Newly appointed Minister of Public Works and Infrastructure Dean Macpherson plans to establish an infrastructure advisory committee, which will work across sectors to rethink South Africa’s infrastructure and create innovative funding models to attract private-sector investment.
In a rapidly globalising economy, South Africa needs to form stronger partnerships and increase collaboration with the private sector and its neighbouring countries to address numerous challenges, including infrastructure backlogs and the investment gap, he said.
Delivering the keynote address at the Infrastructure Africa conference in Cape Town this week, Macpherson said it was time to turn South Africa into a construction site.
“Infrastructure is the flywheel for inclusive economic growth and has the most significant potential to create jobs, reduce inequality and support economic development. However, it is time to reimagine infrastructure development in our country and contemplate how to forge better regional infrastructure integration to unlock new economic opportunities between South Africa and our neighbours,” Macpherson pointed out.
It is time to move towards “accelerating the full implementation of initiatives to build private-sector confidence in the capacity and capability of the state to deliver bankable public infrastructure projects”, he added.
Energy is the biggest portfolio
In 2020, 50 strategic integrated projects, with a combined capital investment value of R340 billion, were announced with the biggest portfolio in the energy sector. These include renewable energy programmes and green hydrogen projects. In 2022, an additional seven projects were gazetted, increasing the investment need to approximately R540bn.
“If we want to grow our economy, we will need to double this figure to at least R1 trillion,” said Macpherson, emphasising the importance of an integrated approach to infrastructure development as local, provincial and national governments cannot afford to work solo to reach the ambitious National Development Plan (NDP) 2030 target of a 5,4% growth rate.
Infrastructure South Africa predicts that, to achieve this objective, public-sector investment must increase from 5,4% of GDP in 2019 to 10% of GDP in 2030 and private-sector investment in infrastructure must increase from 12,5% of GDP in 2019 to 20% of GDP in 2030.
“Research shows that, between 2009 and 2019, public-sector capital expenditures averaged 6,7% of GDP while private-sector capital expenditures averaged 12,8%,” said Macpherson. “The total investment is well below the NDP 2030 target and has declined over the past few years. The NDP states that the total gross fixed capital formation needs to be around 30% of GDP by 2030 to realise the targeted economic growth.”
Addressing the slow rate of infrastructure delivery, Macpherson said regular construction site disruptions on mega-infrastructure projects had to end. “This is a determining factor in the slow rate of infrastructure delivery with the so-called construction mafia, acting as small, medium and micro enterprises exercising violence, intimidation and extortion to get contracts from developers. These forms of organised crime especially affect the transport, human settlement, water and sanitation sectors. These disruptions alone cost the economy approximately R40 billion in 2020. I want to be very clear, anyone who seeks to hold back infrastructure projects must be treated as an enemy of the state. There is no room for negotiations or delays to our projects.”
