The funding of the Transnet project in Empangeni - Nkwalini
Date
2018
Authors
Citeko, Luvuyo
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Abstract
Infrastructure projects are implemented by different State Owned
Enterprises in most countries around the world, in the African continent and
in South Africa. State Owned Enterprises across the world fund
infrastructure projects using different funding models. The funding theories
that will be explored in this research paper are:
• Self-funding model;
• Public-Private Partnerships funding model;
• Government funding model; and
• Aid or donations funding model.
Transnet as a State Owned Enterprise embarks on many infrastructure
projects with the view to drive development and stimulate economic activity.
Transnet follows prescribed evaluation criteria that emphasise the
profitability requirements for projects to be undertaken or funded. Those
projects that have a greater return on investment, higher profitability or
higher Net Present Value tend to get more support or funding from Transnet.
This means that most projects are funded using a self-funding model.
Most projects that have a negative profitability index but which have
potential to create jobs, boost local economies and create sustainable small
to medium businesses in a substantial way tend to be overlooked because
of the return on investment requirements. The Empangeni-Nkwalini branch
line is a case in point. This project has been unable to obtain funding from
Transnet due to its lack of profitability.
The basis of the study was to establish the most suitable funding model
among the four models for the Empangeni-Nkwalini branch line.
The Rational Comprehensive Model was used to prescribe a new funding
method for the Empangeni-Nkwalini project. The research used the qualitative research method in responding to the
research question, since the research that is conducted is exploratory in
nature and a qualitative approach is best suited to this type of research.
Data that is analysed in order to gain an understanding of the phenomenon
under investigation, in this case existing funding models, was collected
through interviews and document assessments.
The findings of the research suggest that self-funding, Public-Private
Partnership, and a Government funding model can all be suitable for
Empangeni-Nkwalini project funding requirements, providing that certain
conditions are met under each model. The findings also suggest that the
Aid or Donations funding Model is not suitable for the Empangeni-Nkwalini
project funding requirements.
Description
A research report submitted in partial fulfilment of the requirements for the degree of Master of Management in Public Policy to the Faculty of
Commerce, Law and Management, University of the
Witwatersrand, Johannesburg, 2018