Raising public and private investment levels is a key aspiration of the South African government’s nine-point plan for bolstering an economy that is close to flat-lining.

Four of the points – resolving the energy challenge, increasing private-sector investment, growing the ocean economy and pursuing cross-cutting initiatives to reform, boost and diversify the economy – have direct implications for the outlook for the project economy.
In the electricity realm, there is obviously a strong focus on finalising the delivery of megaprojects (featured in this publication) that have been under way since 2007.

In parallel, though, space is slowly being created for independent power producers (IPPs). In fact, IPP investment could well prove critical in the near term to replenish electricity-related order books for contractors and equipment suppliers – especially with few new projects likely to be added to the immediate Eskom pipeline, with the State-owned utility facing serious financial constraints.

Success in this electricity domain could also improve prospects for private-sector investment generally, because investors are currently hamstrung by not only weak markets and confidence levels, but also by electricity shortages.

It is possible that improved electricity stability could spur direct investment by far-sighted businesses aiming to position themselves – using South Africa as a gateway – for opportunities emerging in the rest of the continent.

But, while security of electricity supply is a necessary ingredient for private investment, it will not be sufficient. Potential investors also need to see material improvements in other infrastructure areas, from water to logistics. In addition, the attitude of government and the incentives on offer could prove critical as firms seek to navigate the global economic headwinds and domestic crosswinds.

Therefore, government will arguably need to choose pragmatism over conditionality, and to embrace rather than shun profitable enterprises. Partnerships, including those pertaining to project delivery, should also be embraced in light of government’s limited delivery capacity.

Should all, or at least some, of these components come together, South Africa could make unexpected progress in raising gross fixed capital formation.

Such progress will result in immediate growth and jobs spin-offs, while the actual projects could also position the country for any eventual recovery in the commodity and business climate.

It is a virtuous cycle that now truly needs to be put into motion.

The latest edition of the Projects in Progress supplement provides insight into some of the larger public and private projects being undertaken across South Africa, as well as selected economies in East, Southern and West Africa; while demonstrating that serious gaps remain in progressing some important transformational projects from planning to implementation.

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