The Construction Management Foundation (CMF) has welcomed the signing of a joint memorandum of agreement (MoA) to establish the R100-billion Infrastructure Fund.

The MoA was signed by the National Treasury, the Development Bank of Southern Africa (DBSA) and the newly established Infrastructure South Africa (ISA), an entity of the Department of Public Works and Infrastructure, on August 17.

In a statement on August 18, the nonprofit foundation described the signing of the MoA as “an important step in transforming and improving the manner in which the South African government has traditionally financed, planned and [built] infrastructure assets”.

The MoA signing also comes at a “critical juncture” as South Africa sets out an infrastructure-oriented roadmap for economic recovery from the impact of the Covid-19 pandemic.

“It is important that government fast-tracks these projects to curb further decimation of the South African construction industry, which is expected to contract by at least 8% in 2020,” says CMF CE Ronnie Siphika.

He says it will be important that the focus is on improving the quality and reliability of the infrastructure pipeline.

“The first 55 gazetted Strategic Integrated Projects are a promising sign but, given the size of this pipeline and the length of infrastructure project preparation cycles, it is probable that a significant share of these projects already have been in the pipeline and this, in conjunction with the fact that the South African government had already been actively seeking private sector investment in infrastructure projects, casts doubt over the quality of this project pipeline as it opens up the possibility that a large share of these projects have been previously rejected by investors,” he elaborates.

The establishment of the ISA – to be led by Dr Kgosientsho Ramokgopa – has the potential to play a significant role in improving the quality of the pipeline and the commercial viability of most of these projects.

“The institutional framework for the delivery of large and complex infrastructure projects has been recognised as a critical success factor by many governments around the globe and the ISA stands a chance to fix the fragmented and broken institutional arrangement South Africa has been using since the dawn of democracy,” Siphika notes.