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Thought Thursdays

 Infrastructure and the mirage of the promised land

2014-04-09 11:00
Willem Louw
International ProgrammeConsider a quotation from the website of the World Economic Forum (WEF) Infrastructure and Urban Development website: “Development of infrastructure is one of the top political priorities in Africa, to enable economic growth and competitiveness. Without adequate infrastructure endowment, Africa risks sacrificing about 2% of GDP growth per annum”. For this reason the PIDA (Programme for Infrastructure Development in Africa), led by the WEF and coordinated with the African Development Bank (AfDB) with the support and guidance of the African Union Commission (AUC) and the NEPAD Planning and Coordinating Agency (NEPAD Agency), has been established.

South Africa, too, has adopted a National Development Plan (NDP) with 18 Strategic Infrastructure Projects (SIPs) contained therein to transform the economic landscape of South Africa, create a significant number of new jobs, strengthen the delivery of basic services to the people of South Africa and support the integration of African economies.

These programmes and plans strongly emphasise:
  • increasing energy access and reducing power generation costs;
  • reducing transport costs;
  • ensuring water access and food security; and
  • increasing global connectivity.

This is not the only similarity that these programmes and plans share. All are equally slow when it comes to implementation. The opportunities lost because of slow implementation raise the question as to why this tardy progress is allowed to happen. 

South Africa, often viewed as being one of the most progressive countries on the continent, if not the most progressive, is accordingly no different to the rest of Africa (primarily Africa south of the Sahara) when it comes to implementation of the programmes and plans and the inability to expedite progress to the levels required.

Prof Andre Roux in the March 2014 edition of Strategy Insights provides some insight into why countries in sub-Saharan Africa fail to realise the importance of adding value, in this instance via infrastructure implementation to their own resources. As much as inertia and complacency are motivated as factors to be guarded against as value-destroyers, so much can they play the same role when it comes to not realising the plans and objectives for either the PIDA or the NDP. Roux states that if a country in sub-Saharan Africa does not rise to the challenge posed by inertia and complacency, then it will not be able to exploit the benefits of the demographic window of opportunity fuelled by the resource or extractive sector. This then implies that the current windfall will not be used to invest in appropriate education and training, infrastructure and entrepreneurship.

In the South African context, with its current spate of labour unrest being experienced in the mining sector and the doldrums to be expected before and particularly after the election in May 2014, the prognosis on expediting infrastructure delivery turns decidedly negative. Although the National Development Plan has a 20-year planning framework enabling it to continue beyond one administration to avoid stop-start patterns, it will experience a further reduction in the pace of infrastructure development and spending. In 2012 the forecast was that it would fall from 9,1% to 8,1% of GDP in 2013. The most recent budget speech by the Minister of Finance in February 2014 alluded to the reality that this number is now forecast to be in the region of between 4–5% of GDP.

In documentation of a briefing by the Department of Human Settlements to Parliament on the Water and Sanitation SIP (SIP 18) and related SIPs (published on the Parliamentary Monitoring Group website on October 2013), the Chairperson places significant emphasis on the ability of Members of Parliament to mobilise the nation to register voters as a priority action. At the same time frustration is expressed that there is a lot of ‘drawing up of plans and forums’ while implementation had not happened yet.

Hypothesis: This will be the case for a number of months after the May 2014 election as new appointees find and explore their new responsibilities in the future dispensation. The ability to make progress with the SIPs within the NDP will again be compromised.

Lastly, it does appear that there is an ongoing shift in development assistance away from traditional aid packages in areas such as infrastructure, health and agriculture, as was demonstrated during the recent Africa-European Union (EU) Summit that took place in Brussels, Belgium, in early April 2014. In this context, the recently launched Euro100 million programme designed to accelerate the preparation of social and economic infrastructure projects in South Africa, known as the Infrastructure Investment Programme for South Africa to be managed by the Development Bank of Southern Africa is extremely relevant. This programme has been designed to move priority energy, transport, water, information and communication technology, education and health projects from ‘concept to bankability’. It is a big pity then that President Zuma decided not to attend, even though South Africa was the only country on the continent with which the EU currently has a Special Partnership Agreement. Additionally, the timing of the President’s withdrawal came against the backdrop of increasing questioning from within Europe about the investment climate in South Africa, particularly in light of the protracted strikes and the country’s decision to terminate bilateral investment treaties with European countries.

If there is movement in countries in sub-Saharan Africa who are rising to the challenge posed by inertia and complacency concerning infrastructure development, and if this rising is manifested in the EU continuing to encourage initiatives (via the WEF in terms of the PIDA programme) directed towards building peace and security, promoting good governance and democracy as well as continental integration and investment promotion, can we afford not to be at the discussion table? Or do we just assume that we are different and that we can continue to dream about the promised ‘infrastructure’ land while the windfall opportunity continues to pass us by? If so we will, despite our very lucrative resource and extractive sector, not be able to exploit the benefits of the demographic window of opportunity. Imagine the nightmare that not using the current windfall to invest in appropriate education and training, infrastructure and entrepreneurship will bring.

Willem Louw

Willem Louw is the Director of the Centre for Business Management of Projects at USB-ED.

Great approach Willem
Posted by Chris Venter on 10-04-2014 7:00 AM
What do you think of the political consequences of large infrastructure projects, given that they depend for their execution on big investors and creditors, including foreign debt? Do these projects help enhance democracy or do they tend to curtail it? Do they help reduce or increase the divide between rich-poor?
Posted by B D on 20-04-2014 11:59 PM


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