SA lacks the institutional capacity critical to fixing infrastructure seen as vital to unlocking its economic potential, says Kenny Fihla, CEO of Standard Bank Corporate and Investment Banking, urging the government to partner with the private sector to address the challenge.
“Everyone knows that our roads are falling apart, water supply is interrupted and the electricity is unreliable and getting worse, and that you cannot have economic growth, as well as an improvement to people’s social wellbeing, if you have failing infrastructure and deterioration in social services,” Fihla told Business Day during an interview on Friday.
Creaking municipal infrastructure is one of the factors that has led to a deterioration in municipal services across SA, sparking several service delivery protests.
Businesses have also borne the brunt of poor municipal service delivery through interrupted power and water supplies.
Last week, Pick n Pay chair Gareth Ackerman said governance failures in some SA’s towns and cities had degraded infrastructure to such an extent that SA’s second-largest retailer was battling to get insurance cover on some assets.
Only 27 out of the country’s 257 municipalities received clean audits in the 2019/2020 financial year, according to the auditor-general’s office.
“The infrastructure issue is mission critical for SA. The biggest mistake, though, that the government is making is to pronounce [projects] and hope that things will happen when in reality the institutional capacity to implement these projects is weak,” said Fihla.
Fihla’s comments come at a time when SA is gripped by intermittent power cuts, which have dimmed economic growth prospects.
The energy supply crunch has highlighted the urgency of bringing new capacity online, such as renewable energy to augment existing capacity. SA has an immediate energy supply gap of about 6,000MW.
State-owned power utility Eskom is unable to generate enough capacity to meet available demand because many of its coal-fired power stations are old and have not been adequately maintained for years.
As a measure to protect the grid from total collapse, Eskom has resorted to intermittent power rationing that has proven costly to businesses.
Building new renewable solar plants is seen as one mechanism to relieve pressure on the strained national grid, at least in the short term.
But Fihla said SA has a backlog of about 8,000km in its transmission network, meaning not all solar plants may be connected to the national grid.
“Dealing with that backlog and developing the infrastructure to supply is mission critical. We need to find different ways of accelerating the development of infrastructure, and those different ways would require private sector participation,” said Fihla.
“We need a change in the mindset of government, thinking they can do everything themselves — they can’t. There is no institutional capacity. They need to embrace private-public partnerships.”
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