Infrastructure is vital for sustainable growth in S.A

Author: Saul Molobi

South Africa has a mammoth task, to accelerate economic growth and create job opportunities amid a global economic slump.

According to the World Bank, “global economic growth could drop to a three-decade low of 2.2% per year through to 2030,” unless fundamental policy shifts are implemented. Part of these shifts require investment in infrastructure development, which in turn creates an environment for global corporates to invest in a given market.

For South Africa, infrastructure development priorities are appropriately aligned with continental and global economic development imperatives, particularly through the National Development Plan (NDP) which is the country’s development blueprint.

While the country has faced tumultuous challenges across the economic value chain in recent times, strategic efforts to attract and retain investments should be celebrated, as we anticipate new investment announcements at the annual South Africa Investment Conference to be hosted by President Cyril Ramaphosa.

In the context of harnessing South Africa’s economic growth, the NDP places improvement of the national economic infrastructure, that is transport, energy, water resources and information and communication technology (ICT) networks at the core of attaining the vision of sustainable and inclusive growth by 2030.

To achieve these ideals, the country and its economy must develop its infrastructure goals and plans. The Development Bank of Southern Africa (DBSA) is a valuable ally in achieving the infrastructure development goal through either funding of public or private sector projects.

As a single point of contact for infrastructure planning, management, and delivery, Infrastructure South Africa (ISA) is successfully coordinating the infrastructure development targets outlined in the NDP. The ISA is under the executive authority of the National Department of Public Works and Infrastructure, while its founding mission is centred around the three pillars of intelligent investment, infrastructure solutions and ease of doing business.

The organisation’s core services include providing leadership in infrastructure planning, best practices for project preparation, and technical and financial support for nationally prioritised infrastructure projects and programmes.

In terms of a continental setting, South Africa aligns with the African Union’s (AU) Agenda 2063, especially the priority areas:

Sustainable and inclusive economic growth, science, technology, and innovation (STI) driven industrialisation and value addition, economic diversification, and resilience. Other priorities which are also linked to the ideals of the NDP include ports operations and marine transport, renewable energy, and communications and infrastructure connectivity.

In line with AU Agenda 2063 with regards to STI infrastructure development, South Africa is equipped in the form of the National Research Foundation (NRF) through the South African Agency for Science and Technology Advancement (SAASTA). Furthermore, the Council for Scientific and Industrial Research (CSIR), and the Square Kilometre Array (SKA).

Read here for more information about the 2023 South Africa Investment Conference.

The country’s development of the national economic infrastructure as outlined in the NDP also finds linkage to the United Nations (UN) Sustainable Development Goals (SDGs). Mainly, the related SDGs are 6, 7, 8 and 9 on related clean water and sanitation, affordable and clean energy, decent work and economic growth, and industry, innovation, and infrastructure respectively. This also relates to Goal 11.2 of SDG 11, which calls for “providing access to secure, affordable, accessible, and sustainable transport systems for all.”

President Cyril Ramaphosa alluded in the State of the Nation Address (SONA) 2023: “Over the course of the last year, we have laid a firm foundation based on the commitments we made for faster growth through our investment drive, economic reforms, public employment programmes and an expanding infrastructure programme.”

Significantly, President Ramaphosa also said, “Just as energy is essential for economic growth, so is a reliable water supply and an efficient transport and road infrastructure system.”

It is against the backdrop of the SONA that progress made towards advancing investor friendly national economic infrastructure development is henceforth outlined.

Transport and road infrastructure

The National Rail Policy, which among other things allows for third-party access to the train network, has been adopted as a roadmap for the modernisation and reform of the rail industry.

To make the policy commitments a reality, work is presently being done across government to construct a Transnet Roadmap, which will include reorganising Transnet Freight Rail to establish a new Infrastructure Manager for the rail network by October 2023. In the Durban and Ngqura container terminals, Transnet and private sector businesses will sign partnerships to encourage fresh investment in the nation's ports and boost their effectiveness.

The improvement of the nation's ports will also assist them in regaining their former status as some of the most effective ports worldwide. Repositioning the Port Elizabeth Automotive Terminal, which has more than doubled its capacity and already witnessed a surge in exports, has been extremely successful.

Vehicles are leaving the Port Elizabeth auto terminal in large numbers for foreign markets. Transnet is also growing its fleet and refurbishing its idle locomotives.

Thirteen commuter train lines have been restored as a result of the PRASA restructuring, greatly lowering the cost of transportation for many employees.

The South African National Roads Agency Limited SOC (SANRAL) is still working to fulfil its duties related to funding, enhancing, managing, and maintaining the country's road system.

Energy

Allowing private developers to generate electricity is one of the country's significant reforms. There are already over 100 projects underway, with a total capacity of over 9,000 MW planned to be added over time.

Many enterprises involved in the renewable energy program will shortly begin building on a total of 2,800 MW of new capacity. To close the immediate shortfall, Eskom will acquire emergency power that can be installed within six months.

New transmission lines and substations are being built, particularly in the Eastern Cape, Northern Cape, and Western Cape. All of these actions will result in a significant boost in power to the grid over the next 12 to 18 months and beyond.

The increased power output will be consistent with South Africa's broad energy mix, which includes existing coal-fired power plants, solar, wind, gas, nuclear, hydro, and battery storage. The appointment of an electricity minister is one of the steps taken to ensure the country's access to reliable energy.

Water resources

A consistent supply of water is critical for human well-being and economic progress. The Department of Water and Sanitation is driving the process of investing in significant infrastructure projects around the country to ensure water security now and in the future.

The Lesotho Highlands project, whose Phase Two will begin later this year, is crucial for guaranteeing water supply security in Gauteng, Free State, Mpumalanga, the Northwest, and the Northern Cape.

The first phase of the Umzimvubu Water Project will begin in the current fiscal year. This phase includes the construction of the Ntabelanga Dam, irrigation infrastructure, and water distribution to communities with government support.

The Lilane Dam, which will feature a hydropower station, will be built in the following phase. Significant initiatives to expand the capacity of the Clanwilliam Dam, Hazelmere Dam, and Tzaneen Dam will increase water supplies to the West Coast, eThekwini, and the eastern half of Limpopo.

Information and communications technology

The completion of the spectrum auction has unleashed fresh investment and provided R14 billion to the fiscus in the telecommunications sector.

The release of spectrum is important for the deployment of 5G mobile networks and will lower data costs. These efforts will get us closer to our goal of providing everyone with cheap, high-speed internet access. The Independent Communications Authority of South Africa (ICASA) and SENTECH SOC Limited are at the forefront of the information and communications technology revolution.

All these integrated advancements in the economic infrastructure development are the clearest evidence that South Africa continues to be a favourable destination for investment opportunities.

Molobi is the former Head of Mission for South Africain Milan, Italy. He is currently the Non-Executive Director at the Global Council for The Promotion of International Trade (GCPIT).

Read here for more information about the 2023 South Africa Investment Conference.