Public-private partnerships (PPP) and independent power producer (IPP) projects completely changed the focus of Ledwaba Mazwai’s legal practice under the leadership of its two Founding Partners, Metja Ledwaba and Lungile Mazwai, who established the firm in 1996. Even then, Ledwaba Mazwai set the scene for becoming a ground-breaking commercial law practice, given that it was – and remains – fully black-owned and operated. It advanced its pioneering spirit when the two partners recognised the potential of the growth spurt in privatisation and infrastructure projects in South Africa in the 1990s.
‘Venturing into PPP and IPP transactions brought us close to government and public entities in commercial and corporate transaction,’ says Ledwaba. ‘The same strategy we apply for commercial law equally advances PPP and IPP projects – that being to become one with the businesses we represent, by finding suitable legal solutions, and identifying the resources and support required, be it in project-finance transactions or restructuring state-owned enterprises, including privatisation, litigation, administrative and constitutional law advice. It has also meant extending our motto “a habit of excellence” to every aspect of business.
‘As we celebrate our 21st anniversary as one of the leading law firms specialising in PPP and IPP transactions, we reflect on our journey and the advice we have given on projects across all spheres of national, provincial and local government. The range of industries is just as vast, including rail, office and student accommodation, health, education and power.’
Its two decades of operation also puts the firm in a position to comment on why PPPs advance economic opportunities.
‘Firstly, they present an opportunity for governments, through the mobilisation of private-sector resources and partnerships, to deliver public infrastructure or public services for the greater good of citizens,’ says Mazwai.
‘Secondly, is the achievement of socio-economic objectives. The policy position adopted by government thus far, and understandably so in our view, is to extend PPPs to advance socio-economic benefits as opposed to just technical, legal and financial considerations, and irrespective of the sector in which the project is being implemented. Employment, equity participation by disadvantaged groups, local content and industrialisation would be some of those areas.’
This applies equally to Africa. While Ledwaba Mazwai‘s current footprint is South Africa, the legal practice does have plans to grow its reach beyond the country’s borders. According to Ledwaba: ‘Opening regional offices is not yet on the horizon but we are working on regional partnering with firms in other jurisdictions to provide our specialised legal skills in PPPs, IPPs and infrastructure development projects.’
He adds that Africa is rather unique in terms of its economic development drive. ‘The environment is characterised by poverty, the need for skills development, unemployment and inadequate basic human needs resources. The legal framework and structuring of some of the legal agreements are, therefore, vital in terms of addressing such challenges.’
South Africa provides a good case study, given that the firm has been key in developing templates for contractually committing economic development initiatives to transaction agreements that structure the projects. ‘Our legal skills have brought a lot to bear on how business commits to achieving the set initiatives of a PPP agreement, including socio-economic objectives as well as the effective monitoring of their implementation,’ says Ledwaba.
The two partners say Africa’s many PPP opportunities include dominant industries such as transport, energy and communication infrastructure. Mazwai says, however, that ‘in the context that PPPs are driven to mobilise private-sector investment into public projects, private-sector funding is perhaps just as important as the skillset and capabilities that the private partner should be delivering as part of the partnership. Consequently, it is crucial to ensure that at the end of the project term, the public sector is in a position to assume the operation and maintenance of the project. This aspect cannot be overstated’.
The firm’s knowledge and understanding of the inter-relationship between public and private includes policy and financial consi- derations and technical solutions, as well as ensuring that developmental objectives are translated into legal documentation. Bringing projects to financial close is based on a good understanding of the legal and commercial considerations for a bankable project, which the two partners say requires a journey from the concept to feasibility state, through procurement and the structure of the transaction agreement.
PPPs can be heavily weighted, especially in South Africa where they are regulated by the Public Finance Management Act, for national and provincial spheres of government; and the Municipal Finance Management Act for local government. Ledwaba Mazwai takes the approach of ensuring that even the principles of any agreement follow regulated guidance and desired risk transfer, and that all provisions become industry standard.
As PPPs and IPP projects become increasingly sophisticated and advance economic directives for both public and private organisations, Ledwaba and Mazwai argue that ‘the next frontier for PPPs is seeking innovative ways to solve and address challenging human conditions of our time and the future, in a sustainable and economically viable manner’.
