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Government announces tailwinds on infrastructure project

The minister of public works and infrastructure, Patricia de Lille, says the government must clamp down on corruption so that it can regain the confidence of society and investors. 

De Lille was speaking at the Infrastructure South Africa project preparation roundtable event on Monday at the Gallagher Convention Centre in Midrand. She said, “We must show that the government is capable of turning the tide.”

The project preparation roundtable is aimed at fostering collaboration between government and the private sector on infrastructure projects. 

This meeting comes after President Cyril Ramaphosa’s announcement of the economic reconstruction and recovery plan last month. 

The plan has infrastructure development as one of the measures to get the country out of its lacklustre economic state, with the aim of R1-trillion worth of infrastructure investment over the next four years. 

Ramaphosa has previously said that infrastructure has immense potential to stimulate investment and growth and create employment, directly and indirectly. 

To ensure this is implemented, the government has created Infrastructure SA, an entity in the department of public works and infrastructure, and the National Infrastructure Fund, which will prepare and package projects. The fund will provide R100-billion in catalytic finance over the next decade. 

De Lille said the department was starting with 62 strategic integrated projects, out of 276 announced in June at the sustainable infrastructure development symposium. 

The symposium discussed the prioritisation of infrastructure development to support structural transformation, growth and job creation.

She added that all of the projects, of which 62 were gazetted in July, will be subjected to an independent due diligence process as well.

“The Infrastructure Plan will be underpinned by an anti-corruption strategy and, together with the Special Investigating Unit, we are in the process of setting up an anti-corruption forum with representatives from the public and private sector, based on the same principles of the anti-corruption forum set up within the health department”, she said.

De Lille added that the government is also far from the National Development Plan target for public sector infrastructure investment. In terms of targets set by the national planning commission, by 2030 the government has to spend 10% of gross domestic product (GDP) on infrastructure. This is currently at 5.9%.

The government is using blending financing to facilitate this project. Investment is expected to reach 23% of GDP by 2021, with the public sector contributing 8% and the private sector 15%.

Kgosientso Ramokgopa, chief executive of Infrastructure South Africa (ISA), which is tasked with driving the implementation of the infrastructure investment plan, said that over the past six months, his entity has had conversations with the private sector for funding. The discussions were specifically with multilateral and commercial banks. He added that pension fund managers had now joined the talks. 

Ramokgopa explained that the private sector was sitting on a big pool of liquidity and beginning to look at investing in infrastructure as an additional asset class to provide the necessary returns to shareholders. 

Ramaphosa opened his address with the quip: “I smell money in the room, but I want to get to the point of feeling it.”

He said that despite the daunting challenges the country faces, the post-Covid-19 reconstruction and recovery phase is alive with possibility.

Ramaphosa emphasised that his government was prioritising economic reforms to unlock investment and growth, fighting crime and corruption, driving industrialisation with a focus on growing small businesses, improving the capability of the state and creating jobs through mass public employment programmes.

He also welcomed the participation of the multilateral development banks, pension funds and commercial banks, which have agreed to participate in the governance structures of the Infrastructure Fund.

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Tshegofatso Mathe
Tshegofatso Mathe
Tshegofatso Mathe is a financial trainee journalist at the Mail & Guardian.

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