Road to recovery lies in smart choices
By Neil De Beer
JOHANNESBURG - Economic infrastructure may be compared to the foundation of a building, which plays a supporting role in facilitating the multitude of productive economic activities that constitute the bulk of the economy, or gross domestic product.
And this is comprised by certain investments and their related services as transport, power, water systems, communication, and social infrastructure comprise investments and services, that raise the productivity of human capital, for example, education and health.
So how are we doing in our "foundation of our nation" section?
Well, it is not unreasonable to predict that when the policy is developed it will be a slow process. Such is the case with the integrated resource plan and South Africa’s electricity provision plan that it must be put on steroids and not be dragged out.
We need an emergency electricity plan, so dire is the need for electricity in South Africa, that I heard that there was a proposal that suggested power station ships be brought into South African ports, and plugged into the grid. Get it done if need be, our people are still living with candles and this is not acceptable.
The access to water, only 7.3million (43percent) households have access to water services good, about 4.3million (26percent) households had access but needed some improvement, and about 3.9million (23percent) households had services but faced significant challenges. We are not a water-scarce country, but are a water management-less country. South Africa needs good water management, not new water laws.
The priority spending from the Budget speech will be education, which receives R396billion, followed by health with R230bn and social development with R310bn.
But the ultimate questions remain, who is protecting these amounts from going into the wrong hands?
In my opinion, there needs to be a national funding strategy to ensure that the funds are delivered in accordance, and on time.
And additional funds over and above grants are raised to cover all existing, as well as future plans.
This must be done sustainably and affordably, and ensure that such expenditures are required for future operations and maintenance.
And lastly the beast topic of them all, the unemployment rate. I remember in the early 1980s there was a heated debate over whether unemployment in rural areas was voluntary or involuntary. Presently, unemployment in South Africa is so widespread, that it demands an explanation from literature and every citizen in South Africa, even by the unemployed medical doctor in Elsies River, Cape Town.
There is a healthy dose of scepticism in my view about government’s ability to execute the list mentioned.
Investments in infrastructure must be undertaken with care, as it is a topic that never goes away, but most importantly must make sense to our people and their needs.
For example, constructing a highway or railway between two unconnected centres of economic activity may realistically be expected to have a beneficial impact on economic growth.
Linking two uninhabited areas with no prospects for economic development would simply be wasteful. In other words, the growth-enhancing effects of economic infrastructure are not automatic. They must be considered with care in each situation, and weighed against the costs.
In many respects, South Africa’s ability to realise its competitive potential depends on making smart infrastructure choices. And this must respond to economic, demographic, fiscal and environmental changes if they are to help people, places, and firms thrive and prosper in a domestic and global context.
Neil de Beer is president of the Investment Africa Fund and advises numerous African states on economic development. See www.ifa.africa.