Infrastructure investment sustaining SA's economy

Tuesday, March 10, 2009

Pretoria - High levels of public and private investment in infrastructure has helped to sustain South Africa's economy in the midst of global economic recession, Trade and Industry Minster Mandisi Mpahlwa said, Tuesday.

Speaking at the Economic, Investment and Employment Cluster Programme of Action progress report, Minister Mpahlwa said that South Africa's economy has managed to keep head above water as a result of government's Public Infrastructure Investment Programme.

"Over time that we have been working as an economic cluster, we sought to deepen our understanding of our economy, its strengths, weaknesses and constraints.

"In the first three years of this term we managed to raise economic growth to 5 percent ... with a rate of job creation higher than it had been for a very long time.

"Our growth was driven by strong commodities demand, strong consumer demand and high levels of investment by both the private and public sector," Mr Mpahlwa told media.

With the global economic recession having taken grip firmly, in developed economies, in particular, demand for South Africa's commodities as well as local domestic consumer demand dropped sharply.

The decision to investment on a grand scale in infrastructure, however, is driving investment, sustaining South Africa's economy, and keeping us in positive territory for the moment, the trade and industry minister said.

The road to economic recovery in South Africa is a road government does not know, he said, adding this therefore makes it difficult to prepare and respond to the prevailing situation.

"The emergence of the global economic crisis has begun to impact on the real economy which does pose challenges for the government economic POA.

"However, the crisis does re-emphasise the need to continue implementing interventions identified, as these address the long term structural constraints to the economy and seek to promote a fast growing, dynamic and resilient economy," Mr Mpahlwa said.

The work of the capital expenditure programme has been vital in driving industrial development in the economy, and undertakings such as Eskom's Build Programme have also spurred mass investment.

Eskom's R150 billion investment for the five years leading to 2011/12 in electricity infrastructure seeking to secure energy supply has begun, he said, with the return to service of power stations Camden, Grootvlei and Komati.

The Cabinet Lekgotla in January 2009 approved the broad policy framework that will guide the country's Water for Growth and Development initiative, aimed at ensuring supply of safe water.

"Progress has also been made in the construction and maintenance of water infrastructure, as well as gaining a better understanding of water challenges that face us," the minister said.

As indicated by Finance Minster Trevor Manuel in his February Budget Speech, government will spend an estimated R787 billion over the next three years as part of the Public Infrastructure Investment Programme.

Such budgeted investment will not only provide the necessary short, mid and long term boost to the economy, but will also provide hundreds of thousands of people with employment during a period of expected economic hardship.