Newly appointed Minister of Public Works and Infrastructure Dean Macpherson is poised to establish an infrastructure advisory committee. This committee will collaborate across sectors to reimagine South Africa's infrastructure and develop innovative funding models to attract private sector investment.
Macpherson said in a rapidly globalising economy, South Africa needed stronger partnerships and greater collaboration with the private sector and across borders with its neighbouring countries, if it were to address the many challenges, including infrastructure backlogs, and the infrastructure investment gap.
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,” he said.
Macpherson said it was 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”.
In 2020, 50 Strategic Integrated Projects with a combined capital investment value of R340 billion were announced, with the energy sector having the biggest portfolio. 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, saying local, provincial and national governments could not afford to work in solo if the National Development Plan (NDP) 2030 ambitious target of a 5.4% growth rate was to be reached.
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, while 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 the 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 SMMEs 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 cost the economy approximately R40bn in 2020 alone.
“I want to be very clear, anyone who seeks to hold back infrastructure projects must be treated as an enemy of the state,” said Macpherson. “There is no room for negotiations or delays to our projects.”
