http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.22Change: -0.01
R/$ = 10.61Change: -0.04
Au 1299.71 $/ozChange: 2.15
Pt 1483.50 $/ozChange: 4.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Aug 31, 2012

Hybrid funding approach needed for infrastructure projects

Back
Johannesburg|Africa|Energy|Housing|PROJECT|Projects|Resources|Screen|Africa|South Africa|Energy|Equity Finance|Logistics|Mezzanine Finance|Transport|Infrastructure|Jacob Zuma|Nhlanhla Nene
|Africa|Housing|PROJECT|Projects|Resources||Africa||Energy|Logistics|Transport|Infrastructure|
johannesburg|africa-company|energy-company|housing|project|projects|resources|screen-company|africa|south-africa|energy|equity-finance|logistics|mezzanine-finance|transport-industry-term|infrastructure|jacob-zuma|nhlanhla-nene
© Reuse this



Many infrastructure projects in South Africa have a social and commer- cial component, and therefore required a hybrid financing approach, Deputy Finance Minister Nhlanhla Nene said at the third Banking Summit, held in Johannesburg last week.

“The optimal financing structure needs to be tailored on a case-by-case basis to fit the specific nature of the infrastructure project,” he stated, adding that the same applied to the repayment model.

Nene said that although infrastructure projects would remain heavily reliant on public funding, government had limited capacity to pay for everything, necessitating the role of the private sector.

“Government expenditure is limited by how much tax revenue it can collect without hurting economic growth, and how much debt we can borrow.”

He explained that these abilities were being constrained by the weak global economic conditions.

“We need to think out of the box; the potential exists for equity finance, mezzanine finance, ‘build-operate-transfer’,” Nene noted.

Further, he told the summit that South Africa’s R3.3-trillion infrastructure plan, announced by President Jacob Zuma in his February State of the Nation address, created significant opportunities for banks, which would have to take on a long-term vision by offering long-term lending.

Government has identified 17 strategic integrated projects in sectors such as energy, transport and logistics, schools, hospitals and nursing colleges to be constructed between now and 2020.

Nene said “a conversation” between banks and government would have to be initiated. “We should talk constructively and openly about the challenges of growth and what we should do to build the kind of South Africa that is envisioned in the National Development Plan (NDP).”

Earlier this month, the National Planning Commission handed over its final report to the President in Parliament.

Nene emphasised that infrastructure development was important in raising South Africa’s potential growth rate. By some estimates, a one percentage-point increase in infrastructure investment would raise long-run gross domestic product (GDP) by about 1.3% and employment by about 0.7%.

Further, the Minister said that projects whose costs could be covered equitably, and those that were implementable, would have to be prioritised, as resources were limited.

“For social infrastructure, this would mean prioritising backlogs, for example housing, basic services, over-crowded classrooms. For economic infrastructure, it means unblocking the largest supply constraints, the symptoms of which include traffic congestion, rising property prices, increasing input prices and inability to fulfil export orders,” Nene stated.

Also addressing delegates, Banking Association of South Africa MD Cas Coovadia warned that without significant intervention, infrastructure spent as a percentage of South Africa’s GDP would drop from the current 9.1% to 8.1% by 2013.

He said government’s lack of capacity to implement projects, as identified by the NDP and the New Growth Path, would have to be overcome.

Coovadia pointed out that spatial mapping and cost determination, carried out by the Presidential Infrastructure Coordinating Commission, reiterated the need for private- sector equity in project funding.

However, he expressed concern that real engagement between the public and private sectors was lacking.

Coovadia said the financial sector would have to be considered as a strategic partner in enabling the sustainability of infrastructure projects.

Edited by: Martin Zhuwakinyu
© Reuse this Comment Guidelines
 
 
 
 
 
 
 
 
Other News This Week News
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
More
 
 
Latest News
Updated 28 minutes ago The 2014/15 budget for the Gauteng department of human settlements is R5-billion, human settlements MEC Jacob Mamabolo said on Tuesday. "Of this amount, R4.4-billion will go towards all housing programmes within the department and we shall ensure that this allocation...
Updated 1 hour 27 minutes ago This four-page brief covers key developments in South Africa’s water sector over the past 12 months, including details of South Africa’s water policy, water infrastructure, nonrevenue water and water quality issues, as well as prospects for the sector.
The Medupi power station project
Electricity producer Eskom has, for the first time, offered a detailed timeline for the synchronisation of Medupi Unit 6, which is officially scheduled for December 15, 2014. Addressing a joint meeting of the Portfolio Committees on Public Enterprises and Energy on...
More
 
 
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
 
 
 
 
 
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
GARYN RAPSON Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will open the door for court battles to determine who will be held liable for the remediation
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks