Infrastructure spending had delayed South Africa’s fall into recession by just over two years, Economic Development Minister Ebrahim Patel said on Thursday.

Speaking on the first day of the Gauteng Infrastructure Investment Conference, in Midrand, he stressed that the importance of investing in infrastructure should not be underestimated, considering the impact that it has had so far.

“Infrastructure is critical to economic performance. It’s a requirement of a modern competitive economy comprising energy, logistics, transport, water and communication systems,” he told delegates.

Further, infrastructure is a stimulator of growth itself, adding goods and services to South Africa’s gross domestic product (GDP), while bolstering education, construction, and the health services sector, besides others.

Had South Africa not increased infrastructure spending over the last ten years, the economy would have gone into recession in 2015, he said, adding that just the additional spending over the last decade has added about 2.2% to the size of the national GDP.

Since 2015, South Africa added 5 300 MW of additional energy, with 900 km of additional transmission lines deployed across the country.

Further, nearly 200 000 new houses had been built and 500 000 had been connected to the electricity grid, while 230 schools and 60 clinics had been built in the two-year period since 2015.

“But infrastructure is not only about these physical platforms we have built, it is also about what you use on these platforms,” Patel pointed out.

Referring to the integration of South Africa’s transport systems and citing the Rea Vaya bus rapid transit system, he said there was an opportunity to localise the manufacturing of the components.

Further, as Transnet modernised its systems, it required more trains, and in the period since 2015, some 2 200 new train wagons have been manufactured in South Africa, he noted.

“We have been able to expand taxi production, so 24 000 minibus taxis have been manufactured in South Africa.”

He further pointed out that smartphone penetration, through which most South Africans access the Internet, also surged from 38% in 2015 to 62% at present.

However, while there had been – and continues to be – significant progress, Patel acknowledged that the infrastructure economy remained hampered by existing and new challenges.

Citing the recession, credit ratings downgrades, industry competition, the opening of the market and ownership transformation, spatial development and urbanisation, besides many others, he indicated that the country needed to examine ways of leveraging the “enormous infrastructure spend” to stimulate wider development in the economy.

FOUR-COMPONENT ROADMAP

“We need a roadmap to get back into investment grade and to ensure that the recession is not prolonged and that we emerge as quickly from the recession with as little damage to the economy [as possible],” Patel said, pointing to four components identified by national government as necessary to getting the economy going.

South Africa needs to develop a credible growth story, identifying areas in the economy with high growth potential and the ability to provide employment for the youth, ensuring that the obstacles to attract investment to those opportunities are overcome.

“The second is to transform the economy to make it more inclusive, to bring young people in, to bring black South Africans in and to bring women into the economy, [and] to ensure that jobs are created,” he said.

Thirdly, there was a need to ensure integrity within government, taking firm steps against State capture, corruption and tender fraud, with fiscal policies managed responsibly and sustainably, inspiring confidence.

Lastly, Patel pointed to the need to deepen partnerships between business, labour, government and global communities.