Opportunity Issue 98

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INFRASTRUCTURE constraints the government is facing, it seems that public-private partnerships may just be the appropriate tonic.” Shawn Hagedorn, an independent strategy adviser, argues that a feasible growth plan should be the main anchor of the country’s economic recovery if infrastructure is to have the desired effect. “None of our leaders has produced a viable growth plan, yet many support ramping up infrastructure projects to spark jobs and growth. While it is unrealistic for any country to expect infrastructure investment to spur growth without a plan, SA has special challenges. If we view the global economy as a computer network, the cost of upgrading SA’s hardware is high, whereas exceptional performance gains are to be realised through better network integration,” says Hagedorn. Hagedorn’s main concern is what he calls South Africa’s “central political-economic disconnect”, which he explains as a situation that is a diametric opposite of all successful economies worldwide which thrive through extraordinary integration into the global economy. He blames the failure of the domestic economy’s ability to take off on the ruling ANC’s strong emphasis on redistributive economic policies which focused predominantly not on global competitiveness but redressing economic inequities without concomitant growth, failure to embrace possibilities due to focus on correcting legacies as well as an incessant debate of the imperfections of successful policies as opposed to adopting and adapting those prescriptions. “The country’s meagre growth prospects are due to overreliance on domestic spending, despite most households being poor. Government efforts to induce growth have been expensive, ineffective and unsustainable in the decade preceding the Covid-19 pandemic, households and government became over-burdened with servicing expensive debt, while GDP growth barely tracked population growth. We are far along the path of triggering mutually reinforcing debt and poverty traps.” Notable successes for PPP The exploration of the infrastructure-led economic growth path is, however, not a novelty. In 19<strong>98</strong> the new public-private partnership framework was inaugurated with the view to boosting the overall wellbeing of the domestic economy. Using a hybrid mix of private and public sector funding, estimates are that R90-billion has to date been procured via Private steel fabricator and steel erector Betterect has recently invested in semi-portable cranes by RGM Cranes. Credit: Betterect this framework and government contributed at least R30-million to the kitty. The model allows for the crowding in of public sector investment and the acute shortage of funds on the part of government is addressed as a result. Among the most notable successes of the PPP framework is the Gautrain Rail Link Concession. Although there appears no dissonance regarding this developmental paradigm, some hurdles along this laudable recovery path need to be tackled. For instance, the market should not be forced to invest in low-yield, high-risk projects but those which link funding to performance. Also, the use of any sort of legislative instruments to force the market to direct its investments into a sector for which its appetite is next to nothing may create a huge disincentive. In a nutshell, any form of a prescribed assets regime may seriously stifle the investment spending drive. According to infrastructure investment expert, Jurie Swart, CEO of African Infrastructure Investment Managers (AIIM), the private sector has an appetite to partner with the government on its massive and unprecedented infrastructure investment drive. However, he points to the urgent need for high-level discussions to iron out the finer details of the initiative, especially the governance procedures. He adds that his organisation will, as the most experienced private equity investment partner on infrastructure development on the continent, with an estimated $2.1-billion under its management in seven savings funds, be meticulous before it commits funds to any project. “We are the custodians of South Africa’s savings and it makes sense that these savings are committed to sustainable projects that offer appropriate risk-adjusted returns. These should improve the economic wellbeing of the savers,” says Swart. Despite concerns about rampant malfeasance and shoddy corporate governance, government has in some instances notched up an impressive record in managing PPPs. A case in point is the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), which boasts an estimated R7-billion in investments to date. Commercial banks have also added close to R90-billion in this programme in a bid to ameliorate the funding challenge. As infrastructure spending gains impetus, construction and engineering group WBHO is among its earliest beneficiaries and has been awarded a R1.88-billion public-private partnership contract to build a new accommodation office for the Department of Rural Development and Land Reform. Maybe government has finally found a path that will navigate the domestic economy out of the doldrums and enable it to take off to greater heights of prosperity. As KH Plant, a specialist construction equipment company, noted in its 2021 Outlook for the South African Construction Industry about the prospects of government’s infrastructure endeavours coming to fruition and powering the domestic economy to the long-awaited recovery: “Despite the country’s economic standing, the fundamental need for infrastructure remains. Demand is high for better and more roads and other transport options, housing, power and other utilities and so on. Government has already committed to using infrastructure projects to drive post-Covid-19 economic recovery.” 28 | www.opportunityonline.co.za
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Page 1 and 2: www.opportunityonline.co.za JULY/AU
Page 3 and 4: AUTOMOTIVE From a skills and manufa
Page 5 and 6: ADVISORY SERVICES Mint Fresh Adviso
Page 7 and 8: Welcome to South Africa’s fabled
Page 9 and 10: SMME VIRTUAL ROADSHOW PRACTICAL AND
Page 11 and 12: JULY/AUG/SEPT 2021 • ISSUE 98 Mom
Page 13 and 14: What are the main economic activiti
Page 15 and 16: PROFILE Midvaal Local Municipality
Page 17 and 18: Sebenza Mbokodo Women’s Project T
Page 19 and 20: LOCAL GOVERNMENT A critical reflect
Page 21 and 22: THERE ARE MANY BUSINESS FINANCIERS
Page 23 and 24: www.opportunityonline.co.za | 21
Page 26 and 27: INFRASTRUCTURE Researcher and write
Page 28 and 29: INFRASTRUCTURE One of the major are
Page 32 and 33: ENERGY South Africa's Petroleum Bil
Page 34 and 35: INTERVIEW Making investment in the
Page 36 and 37: ENERGY William Price, Country Manag
Page 38 and 39: in the atomosphere 2.6 TWh each yea
Page 40 and 41: TRANSPORT Policy needs to match inf
Page 42 and 43: TRANSPORT Credit: Group Five defici
Page 44 and 45: TRANSPORT Listed below are a few re
Page 46: Rail regulator embracing change A s
Page 49 and 50: PROPERTY INVESTMENT The top estates
Page 51 and 52: Experience limitless luxury STANDS

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