303. We thank the co-sponsors for introducing the item of public-private collaborations in innovation.
304. South Africa followed a global trend in the popularity of Public-Private Partnerships (PPPs) by establishing a formal PPP structure within the National Treasury in 1999. Although there were PPPs prior to this date, these arrangements did not follow a standardised process or receive formal recognition as PPPs within the Nation Treasury Department of South Africa. South Africa has implemented a regulatory framework for PPPs which came into effect in the early 2000s, enabled through the Public Finance Management Act of 1999 (PFMA). The National Treasury of South Africa developed a standardised procedure for such an entity, which it defined as a "contract between a government institution and a private party, where the private party performs an institutional function and/or uses state property in terms of output specifications; substantial project risk (financial, technical, operational) is transferred to the private party; and the private party benefits through unitary payments from government budgets and/or user fees".
305. According to standard economic criteria, South Africa is a high-income country with a welldeveloped infrastructure, with nearly 70% of the population urbanised and deep and liquid capital markets. However, it is also one of the most unequal economies in the world with a post-tax Gini-coefficient of 0.7, with unusually high levels of structural unemployment (around 36%) and poverty (around 50%).
306. Initial PPP projects were undertaken between 1997 to 2000 by the South African National Roads Agency for the N3 and N4 toll roads (national roads), the departments of Public Works and Correctional Services for two maximum security prisons, two municipalities for water services, and by South African National Parks for tourism concessions. Using lessons from these projects, together with international experience, a strategic framework was adopted by government in December 1999 and in April 2000 in accordance with Treasury Regulations for PPPs issued in terms of the PFMA.
Examples of PPP collaborations
307. It is often said that vaccines are lauded as one of the most successful public health interventions, providing universal prophylaxis at a fraction of the cost that would otherwise be incurred following the widespread outbreak of an infectious disease. In the case of South Africa, an extensive vaccination programme, known as the Expanded Programme for Immunisation (EPI) forms part of a health strategy adopted by the National Department of Health (NDoH). Implementation of the EPI requires the procurement of approximately 46 million vaccine doses annually, at a cost of roughly ZAR 1.5 billion per annum (2015 values). Prior to 2003, vaccine procurement was an internal function of the NDoH; the department issued tenders on behalf of the provinces and secured the necessary supply from successful bidders. However, since 2004, vaccine procurement and distribution has been undertaken by a public–private partnership (PPP), known as the Biovac Institute (BI).
308. Over the period 2010 to 2014, BI successfully procured and distributed vaccines and received an income of USD 86 million, equivalent to an average cost premium of 12%, as per the terms of its supply agreement with the NDoH. Moreover, it became increasingly able to supply vaccines to the public health system at globally competitive prices and undertook local R&D, the latter in one case leading to a novel conjugate vaccine that has been licensed to two international companies and for which the institute receives royalty revenue.