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President gets private sector on board infrastructure investment

SANEWS.GOV / 18 FEBRUARY 2020 - 11.37 / STAFF REPORTER

President Cyril Ramaphosa has highlighted the role the private sector has to play in infrastructure investment at his extraordinary meeting with the CEOs of commercial banks and multilateral development finance institutions.

Held in Cape Town on Tuesday, the meeting -- which was also attended by Ministers and Directors-General -- came less than a week after the President tabled the State of the Nation Address in Parliament, where he detailed key infrastructure investment interventions aimed at reviving the economy.

Spurred by the 2019 Budget Report, which revealed the declining state of public investments and the under-utilised transfers to local governments for investment projects, the President on Tuesday said the fiscal space has further been constrained by the vast contributions provided to rescue SOEs such as Eskom and South African Airways (SAA).

“Overall infrastructure investment needs to grow to 30% by 2030 to achieve the NDP [National Development Plan] growth targets.

“Multilateral development banks, development finance institutions and the private sector all have a critical role in financing and implementing this investment,” President Ramaphosa said.

In recent years, the President said, government has witnessed the accelerated deterioration of some of its most important assets required to improve the quality of life of citizens.

He said the rapid deterioration of municipal water infrastructure, such as waste water treatment works and water treatment plants, undermines the economy and threatens access to basic services.

“The disintegration of provincial and municipal roads will affect the efficiency of the road network, stunt economic growth and increase the cost of transport for all road users.

“The story of failing power plants is well documented, causing great harm to the economy and raising the country’s risk profile.

“The haemorrhaging of technical engineering and financial skills in the public sector has contributed significantly to the bleak state of public infrastructure.”

Addressing captains of industry, the President said the decimation of these necessary skills in the public sector has undermined planning, prudent asset management and the production of a credible and transparent project pipeline.

The net effect has been the collapse of industry, divestment from the country and erosion of funder confidence.

“This is a picture we want to correct and correct immediately. Addressing barriers to infrastructure investment is critical to achieve the required growth,” President Ramaphosa said.

Infrastructure investment interventions

The President said the most immediate interventions to turn the situation around include:

- The creation of technical and financial engineering capacity. Through private sector collaboration, the President said it is important to create a legally permissible transitional dispensation to ramp-up State capacity in the technical and financial areas;

- Developing a detailed Infrastructure Investment Plan. The plan should provide a positive signal to investors and lenders, revive the stagnant construction industry, and improve skills and institutional capacity across line ministries and sub-sovereign entities to generate a visible pipeline of projects;

- Initiating policy and regulatory reforms. SA’s public sector policy and regulatory environment is among some of the most elaborate and prohibitive in the world, the President said;

- A rethink of the public sector financing space; and

- A need to revise the public sector infrastructure institutional framework. This is aimed at reviewing the distribution of functions and roles across different institutions, and optimising processes and controls to ensure optimal infrastructure investment.

“The recently established Investment and Infrastructure Office in the Presidency will spearhead the revision exercise with a view to ensuring better coordination and alignment, and positioning the Presidency as the strategic centre for investment and infrastructure in the country.

“I will be releasing an Infrastructure Investment Policy Statement, which, among other things, will provide an ‘eco-system’ within which good infrastructure investments (including PPPs) are undertaken, remove ‘institutional confusion’, and create an oversight mechanism.

“This policy will help build consensus and provide clarity to all stakeholders on how infrastructure projects should be conceived, how government support mechanisms should be structured, and how the infrastructure project life cycle should be streamlined,” the President said.

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LINK : https://www.sanews.gov.za/south-africa/president-gets-private-sector-board-infrastructure-investment

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