Sorry, Mr President, infrastructure alone won't drive growth
Infrastructure is a key driver of economic growth, but it must be combined with other development programmes to realise real economic growth.
This is the sobering assessment of the government’s plans to use infrastructure development to drive the South Africa economy, as unveiled in the 2012 State of the Nation address.
It is hoped the plan—driven by the Presidential Infrastructure Coordination Commission (PICC), which will be led by the president and his deputy—will free up the logistical “congestion” in our economy that hinders further investment.
Professor Walter Baets, Director at the University of Cape Town’s Graduate School of Business welcomed the plan, but said it wouldn’t boost investment on its own.
“The development of economic infrastructure won’t guarantee immediate investment—but it does sweeten the deal for any potential investor,” Baets told the Mail & Guardian.
Baets argued instead that there should be a balance between infrastructure and skills development.
“We won’t win this fight only with infrastructure,” he said. “You can have the best logistical systems in the world but if you don’t have the skills it’s all pretty pointless.”
Associate Professor Marianne Vanderschuren, a transport engineering expert at UCT, shares Baets’s view, said South Africa had a “huge resource problem”, and underscored the importance of getting existing infrastructure working properly.
“Fuel efficiency alone would be improved by up to 20% if we optimised the operation of our traffic lights,” Vanderschuren told the M&G. “We have the technical systems available but not enough human capital—this underlines the challenge.”
Furthermore, there is a chance that improved infrastructure could threaten local production if not managed properly, Vanderschuren said. “I hope we are not developing our ports and infrastructure for globalisation alone. The ability to import easily is an advantage—but we should be producing more locally, to tackle unemployment,” she said.
Besides the challenges of bringing the infrastructure development programme in line with the country’s other challenges, how exactly the plan will be executed has been brought into question.
With infrastructural projects already beset by such problems, there is a real concern that corruption and slow service delivery may derail Zuma’s plans.
Nazmeera Moola, a director at Macquarie First South, says that while slow infrastructure development has been a “huge bottleneck to growth”, plans need to be turned into action before any real progress can be expected.
“It is an ambitious policy idea that firmly identifies the blockages in our economy, but the true test of whether it will work will be in the execution of this programme. South Africa is very good at plans but not so good at execution,” Moola told the Mail & Guardian.
So while Zuma’s infrastructure plans are a step in the right direction, the country will have to hope the government is up to the task of not only speaking to our other challenges but also delivering the program effectively.
“It is going to take some serious commitment from the government to see this plan through. It’s all about accountability and the will to ensure that this is delivered to the people of South Africa,” Moola added.
For news and multimedia on the State of the Nation address visit our special report.