Initiatives, programmes being pursued to spur infrastructure development

28th September 2021 By: Tasneem Bulbulia - Creamer Media Reporter

Infrastructure development is a critical component of the country’s economic rebuilding efforts and there are a number of infrastructure investment and development programmes and funding initiatives under way that aim to spur this on, Development Bank of Southern Africa disruption specialist Johann Lübbe has pointed out.

Speaking during day one of the Consulting Engineers South Africa (Cesa) Infrastructure Indaba 2021, on September 28, he said a programmatic and blended finance approach were among the options being pursued to fund infrastructure delivery.

He indicated that one example of this was a nonrevenue water programme – a water conservation, water demand management and cost recovery programme.

For this, discussions are under way with government to establish a national nonrevenue water programme. This would entail a municipal water service turnaround strategy focusing on reducing losses, reducing over consumption and improving cost recovery, he stated.

This programme would use blended financing solutions, leveraging private sector investment through performance-based contracting models.

Lübbe also cited a water reuse programme – a municipal water (effluent) reuse programme that would enable the creation of a new asset class.

He said the country was facing a projected 17% water deficit by 2030, stressing that there was a need to place more value on water as a scarce resource. Therefore, this programme presents a significant potential to extract maximum value from this scarce resource by using it more than once, Lübbe noted.

He further mentioned a provincial roads funding and implementation mechanism. This concept has been identified and scoping investigation has been completed in the North West province, he said.

The product now needs to obtain government support, and to identify a pilot project, with the North West province as a proposed site for this.

Lübbe explained that most provinces were struggling to cope with the demands of upgrading, rehabilitation, refurbishing and maintaining road networks, owing to budget and finance constraints, as well as capacity constraints.

This, he said, results in most provinces experiencing rapidly deteriorating road networks, a reduced ability to stop and turn around the deterioration and exponentially increasing capital and maintenance costs.

Other programmes include an off-grid sanitation programme and a community/rural water supply programme.

For this, discussions are under way with government to establish a national water reuse programme.

Professional services firm PwC chief economist Lullu Krugel, meanwhile, said building confidence in the country remained negative and below the long-term average, owing to multiple challenges.

She noted that some of the key challenges facing the construction industry at present were weak contractor activity, pressure on overall profitability, delays in municipal approval of projects, the ‘construction mafia’, government inaction in the rollout of key building projects and worse-than-expected domestic demand for building materials.

Growthpoint Properties COO Engelbert Binedell, meanwhile, said infrastructure in the country had failed, but, that there were pockets of excellence.

In terms of the outlook, he said developments would be put on hold and maintenance of existing infrastructure undertaken instead.