Fifty-five "bankable and shovel-ready" infrastructure projects are in the pipeline following collaboration between the office of President Cyril Ramaphosa and the private sector to prepare project proposals for financing.
The head of the Infrastructure Investment Office in the presidency, Kgosientso Ramokgopa, told the Sustainable Infrastructure Symposium for SA on Tuesday that over the past five months the collaborative efforts have resulted in confirmed financing for all of the 55 projects, without making a call on the fiscus.
Ramaphosa said that the government wants infrastructure to be "the flywheel" around which the post-Covid economic recovery is built.
A list of the projects was not made available at the conference, making it impossible to gauge the value of investment by either the public or the private sector. The projects are mostly in energy, roads and ports and will be undertaken with state-owned entities. These will require government loan guarantees and Treasury permission to increase borrowing limits.
Also included in the list of 55 are some purely private sector projects, such as housing developments, which the government has unlocked by committing to provide bulk infrastructure.
National Development Plan
Ramokgopa said the aim of the initiative is to shift gross fixed capital formation from a low of 16% of GDP to 30% as outlined in the National Development Plan. But the "decimation and displacement" of technical and financial engineering skills in the state have made it essential to lean heavily on the private sector for expertise.
The selected projects have a cost recovery element or a revenue stream and "are packaged in a way that we will be able to invite public sector participation", he said. The 55 projects have been selected from a list of 188 in six different sectors and mostly in network industries.
The 55 projects as well as some others will be gazetted in terms of the Infrastructure Development Act in the coming weeks. This will enable the projects to pass more readily through regulatory hoops. However, the gazetting of a project does not mean that the government has committed to building it or that it will be funded.
This is not the first attempt to build a project pipeline for infrastructure that can galvanise growth and stimulate employment in the construction sector. In 2014, the then economic development minister Ebrahim Patel launched a similar initiative of 645 projects in 18 strategic sectors.
Presidential investment envoy Jacko Maree, a delegate
to Ramphosa’s roundtable discussion, urged the government to prioritise projects and to refrain from drawing up long lists. "We have to prioritise. I get worried when I hear of hundreds of projects. Secondly, for the private sector to retool their businesses for this they need to know that this will be sustainable and will go on for years."
Maree also warned that with the government’s debt to GDP ratio on an unsustainable trajectory with limited domestic resources, SA will need to access funding from multilateral development banks and international finance institutions.
New Development Bank vice-president Leslie Maasdorp said that in addition to the $1bn (R16.85bn) emergency Covid-19 loan already approved for SA, the bank intends to engage over a further $1bn to be extended for infrastructure projects.
"We want to design that with the government. This would be for economic sectors that need an injection," he said.
The bank has also registered a rand-denominated bond programme with the JSE and is committed to raise R10bn so that it could lend to SA in rand-denominated debt.
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