Busisiwe Mavuso | Emergency measures needed to lift infrastructure programme out of bureaucratic quagmire

POSTED ON: October 7, 2022 IN by Admin
infrastructure infrastructure

By Busisiwe Mavuso

BLSA has repeatedly highlighted that the institutional architecture for infrastructure within the state is simply not fit for purpose.

It’s a startling fact that not one large infrastructure project has been brought to market since President Cyril Ramaphosa launched the infrastructure fund in August 2020, which had a target of spending R100bn on new projects over the next decade.

That was intended to leverage as much as R1-trillion in new infrastructure investment flowing from the private sector and was the core economic stimulus announced in the President’s Economic Reconstruction and Recovery Plan in 2020 in response to the crippling economic effects of the Covid pandemic.

BLSA has repeatedly highlighted that the institutional architecture for infrastructure within the state is simply not fit for purpose.

The primary problem is that the institutions responsible for infrastructure development are housed in different ministries that have separate mandates and processes. Sometimes the implementing entity is housed in one ministry while the policy or decision makers are in another. Responsibilities often overlap and there is poor co-ordination between all of them. A lack of expertise exacerbates the problem.

What’s alarming is that so little seems be happening to fix it. Perhaps that’s because even with that important function, there is overlap on whose responsibility it is.

The Infrastructure and Investment Office (IIO), housed in the Presidency, has a mandate to provide a collaborative platform that seeks to bring together all stakeholders with a vested interest in infrastructure development. But Infrastructure South Africa (ISA), which is housed in the Department of Public Works and Infrastructure, is tasked with unblocking legislative and regulatory barriers to investment, as well as fostering policy certainty to increase investor confidence. Then the ISA reports to the Presidential Infrastructure Coordinating Commission, which has the task of coordinating infrastructure planning and delivery across all branches of the South African government, state agencies and social partners.

While all those entities are working to streamline the processes that are stalling infrastructure development, nothing has changed. Perhaps collapsing them into one unit, or at least merging the IIO and ISA into a joint venture, will improve co-ordination and accelerate implementation of reforms to streamline the architecture.

With so many units just to reform the system along with countless other institutions involved in the actual processing of infrastructure projects, from national down to municipal level, it also makes it almost impossible to trace who should account for failures and delays, and accountability is therefore non-existent. Despite the overly complicated architecture, no one is actually tracking  procurement from feasibility to implementation stage.

And each of the multiple institutions that are involved in processing project applications is armed to the teeth with its own garland of red tape, bringing more interminable delays.

We need these issues to be resolved quickly. Private sector participation is key to getting the infrastructure programme up and running but the entire system appears designed, paradoxically, to make this impossible. The last public-private partnership was recorded in 2017 and the value of PPS has dropped from R10,7bn in 2012 to R5,6bn in 2020.

The problems lie in the serious project pipeline challenges, not in funding. Even state funding of infrastructure projects is readily available – Finance Minister Enoch Godongwana has already announced that in the medium-term budget this month, the infrastructure budget will be increased by 30% to R812.5bn for the next three years.

We need to convert that funding into shovel-ready projects. Way back in 2012, the National Development Plan envisaged 30% of GDP being spent on infrastructure development by 2030 (we’re at about 14% while emerging market peers are around 25%) precisely because of the long-term economic benefits that would bring. Those are needed more urgently now in the wake of the Covid pandemic and with unemployment at 33,9% (at the narrow definition), from 24.7% when the NDP was launched.

While a sudden burst of infrastructure developments would create a significant number of jobs in the short term related to construction, transport, and other sectors, it would also have a positive long-term impact of a growing economy based on efficient services in our energy, water and transport sectors, which are vital to facilitate further economic growth. We’d also have more schools, medical clinics and other vital state facilities that are desperately needed, particularly in rural areas.

The long-term multiplier effects of having efficient rails, roads, water and energy supply are immeasurable but just the short-term stimulatory economic effects make it worthwhile implementing urgent measures that will pull infrastructure development out of its bureaucratic quagmire.

*Busisiwe Mavuso (@BusisiweMavuso2) is the CEO of BLSA. This article first appeared in News24 Business.

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