At present there are 35 projects in the pipeline. Of these projects, most are in eThekwini (and these projects also have a significantly higher private sector contribution); Johannesburg has also been successful in assembling suitable projects for NDP grant funding; and Tshwane.

Demand for NDP grant is already beginning to outstrip supply. There are thousands of townships in SA and only about 100 key projects will be funded. Extracting learning and good practice from these funded projects is therefore a key objective.

The main challenges to be dealt with in implementing the NDP grant include:

• Increasing private sector contributions to these neighbourhood development projects;
• Ring-fencing other government funding in area-based projects;
• Co-ordinating development capacity to ensure that projects are sustainable; and
• Assembling larger and more strategic projects that fundamentally reshape existing townships.

The following presentation documents are available in PDF format:

• Presentation documents

  • UDP Seminar Notes
  • NDP and other grants
  • Tax incentives
  • Public Private Partnerships
  • State land
  • Guarantees
  • City Improvement Districts