Since South Africa's first democratic government came to power in 1994, the country has been developing numerous new policies to facilitate the reconstruction and development of the nation, and in particular to redress the highly prevalent disparity in access to services and infrastructure. This has included new approaches to economic management, infrastructure and service provision, and local government. The sum of these policies supports PSP both directly and indirectly.

The developmental cornerstone of the new policies is the Reconstruction and Development Plan (RDP), a multi-sector strategy aimed at establishing new paradigms of economic growth, redistribution, public sector reform, participatory development and new modes of service delivery. For macro-economic policy, the growth, employment and redistribution strategy (GEAR) was put in place, focusing on debt management, attracting investment, liberalising trade and creating employment. Both strategies emphasise that government cannot achieve its growth and development objectives without partners. On this basis, a range of other policy frameworks were added to the policy environment that allows for PSP. A strategic framework for PPPs, published in 2000, confirmed the national commitment to PSP, and provided the basis for regulatory and institutional measures specifically targeted at assisting national departments and provincial governments that are negotiating partnership contracts.

In relative terms, local government in South Africa has a more autonomous fiscal relationship with the national treasury, and PSP in the municipal sphere required a specific set of policies. The baseline paper in this regard is the White Paper on Local Government published in 1998. It proposed a more developmental role for municipalities, and among other things emphasised the importance of municipal borrowing on private capital markets, and of service delivery partnerships with private sector, other public agencies and civil society organisations. This policy paper coined the term 'municipal service partnerships' (MSPs) to move away from the implication that only the public and private sectors could be involved in a partnership approach. A White Paper on Municipal Service Partnerships produced thereafter provides local government with the policies and guidelines for action at the local level. It spells out the philosophy behind partnerships and highlights the need for strategic assessment of challenges and issues, stakeholder consultation, and firm institutional and legal measures to firm up the policies.

This policy framework confirms the South African government's commitment to municipal-level PSP and provides directives to municipalities as to how they can implement this partnership vision. Informed by South Africa's experience in consulting trade unions and other stakeholders, the policy framework emphasises the importance of stakeholder involvement in the implementation of PSP.

More specific infrastructure policy is articulated in the Municipal Infrastructure Investment Framework (MIIF) (see Box 10.8), and further policy development is taking place to establish a framework for the provision of free basic services to people who cannot afford them. These policy statements have informed various legislative initiatives to direct municipal services partnerships. The Municipal Systems Act deals with most aspects of municipal administration, and includes specific provisions regarding partnerships. At the time of writing, a Municipal Finance Management Bill was in progress, aiming to improve the quality of municipal financial management, and to enhance the creditworthiness of municipalities. It contains proposals specific for a borrowing framework that would improve the quality of information available to the markets, and enhance certainty in the municipal system.

Inter-governmental transfers from the national to local levels add momentum to these policies. Some grants are specifically aimed at restructuring and reforming municipalities, so as to streamline their activities and make them more efficient. Others target service delivery and infrastructure development, with incentives to leverage PSP.

The policy framework for municipal PSP in South Africa fits into one of the most extensive enabling policy environments in the world, supported by this array of macro-economic, fiscal and development policies, laws and financial support measures. Critics argue that the policy frameworks are too intellectual, that they are lacking in practical application and have not been accompanied by a commensurate level of capacity building for local government. Progress with municipal-level PSP suggests, however, that the policies do have some practical relevance, although some problems have been encountered (notably with regard to tariff-setting procedures), and implementation is still in its infancy. The broad and specific policy framework in South Africa provides a detailed example of the wide-ranging issues at stake, and the value of systematically addressing those issues in a strategic manner.