President Cyril Ramaphosa has called on development financiers to partner with the government in investing in public infrastructure, which he believes is key to igniting SA’s sluggish economic growth.
Ramaphosa envisages an aggressive public-sector build programme to create jobs and achieve inclusive growth. He announced the establishment of an infrastructure fund last year and has decided to convene a sustainable infrastructure development symposium to produce a suite of projects of national significance.
Also planned is a detailed infrastructure investment plan consisting of projects that send a positive signal to investors and lenders, with hopes to revive the stagnant construction industry.
Ramaphosa has made attracting fixed investment to the value of R1.2-trillion by 2023 a goal of his administration. Investment in the economy is an important enabler of job creation.
The president met with about 60 commercial bankers, development finance institutions and multilateral development finance institutions at Tuynhuys on Tuesday.
The meeting included the Development Bank of Southern Africa, the Industrial Development Corporation (IDC), the Public Investment Corporation (PIC), the World Bank, New Development Bank, German Development Bank, the French Development Agency, the International Finance Corporation (IFC), the European Investment Bank, and business organisations such as Business Unity SA (Busa) and Business Leadership SA. Several cabinet ministers were also in attendance.
The agenda for the meeting was to discuss the planning framework and challenges facing public-sector infrastructure and its funding, and to find solutions to the challenges. The discussions also focused on the implementation of urgent reforms identified by the government as prerequisites for reviving infrastructure investment.
The president stressed the need for the creation of technical, engineering and financial capacity in the state in collaboration with the private sector.
Policy and regulatory reforms are also necessary, he said, to ensure a speedy, robust and transparent decision-making process. “Our public-sector policy and regulatory universe is among some of the most elaborate and prohibitive in the world. It has the unintended consequences of delaying and derailing investments at great cost to the economy.”
Three units
Ramaphosa has established three specialised units in the presidency: the investment and infrastructure office; the project management office; and policy and research services, to address obstacles and improve the government’s delivery. These units are working closely with the presidential infrastructure co-ordinating commission, InvestSA, and the “ease of doing business” task-team to remove impediments to investment and growth.
In his opening remarks at the meeting, Ramaphosa stressed that extraordinary measures are required to respond to the challenges of slow economic growth and deepening unemployment. He pointed to the huge neglect of infrastructure investment, particularly municipal water infrastructure, as well as the disintegration of provincial and municipal roads, and failing power plants.
“The net effect has been the collapse of industry, divestment from the country and erosion of funder confidence,” the president said.
He also highlighted the haemorrhaging of skills in the public sector, which undermines planning, asset management and the creation of a credible pipeline of infrastructure projects.
Ramaphosa noted that public infrastructure spending has been declining in recent years; now it amounts to about only 13% of total spending.
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