Infrastructure must ‘help solve socioeconomic ills’

• Strong social compact needed to drive SA’s growth and competitiveness, writes Lynette Dicey

SA’s woefully inadequate investment in critical infrastructure has been one of the contributing factors to the country’s poor economic growth, says co-head of SA & Fixed Income at Ninety One, Simon Howie.

The country is currently paying the price for years of underinvestment in assets such as ports, rail and energy. SA’s ports are ranked among the most inefficient globally. Rail network constraints are costing the mining industry, among others, significant opportunities. And does anything further even need to be said about the challenges facing debt-laden Eskom as it struggles to keep the lights on?

As Howie points out, inclusive growth and global competitiveness go hand in hand with well-maintained and efficient infrastructure.

President Cyril Ramaphosa is well aware that SA needs to push for more investment in infrastructure. Since taking office he has put a number of mechanisms in place to fasttrack this including establishing Infrastructure SA (previously known as the Infrastructure Investment Office) as a single point of entry for infrastructure planning, management and delivery and to close the infrastructure investment gap, as well as the Infrastructure Fund which provides gap funding for large-scale infrastructure investments. He has also hosted a number of investment conferences.

Government is trying to implement the structural reforms necessary to attract investment through Operation Vulindlela, a joint initiative of the presidency and National Treasury. Operation Vulindlela recently announced it had achieved eight of its 26 priorities. These include raising the licensing threshold for embedded generation, enabling municipalities to procure power from independent power producers, completing the spectrum auction, reviving the water quality monitoring system, corporatising the Transnet National Ports Authority, finalising the white paper on the national rail policy, publishing the revised critical skills list, and implementing an e-visa system in 14 countries.

Operation Vulindlela has had some notable achievements. But as Business Unity SA CEO Cas Coovadia points out, there is still no mandate to ensure different departments actually implement the necessary actions to enable the private sector to drive business through it. So, while the threshold for embedded generation may have officially been lifted, private sector power generators continue to be obstructed by red tape and bureaucracy. Coovadia says similar issues exist with many of the other reforms, including the critical skills list.

National interest has become the victim of a divided political body, says Chris Campbell, CEO of industry association Consulting Engineers SA (Cesa).

“We need assertive and committed leadership with the political will to drive implementation. We need to get back to having competent people in place and then hold them accountable for implementation.”

He points out that the policy of cadre deployment has had consequences which include poorly maintained infrastructure. Despite moves to raise the bar in terms of professionalising the state, Campbell says it remains uncertain whether there is sufficient political will to follow through on this.

“For many years government has followed a policy of outsourcing services and failed to retain sufficiently competent people in the public sector. Rebuilding that capacity won’t be possible in the short term. Ultimately, the state needs to build sufficient capacity to ensure enough competent people are in place to act as custodians of public infrastructure. The balance of the capacity required should be acquired from the private sector,” he says.

There is also an acknowledgement that more public-private partnerships need to be implemented.

“We have excellent examples of public-private partnerships to draw on, the Gautrain being a prime example. Another example of how a strong collaboration between the public and private sector can deliver positive results is the national vaccine roll-out.”

The majority of publicprivate partnerships implemented in SA were implemented prior to 2009. Since then there has been a significant decrease in the number of public-private partnerships, with the majority of infrastructure projects delivered by the public sector.

What is required to fasttrack infrastructure investment, says Campbell, is a strong social compact between government and the private sector rather than government assuming it needs to act in a paternalistic manner.

“SA needs to focus on a few substantial projects and then deliver those efficiently to build better confidence in our ability to implement and the rest will follow. We’ve done it before in preparation for the 2010 Soccer World Cup and we can do it again. Ultimately, infrastructure needs to be seen as the catalyst for solving many of the socioeconomic challenges facing the country,” he says.

WE NEED TO GET BACK TO HAVING COMPETENT PEOPLE IN PLACE AND THEN HOLD THEM ACCOUNTABLE FOR IMPLEMENTATION