Sep 28, 2012
Urgent need to close SA’s infrastructure funding, regulatory gaps – reportBack
Construction|Africa|Development Bank Of Southern Africa|Environment|Ports|Projects|rail|Resources|Roads|Systems|transport|Water|Africa|South Africa|Delivery Systems|Economic Infrastructure|Electricity|Energy|Finance|Information Communication Technologies|Maintenance|Systems|Telecommunications Sectors|Infrastructure|Jim Yong Kim|Pravin Gordhan|Operations|Southern Africa|Information Communication Technologies
© Reuse this
The ‘State of Infrastructure Report’ has been produced jointly by the Development Bank of Southern Africa (DBSA) and The Presidency’s Department of Performance Monitoring and Evaluation and was released at the biannual Cabinet lekgotla held in early September.
Integrated planning, it says, is necessary to ensure that the right investment choices are made, which, together with effective delivery, has been proved to “distinguish high-growth economies from low-growth ones”.
To illustrate the point, the authors argue that the water sector cannot operate without electricity, which, in turn, cannot operate without water. Similarly, they argue that the use of information communication technologies across, rail, roads and harbours will be “imperative” for enhancing management capability and increasing efficiencies.
“In short, a systematic infrastructure development planning process is required to prioritise, sequence and resource projects, including the mobilisation of private sector participation,” the reports avers.
It is also incumbent on structures such as recently instituted Presidential Infrastructure Coordination Commission (PICC), to facilitate alignment between the deployment of economic infrastructure and the country’s national socioeconomic objectives.
Finance Minister Pravin Gordhan has indicated that South Africa plans to develop a 10- to 20-year pipeline of projects so as to move away from the current stop/start dynamic that has been so debilitating for the construction profession in recent years.
“What we need in South Africa is efficient delivery systems so that intentions and policies begin to be converted, very efficiently, into actions on the ground that make a positive impact on our economy,” Gordhan said at a recent briefing held after government met with new World Bank president Dr Jim Yong Kim.
The DBSA study says it is also critical to urgently “reform” the financing mechanisms available, to ensure that finance is available for the infrastructure priorities that are selected through integrated infrastructure planning.
“Government budgets are often underspent and opportunities are missed to crowd-in the private sector. Importantly, resources are not targeted at high-impact priorities,” the report says.
It warns there are few dedicated funding streams for operations and maintenance and that planning processes have historically neglected to build these costs into infrastructure plans. “The priority is, therefore, to create ring-fenced resource streams for infrastructure rehabilitation and maintenance, notably at the municipal level.”
It is also important to monitor the elimination of backlogs as a separate stream of delivery, while ensuring that the life cycle of the asset is fully taken into account and not just the delivery. “If you can’t afford the life-cycle cost, do not build it,” the authors say.
The regulatory framework for the six economic infrastructure sectors reviewed – electricity, rail, roads, ports, water and telecommunications – is also in need of an overhaul. In some instances, such as rail, an economic regulator remains absent, while in others, such as roads, there is a failure to effectively regulate issues such as overloading.
“South Africa will benefit from improving the regulatory environment in all six economic infrastructure sectors examined in this report. In particular, enhancing the capacity of regulators and giving them the ability to impose sanctions for uncompetitive behaviour must be a policy priority,” the study says, while calling for the regulatory gaps to be closed as a matter of urgency.
Writing in the foreword, Minister in The Presidency for Performance Monitoring and Evaluation as well as Administration Collins Chabane says the PICC has clustered, sequenced and prioritised 17 strategic integrated projects and the issues raised in the report will assist government in “thinking outside our existing paradigm”.
The report concludes that the review highlights the need for a consolidated governance framework for infrastructure delivery so as to ensure projects are aligned with the country’s socioeconomic needs, respond to real demand and that the costs are equitable. It also stresses that implementation capacity needs to be developed and enhanced, particularly given South Africa’s chronic skills shortages.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines (150 word limit)
Creamer Media Senior Deputy Editor
Other News This Week News
Recent Research Reports
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
This Week's Magazine
The BMW Group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports-activity vehicle (SAV) for the local and export markets. Rosslyn will continue production of the current 3 Series through its lifecycle,...
The lack of consequences for poor performance and transgressions on the part of contractors remains a significant hurdle to tackling South Africa’s service delivery challenges, delegates heard at the Consulting Engineers South Africa Infrastructure Indaba, on...
City of Ekurhuleni executive mayor Mondli Gungubele earlier this month officially named the city’s bus rapid transit (BRT) system, Harambee.
About 58% of unstructured data stored by companies is dark data, which means that the value or regulatory importance of the data has not been determined. Subsequently, most of the stored data add costs, rather than increasing revenue or reduce regulatory risks, says...
Effective logistics, import/export and manufacturing consulting services require detailed industry knowledge and experience, but can add significant value to these industries by providing expert advice on various technical elements in their value chains, says...