Reuters

President Jacob Zuma delivers his 2012 State of the Nation address at Parliament in Cape Town.

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Cape Town - The State of the Nation address (SONA) shows the government's willingness to correct capital market failures through infrastructure investments, Public Enterprises Minister Malusi Gigaba said on Tuesday.

He told the National Assembly during debate on President Jacob Zuma's address that state-owned companies were but one of the vehicles for the achievement of the national objectives.

“This programme outlined in the SONA could potentially position South Africa as manufacturer of capital and intermediate goods through an investment localisation programme,” he said.

The programme sought to meet a global demand for South Africa's natural resources and exploit economic opportunities in various routes.

It also presented a new opportunity for, in particular, the manufacturing industry to create downstream linkages.

The electrification programme was responding to the growing economy to reduce the carbon foot print by 2030.

“Already through the construction of Kusile and Medupi power stations, the socio-economic impact of Eskom in these communities is massive.”

The next step was to encourage provincial and local governments to use the technical capacity created by this investment to stimulate local economic development.

Gigaba said by its nature, the developmental state was the manager of strategic sectors of the economy and the re-allocation of resources to productive sectors.

Infrastructure was critical for South Africa to break free from the minerals complex economy and diversify by building a dynamic economy.

“We believe that through the public infrastructure programme, we are not only testing our ability to facilitate cross-pollination between the public and private sectors, but will be writing a growth story that is unique to the South African context.”

In this regard, government was determined to provide leadership for infrastructure roll-out to take place, resolving bureaucratic impediments to the speedy and successful introduction of projects.

Turning to Transnet, Gigaba said the company had a solid leadership and had been enjoying positive results recently.

It had strengthened its balance sheet, enabling the company to review its capital spending from R110-billion in five years to R300- billion in seven years.

This was intended to shift spending away from focusing on the investment backlog to expanding capacity to meet market demand.

Gigaba said the focus on this market-demand strategy was on growth to reposition South Africa as a key global coal, iron, and manganese supplier.

This would make Transnet one of the largest employers in South Africa, one of the top five global freight railways, and one of the top five South African companies in terms of revenue.

Its overall headcount would grow by 25 percent by 2019 from 59 192 currently to 73 962, while indirect jobs were estimated to increase to 194 383.

Some R7.7-billion would be spent on training over the next seven years to up-skill the workforce and the intake of apprentices would increase from 500 per annum to 886 per annum by 2019.

About R31-billion would be spent on local suppliers for locomotive spend over seven years.

“Of course, this strategy is financially sound and most of the growth will be internally funded, off Transnet's strong balance sheet, and only a third of this will require external funding,” Gigaba said.

Opportunities for private sector participation amounting to about R5-billion in various segments such as containers, dry bulk, break bulk, liquid bulk, and automotive would be pursued.

Further private sector participation would also be pursued towards the construction of the dig-out port at the old Durban International Airport, he said. - Sapa