SA under pressure to invest trillions in infrastructure development

28 July 2017 - 11:31 By Nomahlubi Jordaan
Image: Gallo Images/Thinkstock

South Africa needs to invest $464 billion (R6 trillion) by 2040 in the water and electricity sectors to plug its infrastructure investment gap and address economic and population growth between now and 2040.

This was revealed in a G20 Global Infrastructure Hub (GI Hub) report‚ covering infrastructure investment needs globally and individually for 50 countries and seven sectors.

This means that the country has to fast-track its efforts to create a conducive environment to attract investment‚ otherwise it will not be able to meet its United Nations Sustainable Development Goals (SDGs).

Between now and 2040‚ the country’s Gross Domestic Product is predicted to increase by 40% as its population increases by only 16%.

This target‚ according to economist Dawie Roodt‚ is a wake-up call to government to accelerate its efforts to woo the private sector so that it feels safe and secure to invest.

“Without a doubt the government is not doing enough (to ensure the country meets its infrastructure investment goals) … a very clear and simple example‚ is what is happening at Eskom and that has a negative impact on economic activity in South Africa‚” said Roodt.

He suggested one way to attract investment was to privatise the state power utility.

Meanwhile it remains to be seen whether South Africa will meet the SDGs of providing universal access to drinking water and electricity by 2030 as entities tasked to ensure government reaches its target have been fingered in corruption scandals.

Two weeks ago the Sunday Times reported how the power utility had only enough cash to last for the next three months - but still wanted to bonuses to be paid to axed CEO Brian Molefe and suspended acting chief executive Matshela Koko.

Eskom has been at the centre of the Gupta leaks that have exposed how the controversial Gupta family and its associates have exercised their influence over the power utility and ensured that its businesses were awarded multiple lucrative tenders worth hundreds of millions.

In February‚ it was reported that the department of water and sanitation was nearly R4.3 billion in the red and under investigation from the public protector and Special Investigating Unit (SIU).

According to the Global Infrastructure Outlook report‚ the cost of providing infrastructure to support world economic growth would be $97 trillion.

It points out that $18 trillion‚ almost 19%‚ will be unfunded if current spending trends continue.

The report warns that this is not only a major challenge for emerging countries that need to create new infrastructure‚ but also for advanced countries that have ageing systems that need to be replaced.

GI Hub chief executive Chris Heathcote said: “Outlook is a comprehensive and detailed analysis of infrastructure investment need. It gives the new country and sector spending data that governments and funding organisations have been calling for.

“It tells us three key things‚ how much each country needs to spend on infrastructure to 2040‚ where that need is for each infrastructure sector‚ and what their gap is‚ based on their current spending trends.’’

Roodt said the government did not necessarily have to invest more in infrastructure but had to bring the private sector on board.

South Africa is forecast to meet 66% of its infrastructure investment needs by 2040.

Already‚ meeting the SDGs for electricity and clean water provision globally‚ which is part of the infrastructure needs‚ will require $3.5 trillion more to close the gaps.