Study the article provided below and answer the following questions. Biggest African Port to be Partially Privatized
• Philippines port operator to help expand key container terminal
• Agreement is the first port privatization for Transnet

Africa’s biggest harbour will be partly owned and operated by the Philippines’ International Container Terminal Services Inc., a first for South Africa’s national ports company.

The company, known as ICTSI, has been selected as an equity partner to run and expand Durban Container Terminal Pier 2. Almost three quarters of the freight volume moved through the eastern port goes through the terminal and it accounts for 46% of South Africa’s total port traffic, according to state logistics company, Transnet SOC Ltd.

This agreement “is a key catalyst for repositioning the Port of Durban as a container hub port,” Transnet said in a statement on Monday.

South Africa is seeking to boost private participation in its ports, the poor performance of which is a drag on the economy. In a 2021 World Bank index of container port performance, Durban ranked 364th out of 370 and two other Transnet ports were in the bottom 10.

Transnet will own a 50% plus one share in a new company that will manage the terminal for 25 years and will seek to boost its annual capacity to 2.8 million twenty-foot equivalent units, or TEUs, from two million, it said. TEUs are used to measure trade volumes at container ports. ICTSI, whose chairman and chief executive officer is Filipino billionaire Enrique Razon, will make an “up front” payment to Transnet for the stake, the South African company said in a response to queries, declining to give a figure. Razon is a major shareholder in ICTSI.

Ultimately Transnet wants to boost Durban’s total container capacity to 11.4 million TEUs from 3.3 million. ICTSI, which operates terminals across six continents, was one of six bidders for the contract, Transnet said. An announcement on the port of Ngqura will follow, Transnet said.
Source: https://www.bloomberg.com/news/articles/2023-07-17/biggest-african-port-partially-privatized-with-ictsi-durban- pact#xj4y7vzkg

REQUIRED:
Striving to improve its poor port performance and boost the economy, South Africa seeks private participation. The choice of a private equity partner, the Philippines’ International Container Terminal Services Inc. (ICTSI), to operate and expand Durban Container Terminal Pier 2, Africa’s biggest harbour, is consistent with the practice of the new public management model. ICTSI, led by Filipino billionaire Enrique Razon, will make an undisclosed upfront payment to Transnet SOC Ltd, initiating a 25-year partnership to increase the terminal’s capacity and transform the port. With almost 75% of the eastern port’s freight passing through this terminal, the move aims to reposition the Port of Durban as a container hub.

1.1. In light of the above observation, discuss the concept of new public management and its core ethos. (12 marks)
1.2. By scoping the public finance literature, discuss the concept of privatisation. In your discussion, provide TWO (2) advantages and TWO (2) disadvantages of privatisation. (10 marks)

QUESTION 2 (18 Marks)
Two central objectives of the Public Finance ‘Management’ Act (PFMA) are to modernise the system of financial management and to promote managerialism in the public sector. The basic notion is that public sector managers must be given the flexibility to manage, within a framework that satisfies the constitutional requirements of transparency and accountability. In principle, the PFMA has shifted public financial management from slavish adherence to rules and regulations to the central mission of ‘management’. In this regard, the PFMA provides some avenues of managerial flexibility and discretion through a number of permissible deviations from authorised expenditure (Rankin, 2021).
With reference to the above observation, discuss any SEVEN (7) permissible unauthorised expenditure under the PFMA regime. Your discussion should be structured as follows: introduction, the main discussion, and conclusion.

QUESTION 3 (20 Marks)
You are employed as a public finance analyst at the Department of Public Enterprises. Your main task is to promote effective working capital management and to ensure compliance with the PFMA across state-owned enterprises.
3.1. You have received a request to assess the liquidity positions of two large state-owned enterprises anonymised as AA2 and BB1. The information below relates to the working capital of AA2 and BB1 of the current financial year:

Answer to Above Questions on African Port

Answer 1: New public management is an important concept that has grown significantly in the 21st century, and this concept is mainly based on the premise of managing public sector organisations by way of adopting private sector management techniques and principles. The key areas that are given importance in new public management include decentralisation, market orientation, performance measurement, efficiency and cost effectiveness and emphasis on customer satisfaction.

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