DPWI role in Smart City Projects to deal with the infrastructure requirements and service delivery needs of client departments; with Minister and Deputy Minister

Meeting report

Briefing by Infrastructure South Africa: Smart Cities
Dr Alec Moemi, Head of Infrastructure South Africa (ISA), opened by saying that a host of Smart City projects are proposed in a host of provinces, metros, and councils across the country. In this presentation, not all of them will be looked into. He noted that the Portfolio Committee has requested the Department of Public Works and Infrastructure as well as Infrastructure South Africa (ISA) to give a report and update on:

- Mooikloof Mega City in Pretoria,
- Nkosi City adjacent to Kruger National Park,
- Durban Aerotropolis and,
- The Lanseria Smart City.

The Project that has gone through registration with Infrastructure SA is the Mooikloof Mega City. The rest are yet to be registered, or they are still with the project sponsors.

Background
South Africa has long decided to build a new city, a Smart Post-Apartheid City. Since the advent of democracy in 1994, ISA has been trying to alter the Apartheid spatial divide, trying to close the spatial gap, whilst ensuring the development pool across various cities, city regions and districts was aimed at bridging the racial divides that were ushered in by the then laws such as the Group Areas Act. It is on this background that the democratic government has been preoccupied with the dream of ushering in smart cities in South Africa.

The Department of Cooperative Governance has developed a Smart Cities Framework, adopted in March 2021. The objective is to share local and international learning to provide all role players with factual information on the benefits and advantages as well as the challenges and disadvantages that need to be taken into account when planning and implementing smart city initiatives.

In its development planning, South Africa prioritises information learning with international counterparts, particularly with the BRICS counterparts, as some member countries are miles ahead in developing Smart Cities.

The Framework for the New City Initiative
The Eastern Seaboard Development Vision is being driven by government at a national level. Whilst the Committee did not request a report on this, this is what ISA is using to pilot the Smart City Framework.

This Project proposed in the area of Umtata-Port Shepstone-Margate area. It relates to the infrastructure of over 75% of roads in the area that are unpaved and require attention to qualify for classification as a Smart City. Access to Water, Sanitation, Electricity, Waste Management, and Information and Communication Technologies by businesses, individuals, and indigent households are key indicators during the planning stages, if the area is indeed set to be a smart city.

On waste management, South Africa has a serious problem with landfills, paying attention to what China has been doing in this regard. Similarly, Singapore and the Kingdom of the Netherlands are trailing behind China as far as smart waste management technologies are concerned. Infrastructure South Africa is looking at these technologies, and a lot of infrastructure, support, and development will be required in the Eastern Seaboard to achieve the status of a Smart City.

The Spatial Development Framework has been recently finalised for the city region and is chaired by the Municipal Infrastructure Support Agency (MISA). The implementation framework has been done for all the smart city projects. As it relates to the Eastern Seaboard Development Vision, MISA has achieved phases one to five:

- Phase one (The Inception): The inception report communicates the purpose of the Project and assists in obtaining initial buy-in from the relevant structures and stakeholders.

- Phase two (The Status Quo Analysis Report): This phase involves an analysis of the legislative and policy context to develop a conceptual vision for the Eastern Seaboard RSDF. This is an opportunity to analyse various policies and legislation to extract strategic and spatial direction that will guide the development of the RSDF and, subsequently, the entire Eastern Seaboard Development.

- Phase three (The Regional Situational Analysis and Synthesis Report): A spatial analysis and a multidisciplinary situational analysis of the various components forming part of a RSDF is conducted.

- Phase four (The Draft Eastern Seaboard RSDF and Implementation Framework): The Spatial Proposals will be drafted, which are informed by the African Smart City vision, spatial objectives and principles, and the regional situational synthesis.

- Phase five (Public Participation Report & second draft of the Eastern Seaboard Regional Development Framework): This phase will allow the community and all relevant stakeholders to provide comments on the draft ESRSDF.

All four city districts that the Smart City will be in have all agreed they would need a medium-term expenditure framework. It is expected to take three to five years for them to restructure their budget to rededicate themselves to the areas needing attention to ensure the key outcomes are achieved.

Smart Cities Role Classification
Department of Cooperative Governance and Traditional Affairs (CoGTA):
- The Department of Cooperative Governance (DCoG) provides leadership in developing cities and towns in South Africa.
- Development and Coordination of the Smart City Framework.
- Lead IMC on the development of Smart Cities

Department of Public Works and Infrastructure (DPWI):
- The performance agreement between the President and the Minister of Public Works and Infrastructure adjoins the DPWI to identify existing towns and cities for refurbishment and transformation into smart cities.
- A target of three cities/towns had been set.
- Development of Government Precincts.

Infrastructure South Africa:
- Facilitates the implementation of the Gazetted SIPS, which may include mart City Projects.
- Registration of any mega project (over R1 billion) and assess their viability and compliance with the strictures of project pipeline registration of ISA as well as the governance & prescripts of the Infrastructure Development Act.
- Provide Project Preparation Support where feasible

Mooikloof Mega City in Pretoria
The DPWI has been mandated to coordinate the development of Smart Cities within the CoGTA ambit as part of the Smart Cities Programme in terms of the Spatial Planning and Use Management Act (SPLUMA).

Mooikloof Mega City intends to build 50 000 sectional title residential units and is targeting affordable market and first-time home buyers, offering a range of amenities for home buyers.

The Project was gazetted on 24 July 2020 under Human Settlement and has since been registered as a private sector project. The commitment to the Project's investment came through the sustainable infrastructure development symposium.

Phase one seeks to deliver 15 000 housing units. Some developments have begun, such as the expansion of roads. However, the Project has hit a snag. While the private sector companies are willing to invest over R4 billion in the development of this smart City, there is a need for an additional amount of over R1.2 billion. The DPWI, National Treasury, ISA, the private sector, and the Presidency have engaged Tshwane Municipality on the matter to resolve the impasse. ISA is considering escalating the matter to Operation Vulindlela. The main issue is that the City of Tshwane has indicated it does not have the requisite for bulk infrastructure, of R1.3 billion.

Three possible proposals to help address the challenges were brought forward, namely:

- Engaging the Development Bank of South Africa (DBSA) and the Infrastructure Fund for a product called Bomela, where DBSA (Development Bank of South Africa) seeks to bring all requisite resources that are required to bring all the required resources to develop bulk funding, provided that the City of Tshwane agrees to sign over the rates and taxes that are to be derived out of that bulk payment, for the duration which the investment has been amortised. Once DBSA has recouped its investment, then the revenue from rates and taxes would be accruable to the City. The City of Tshwane was not very keen on this offer.
- Medium-Term Expenditure Framework (MTEF), to have the amount of money allocated in the future allocated upfront, for the bulk development to take place. Once the housing units are built and sold, the City recoups the funds from the residents through sales, rates, and taxes. The City will transfer these funds to National Treasury, as the City will have received the funds much earlier. The City of Tshwane did not seem interested in this proposal.
- The build-operate-transfer scheme, which the National Treasury agreed to. Wherein the private sector or the City of Tshwane runs its process of getting a service provider to build the bulk, operate, and transfer the infrastructure to the City of Tshwane once it has made its money.

ISA and DBSA always felt strongly about the VUMELA type of product, as it has no profit motive, and saves for their administrative fees. DBSA has a developmental motive and cares for the motive of South Africa.

Nkosi City, Kruger National Park
Private sector integrated human settlement development is currently in planning by Nkosi City Development (Pty Ltd (formed by Nkosi City Communal Property Association and a private developer, Dovetail Properties (Pty) Ltd) in collaboration with the City of Mbombela. The programme aims to deliver an entirely new smart agricultural city, including 5 045 subsidised housing units (comprised of 1 810 social walk-ups, 558 FLISP, 930 Breaking New Ground (BNG) walk-ups, and 1 747 free standing BNGs, agricultural cooperatives, agricultural industrial sites, various commercial and light industrial developments as well as community infrastructure). This fits with the industrialisation action plan and integrated city planning.

ISA indicated that the township establishment process had been granted by the conditional environmental authorisation bodies, followed by the approved funding from the provincial (Mpumalanga) Department of Human Settlements for internal services which includes subsidised housing and community services.

While the Project has not been formally registered with ISA, they have kept an eye on it and noted that it still has too many chapters to complete, with the issue of having to resolve management and governance issues of the Project taking centre stage.

Durban Aerotropolis
The KwaZulu-Natal Department of Economic Development, Tourism, and Environmental Affairs championed the Project. This is part of the Dube Tradeport. The master plan includes a mix of land uses subservient to and in support of the airport (King Shaka International Airport). DPWI to consider the opportunity to provide accommodation to appropriate user departments in support of integrated development, design, and efficiency for government mandates that need to be incorporated.

Lanseria Smart City
The Office of the Premier of Gauteng initiated the Project. The Greater Lanseria Master Plan was submitted to DPWI for comments in November 2022. The different municipalities and cities that will make up the Smart City will need to consider the master plan to get them approved.

The Lanseria New City Project aims to establish a new Smart City in the area currently known as Lanseria that will be home to between 350 000 and 500 000 people by 2030. The Project is looking at the underdeveloped, outlying areas of housing in Gauteng. This will be the first genuine scale post–Apartheid urban note. With the necessary approval, this Project should break ground in the next 12 to 18 months.

It seeks to be a home to 350 000 – 500 000 people. As it turns out, the actual number will be determined on the pool of phases two and three.

Despite all the initial fervour and urgency with which the Project was taken off the ground, the Project is still not registered with ISA, the main challenge is a result of the instability in the City of Johannesburg. Several resolutions have been proposed for the City Council so that some gazetting can go ahead, yet the City of Johannesburg has not managed this due to its instability.
Until there is necessary Council approval there will be no project registration, and ISA has been working with the Gauteng provincial government to find a way to resolve the matter. ISA indicated it is continuing its coordination efforts.

The issue about the Port St Johns 08 September has been targeted to have the request for proposal go to market. This shows that there is progress post the gazetting. ISA is aware that the majority of the municipalities and districts are under-resourced. The entity is keen to provide resources and support, ensuring a lead support role is performed in troubleshooting all the blockages there.

[See presentation for more details]

Discussion
The Chairperson recalled the President of South Africa’s opening remarks at the sixth Parliament’s opening State of the Nation Address (SONA), where His Excellency said that he was dreaming of a nation with Smart Cities.

Ms A Siwisa (EFF) sought clarity from ISA on the positioning of Smart Cities, stating that it seems they are all positioned in urban areas. She enquired about what criteria were used to determine what areas the Smart Cities would be. She made an example of the recent news that KwaZulu-Natal people are still fighting to be given housing. What criterion was used to identify where the Smart City would be located?

Moreover, there is an allegation of a mega city in Rustenburg. Is Rustenburg in the pipeline with ISA to establish a Smart City?

The Durban Aerotropolis presentation states that the DPWI will provide accommodation to appropriate user departments. Does this mean they are going to build new buildings or are they going to utilise whatever they have in the municipality? This is because the DPWI has a lot of buildings that are sitting without being utilised.

What are ISA's financial implications for assisting in all of these matters, as there was no financial breakdown? Moreover, what are the timeframes for all of the Mega Cities to be finished? The Sixth Administration is in its last leg and it is only the first time the Portfolio Committee is getting a report on the progress.

Mr W Thring (ACDP) commented on a statement made by a former Mayor of eThekwini, Mr Obed Mlaba, from the early 2000’s. The councillor had said that urban sprawl was unsustainable and that there was a need to go vertical, so as to sustain the land and prevent urban sprawl. Mr Thring agreed with this statement, saying that Smart Cities are hopefully an attempt to prevent that urban sprawl. Bearing that in mind, the following questions were posed:
- What kind of listing process will be used to determine who gets into these smart cities?
- What kind of security features will there be? When people live close to each other, you normally have challenges with chaos in cities. Will artificial intelligence be used, and will any security restrictions be placed on individuals?
- In light of municipal challenges, for instance, ratepayers association challenges in eThekwini where ratepayers are not paying citing challenges with non-service delivery which is causing them not to pay the rates. How will these local government challenges go to be overcome?

Mr I Seitlholo (DA) enquired about how the Committee can exercise oversight given the nature and extent of the Smart City projects.

He further went on about the nature and current state of the DPWI buildings that are left unoccupied and are illegally invaded, and their suitability for use. Moreover, he cited challenges posed by load shedding and the reality and practicalities of having Smart Cities while facing loadshedding.

Mr P van Staden (FF Plus) said that it was important to first start looking at the infrastructure collapse taking place in municipalities and load shedding issues, before looking at Smart Cities. Whilst looking at the problem, the Committee would like to get more information on the utterance made by the Minister yesterday, on Operation Bring Back. The Committee would like to hear about this more before any further developments take place about the Smart Cities projects.

The Chairperson expressed appreciation for the Smart Cities projects and said that there should at least be one development of the Smart Cities development taking place since Apartheid, although at a slower pace.

She further referred to challenges she has with the sentiments echoed by Ms Siwisa. She said that it is important to note that there are many spheres, Committees, and government departments involved when it comes to oversight done. Therefore, there are a lot of stakeholders needed for the coordination of oversight. She went on to cite emigration to urban areas during Apartheid as an occurrence that signified the move of people from rural areas and the nightmares surrounding challenges faced by human settlements in the urban areas.

Moreover, she said that the issue of human settlements in Smart Cities should be addressed. How can it be ensured that people stay in both rural and urban areas? She cited the development of the small harbour in Port St Johns as one of the areas that address this challenge.

Responses
In response to Ms Siwisa’s question, Dr Moemi indicated that the presentation does not cover all the Smart City projects. It only covers those that the Committee requested. The mandate of the DPWI is to identify existing cities and to have a plan for their progressive and retrofitting conversion to being smart cities. This applies to existing cities, with existing buildings – including buildings belonging to the DPWI – that will be retrofitted and made into smart buildings. The focus is not only on new cities. It is however important to note that it is the mandate of CoGTA to look at Greenfields projects such as the Eastern Seaboards projects.

Timeframes of the projects differ, as they depend on the extent of development of the Project, impediments to the investment, as well as the nature of the investment. Whilst the framework of Smart Cities provides guidance on processes and brings uniformity on expectations, procedures, and processes, if these were to be quantified when looking from inception to completion, it takes between three to five years to plan and complete a Smart City.

On Lanseria, he further clarified that Lanseria has not yet been registered, meaning it has not moved from phase one. For over a year, efforts have been made with the Gauteng Department of Infrastructure Development to get the Project ready for council approval. Due to instability in the Johannesburg Council, there is a huge backlog and all efforts are being made to ensure the Project is being prioritised.

He further indicated that the majority of the projects come in the form of a public-private partnership. Regulation 16 in the National Treasury Regulation provides for how listing and participation take place for these projects. National Treasury and ISA take all stringent measures to ensure consistent compliance with regulations.

The project framework has a heavy emphasis on modern-day technology for security, which addresses the security question that was posed. Many of them look at advanced and integrated CCTV programmes, biometrics, and facial recognition technologies. There has also been a strong leaning towards the emergence of artificial intelligence in the technological proposals that are coming forth of the enhancement of security and predictive security technologies.

To allay all concerns, Dr Moemi reiterated that ISA consults with all stakeholders as a general rule of operation. He further agreed with the concerns of Mr Thring, about the need to address the concerns of Local Government, as it allows the smooth running of projects.

Whilst load shedding is a national crisis, Dr Moemi highlighted that not a lot of the Smart Cities are keen to be listed on the national grid for power supply. Nkosi City of Kruger National Park is registered with Eskom in the integrated electrification programme, whilst Lanseria, for instance, is leaning towards renewable energy sources. Many of them may not be completely off Eskom. However, they are reducing their dependency on it.

DPWI
Ms Nyeleti C Makhubele, Acting Director-General, responded to the questions. The details on the refurbish, operate, and transfer programme ROTP is a matter that will be discussed in a meeting that is still to take place. As it stands, the Department has a lot of unoccupied buildings, and criticism has been asking why the Department is leasing buildings when it has buildings on its assets register has been asked and regarded as unsustainable. The Department has, as a result, gone on a programme called ROTP (Refurbishment, Operate and Transfer Programme) that will involve asking the private sector to invest in the DPWI buildings on long-term leases and guarantee them government tenants. This will be done, instead of investing capital that the discussion might not be able to handle. This is a long-term programme that the government is undertaking, and ISA is being used for the project rollout. So far, five buildings have been identified in Pretoria. The idea is to have a countrywide rollout. There is also another programme as part of ROTP called Operation Bring Back, which identifies illegally transferred and occupied buildings. More details will be shared in an upcoming meeting.

Deputy Minister of Public Works and Infrastructure, Ms Bernice Swarts, thanked the Committee for requesting an update on the progress of Smart City. She reiterated the Department's commitment to comply with the request of the Committee to share information. She further stated that the Smart Cities Project is a public-private partnership, and that the DPWI will comply through ISA. Moreover, because of the intricate role-player relationships such as municipalities, districts, funders, etc., it is not always easy to make decisions for DPWI. But ISA will do its best to speed up the process, even if they are not the final decision-makers.
Further discussion
Ms Siwisa commented on her timeframe question, stating that it was a cry for a sign of urgency from ISA so that they may be held accountable, because if there is no timeframe provided, the Committee will be given reasons for challenges all the time. What are ISA's financial implications to get the cities up and running? There are services rendered to the four cities mentioned, but there is no mention of costs.

Mr van Staden concurred with Ms Siwisa on the importance of timeframes, stating that the President made an announcement of Smart Cities in 2019 and yet there is still no Smart City that is operational. There was no budget or any timeframe.

ISA response
Dr Moemi reiterated that each Project has its timelines, depending on its nature, environmental nature assessment project, size, interdependencies, and role-players, whether it is a cross-municipal or cross-boundary project, etc. Regarding the four projects that were reported on: in terms of the Smart Cities Framework, the steps provide a guide on time frames that allow for the anticipation of time, hence the planning of a Smart City and being "shovel ready" takes anything between three to five years. All the four presented are behind schedule. The Lanseria project, for instance, ought to be in year one of implementation. However, it has not even been registered on the ISA register as a project. The Nkosi Project is the only one of the four projects that ISA is confident will catch up with time. It is running about six months behind schedule. It will please the Committee to learn that ISA has been able to troubleshoot most of the water license matters promptly. This shows how ISA kicks doors open in spheres of government when it can do so, and improves on impediments.

ISA has been engaging with National Treasury. There is recognition that, with a pipeline with a nexus of R15 trillion worth of projects, there is a need for at least 10-15% of that to deliver qualitatively on the projects. Considering the challenges, ISA requested R3 billion from National Treasury to provide support, with no success, rather a project preparation fund of R600 million was granted. R200 million has been given to the DPWI, and this is what ISA has been using to provide support to struggling municipalities and project sponsors.

Minister’s Remarks
The Minister of Public Works and Infrastructure, Mr Sihle Zikalala, said that Operation Bring Back is a campaign to ensure that the various pieces of land, as well as assets, such as buildings that have gone either missing or unregistered, be kept back and registered. Thereafter, the Department should either commercialise those or allocate them to various state organs they need. The Department is working with provinces and municipalities, in particular, to identify those pieces of land and ensure that those illegally occupied are recovered. DPWI engages in ensuring that the people who are illegally occupying are evicted, and those assets are brought back to the state. This also includes some of the assets sold fraudulently by either officials or some people colluding with the private sector, including prime land in areas such as Midrand. So, it is the campaign that the Department is rolling out, where DPWI engages with municipalities and tries to consolidate those assets into DPWI’s register and ensure that those illegally occupied buildings are recovered.

Closing Remarks by the Chairperson
The Chairperson wanted the Committee to note that the private sector will also come in at some point. So, she wanted it to be noted in the Committee reports when dealing with the oversight of intergovernmental infrastructure projects. There is a need for multi-level legislative oversight strategies. It cannot be an oversight of only one Portfolio Committee. There is a need for multi-level legislative oversight strategies.

Minutes from the meeting held on 30 August 2023 were adopted.

The meeting was adjourned.