Ramaphosa sets a target of R1 trillion investment in infrastructure
Johannesburg: - President Cyril Ramaphosa has pledged to attract investment in infrastructure of R1 trillion in the next four years, but warned that his government has to increase efforts to fight crime and corruption to meet the target.
Ramaphosa made the comments while delivering his opening address at the Infrastructure South Africa (ISA) Project Preparation Round-Table and Market Place at the Gallagher Convention Centre on Tuesday.
He urged businesses, banks, pension fund companies and other stakeholders to assist his government to rebuild the economy, which has been worsened by the outbreak of Covid-19 in March this year.
“Before the outbreak of Covid-19, South Africa was already experiencing slow growth and rising unemployment. The pandemic worsened an already dire situation, severely disrupting economic activity and putting numerous investments on hold.
“Our priority now is driving the implementation of South Africa’s Economic Reconstruction and Recovery Plan,” Ramaphosa said.
He said the plan, which is underpinned by the agreements between social partners, outlines key interventions to kick-start the economy.
He said his government and social partners are prioritising economic reforms to unlock investment and growth, fight crime and corruption, drive industrialisation with a focus on growing small businesses, improve the capability of the state, and create jobs through mass public employment programmes.
Ramaphosa also said another key priority intervention was promoting aggressive infrastructure investment and supporting its delivery.
“These include large-scale build projects, community and social infrastructure, and infrastructure maintenance.
“Throughout, our focus is on catalysing job creation and ensuring that local businesses benefit.
“Over the next four years we hope to unlock R1 trillion in infrastructure investment,” Ramaphosa said.
According to Ramaphosa, a significant vehicle for achieving this is the national Infrastructure Fund, which has recently been made operational.
“It is a blended financing instrument aimed at derisking projects to make them attractive for private sector participation. It is significant, and most welcome, that the multilateral development banks, pension funds and commercial banks have agreed to participate in the governance structures of the Infrastructure Fund.
“It is critical that our Infrastructure Investment Plan is grounded in a credible project pipeline.
“These projects should be ready and bankable for both investment and implementation,” he said.
Ramaphosa said the inaugural Sustainable Infrastructure Development Symposium – or Sids – that took place in June this year was a huge boost for infrastructure build plans.
“Working with the private sector, we were able to identify 276 projects with a total investment value of more than R2.7 trillion.
“We have since gazetted 50 of these Strategic Integrated Projects with a value of R340 billion. We also listed an additional twelve special projects,” he said.
Ramaphosa said the projects were in the areas of water and sanitation, energy, transport, digital infrastructure, agriculture and agro-processing, and human settlements.
Each of these areas was vital to the rejuvenation of the economy, reducing the cost of doing business and improving the country’s competitiveness.
“The Reconstruction and Recovery Plan emphasises that project preparation is necessary to unlock private sector funding and high impact capital funding.
“Attention must be given to improving the state’s technical, project preparation and financial engineering capabilities, including by drawing in private sector skills and expertise,” Ramaphosa said.
He further said “it was evident during the Sids process that not all of the projects were well-prepared, and that additional funding and capacity support would be required.
“Project preparation is a costly exercise, but absolutely necessary,” Ramaphosa said.
He said The Global Infrastructure Hub, a G20 initiative, estimates that infrastructure project preparation costs in developing countries can range from 5 to 10% of the total project investment, with African governments covering most of these costs.
“This is compared to the 3 percent to 5 percent of project costs in developed countries, where project funds and facilities are willing to take the risks to fund projects.
“Clearly, there needs to be more co-ordinated engagement between governments and the private sector and other players in the infrastructure financing space,” Ramaphosa said.
Urging participants to find solutions to the country’s economic woes, Ramaphosa said the round table was the beginning of a more dedicated and structured approach to project preparation.
“It paves the way for greater private sector participation in this crucial stage of the project life-cycle,” he said. | Political Bureau