Sep 28, 2012
Urgent need to close SA’s infrastructure funding, regulatory gaps – reportBack
Construction|Africa|Development Bank Of Southern Africa|Energy|Ports|Projects|Resources|Roads|Systems|Water|Africa|South Africa|Delivery Systems|Economic Infrastructure|Electricity|Energy|Finance|Information Communication Technologies|Systems|Telecommunications Sectors|Transport|Infrastructure|Jim Yong Kim|Pravin Gordhan|Rail|Water|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)
Other News This Week News
Updated 36 minutes ago Public Enterprises Minister Lynne Brown announced on Wednesday that Cabinet had approved the appointment of Department of Public Enterprises (DPE) director-general Tshediso Matona as the new CEO of State-owned electricity producer Eskom. Brown made the announcement...
Updated 1 hour 53 minutes ago South Africa’s crude steel production fell 1.5% year-on-year to 610 000 t in July, compared with the 619 000 t produced in July 2013. However, according to the latest World Steel Association (worldsteel) statistics, Africa’s crude steel output rose 21.2%...
Updated 2 hours 43 minutes ago Barend Petersen has been appointed nonexecutive director and chairperson of Evraz Highveld Steel & Vanadium. This comes after London-listed Evraz last week announced that it would sell a 34% stake in the steel producer to South Africa-based investor Macrovest, which...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 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 network, the funding and maintenance of these respective networks, and the push to move...
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.
This Week's Magazine
The Built Environment unit at the Council for Scientific and Industrial Research (CSIR) has developed a cost-competitive ultrathin concrete pavement surface that, for the upgrading of unpaved roads to paved roads, is more durable than many other pavement alternatives...
The Southern African Large Telescope (SALT), based at Sutherland in the Karoo region in the Northern Cape province, is promising to become an important instrument for research into dark matter. "SALT is shaping up to be very important for answering questions about...
The South African tool, die and mouldmaking (TDM) industry is being revitalised to locally produce the tools, dies, moulds and fixtures required by the manufacturing sector. Local TDM capability is key to enable the manufacturing industry to remain competitive, says...
Misfortune often finds its roots in the smallest of things. Such as a centimetre or two. Or is that in inch? Perhaps a foot? Swedish or Dutch? The French had reason to blush in May as it became apparent that national rail operator SNCF had ordered 2 000 trains that...
The repositioning of the Fibre Processing & Manufacturing Sector Education and Training Authority (FP&M Seta) and its business processes will ensure improved performance in reaching strategic targets and in providing customer service.