‘Social contract’ for infrastructure

The department of public enterprises is looking to the private sector to boost infrastructure development alongside the state-owned enterprises. This emerged on Wednesday when Malusi Gigaba, the minister for public enterprises, delivered his maiden budget vote speech.

He noted that a sharp decline in public investment in infrastructure between 1976 and 2004 had created an infrastructure investment backlog of R1.5-trillion.

“As commercial enterprises, the state-owned enterprises’ plans are based on the funds they can raise off their balance sheets. Clearly there is a funding gap between the required investment to unlock growth in customers and these existing investment plans,” he said.

No single institution, including the fiscus or the state-owned enterprises themselves, could fund the gap. “We need to start engaging creatively with key stakeholders in the private sector to see how we can qualitatively increase the rate of investments to fill this gap.”

Gigaba said the department would be looking to large mining, industrial and financial services companies to enter “social contracts” to “unlock their balance sheets” to speed up the rate of investment in infrastructure.

Tshediso Matona, the department’s director general, elaborated on this after a media briefing on the speech. He said that private sector money might be accessed through public-private partnerships.

In the case of Transnet, he said, its customers could invest in rail to build much-needed capacity. This had been done in places like Australia, where companies such as mining giant BHP Billiton had invested in rail capacity to move mineral products such as iron ore to the market.

South African miners have long bemoaned the inability of Transnet to provide reliable rail infrastructure for the shipment of minerals to the country’s ports.

Gigaba also pointed to plans to better integrate the country’s state-owned enterprises with overarching government programmes such as the new growth path. The department would take a far more active role when it came to oversight of parastatals, he said.

“The very rationale for state-owned enterprises is the developmental mandate they have, which relates to services provided in poorer parts of the country, skills development, industrial opportunities they create for local suppliers and many more,” he said. Using state-owned enterprises to boost skills development was one such example.

Training programmes in state-owned enterprises that had not realised their full potential because of funding constraints would be invigorated by accessing funds in the national skills fund (NSF).

In this regard, he said, work with Higher Education Minister Blade Nzimande, responsible for the NSF, had already begun.

Parastatals such as Eskom would provide 10 000 apprenticeships by 2015, up from 4 500, and would work towards assisting 5 000 young people to find employment, said Gigaba.

Although business may welcome the possibility of working more closely with the government in meeting infrastructure needs, it has questioned the state’s increased role in driving economic growth, as envisaged by the new growth path.

We make it make sense

If this story helped you navigate your world, subscribe to the M&G today for just R30 for the first three months

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.”

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

Related stories


Already a subscriber? Sign in here


Latest stories

Gordhan’s Eskom ‘blame game’ underwhelms ANC leaders

Sources at a meeting of the national executive committee said a call was made to shift the power utility to Gwede Mantashe’s ministry of minerals and resources

Is your laptop tough enough for the pressures of the...

What is military-grade testing, and why should you opt for a device that’s been put to the test?

UK drivers in go-slow protest over surging fuel prices

Rail workers have already staged a series of stoppages to press for better pay as Britain's headline inflation reaches a 40-year high

Bathabile Dlamini reinstated in ANC Women’s League task team

The women in the NEC are said to have fought tooth and nail to have Dlamini brought back after she was pulled out by officials. 

press releases

Loading latest Press Releases…