There has been an increase in construction and development in South Africa.
Investment into infrastructure has the potential to improve South Africa’s economy, drive down problematic levels of unemployment and improve living conditions. According to a report released by the McKinsey Global Institute in September 2015: “South Africa’s Big Five: Bold Priorities for Inclusive Growth”, the gross domestic product of the country could be boosted by as much as R260-billion by 2030 through infrastructure productivity and this could, in turn, create an additional 660 000 jobs. For this to be a success, the quality of infrastructure needs to be addressed alongside a focused approach that ensures spend, investment and project are selected on merit and need, not whims.
“If we talk about the provision of infrastructure and services for the betterment of all, then the answer to whether or not big infrastructure projects are good is likely an unequivocal and idealistic yes,” says Thorsten Deckler, principal at 26’10 South Architects.
“Most modern cities need well-functioning transportation networks to move people and goods, but the manner in which this infrastructure is conceived is critical.”
Deckler hits the proverbial nail on the head with this statement and it is one that is underscored by the research in the McKinsey report. For South Africa to benefit from investment in infrastructure these large, sweeping projects must be more productive and targeted to enable growth. While the country has one of the highest infrastructure investment percentages in the world at an impressive 4.9%, there remain barriers that impact its potential effectiveness such as funding, scheduling, lack of trust and cost.
“There are three key risks to the rollout of sizeable infrastructure projects in our country,” says Dr Martyn Davies, managing director, Emerging Markets & Africa, Frontier Advisory Deloitte. “Effective project management is required to limit cost overruns, with a view to curtailing rent-seeking activities by contractors and stakeholders in the project. The second risk is the loss of value of the rand that poses a risk to the affordability and debt serviceability of such projects, and the third is that projects must be rooted in pragmatic commercial viability and bankability, rather than political whim.”
It is the latter that can potentially place the large infrastructure project under pressure. Government needs to have an efficient way of managing investment into infrastructure and ensuring that it is done in such a way as to support the current infrastructure and its capabilities. McKinsey emphasises the importance of partnerships between government and business, with the public sector making its “priorities and project pipeline more transparent”.
“Large infrastructure projects can play an important role in spatial transformation and make a significant contribution to economic development,” says Deckler. “They offer much-needed employment, skills transfer and stimulate local economies.
“Once built, the spaces of infrastructure, such as train stations which channel high user flows, can in turn support additional services and trade. So while a train station facilitates a primary need, these other benefits must be multiplied and as much as possible needs to be done to anticipate these benefits in strategically in terms of policy, as well as at a spatial and social level.”
Within this there must also be consideration of how any large-scale project can potentially impact on an area and on its communities. The ultimate goal of any mega-project with a focus on infrastructure is to ensure that the people who live in the area will deliver to those immediately affected by the limitations of the existing infrastructure.
India is testament to this not being adequately assessed in light of large-scale dam developments and the resultant suffering experienced by communities that suddenly had no water, no power and no homes. According to the World Commission on Dams report, large dams have not been as effective in development as claimed and that these are responsible for the displacement of 40-80 million people.
“There are many issues with deep social and environmental consequences that sit around large infrastructure projects,” says Deckler. “Large-scale dam building projects, for instance in India, represented progress and modernity whilst threatening to uproot and disenfranchise entire communities.”
South Africa cannot afford the results of badly planned and ill-conceived infrastructure projects. The McKinsey report put forward three major strategies that would ensure South Africa’s infrastructure spend is as productive as possible: work harder to make maximum use of existing infrastructure, optimise its capital portfolio and prioritise projects with the greatest social and economic impact, and streamline delivery of projects by adopting more effective management approaches and practices.
“South Africa needs projects that are rooted in multiple technical, economic, social and environmental readings which capture the realities of the majority of the people,” says Deckler. “These realities need to inform civil society and impact the political agendas driving the projects.
“How informed and committed to its constituencies’ needs is South Africa’s current intention to build nuclear power stations when countries elsewhere in the world are decommissioning theirs? How are such massive undertakings being questioned by an (un)informed civil society? Are infrastructure projects in South Africa used to implement our Constitution or, to use the words of Arundhati Roy, ‘vandalising the very constitution government is supposed to uphold?’ ”
These are the questions that need to be answered when any large-scale infrastructure project is taken out and dusted off, ready for implementation. Government must be more transparent, allowing for private business to become more engaged and more efficient and for civil society to become more involved in decisions that could affect their lives.
Ultimately the value of any large-scale project will lie in its ability to boost the local economy, provide employment and, most importantly, provide for the community and the country over the long term. It must become a priority for these projects to be done to the highest standards and to be done when necessary, not only when silver rests on palms.