Govt looks into funding models for infrastructure plan

Wednesday, May 23, 2012

Pretoria - Government is investigating various funding models for ensuring the success of the R3.2 trillion infrastructure development plan, says Public Enterprises Minister Malusi Gigaba.

"R3.2 trillion is required for the 17 projects... So there are various funding models that government is looking at. We're looking at the idea of establishing an infrastructure fund of public-private partnerships ... that is partnerships between state owned companies and development finance institutions like the IDC [Industrial Development Corporation]. We're looking at various other funding models," Gigaba said on Wednesday.

In his State of the Nation Address in February, President Jacob Zuma announced a massive infrastructure development plan. It lists 17 strategic integrated projects that cut across rail, road, schools and hospitals construction. The projects cover a range of economic and social infrastructure across all nine provinces, with an emphasis on poorer regions.

Speaking at the 4th Tshwane International Trade & Infrastructure Investment Conference (TITIIC), Gigaba said Zuma will later this year host an infrastructure conference to outline the plans of the infrastructure programme to the private sector, as well as to identify areas for private sector participation.

The importance of a reliable supply of infrastructure to inform decisions of trade and investment, as well as making the economy competitive could not be overemphasised, Gigaba said. Additionally, South Africa's infrastructure needs remained large.

"Despite the programme that the government has announced demonstrating confidence in the economy, South Africa's infrastructure needs remain large and for this infrastructure programme to succeed, you need the balance sheet of the private sector to be unlocked.

"Innovative ways must be found to achieve private sector participation and to boost business confidence despite global uncertainties. We need to increase private sector investment in the South African economy," said the minister.

He noted that the automotive industry had invested significantly in the domestic economy, adding that they faced challenges such as an unreliable freight logistics network and uncertainty in the supply of electricity and uncompetitive tariffs for ports, which eventually leads to the country becoming uncompetitive compared to other emerging economies.

"It is quite clear that certain bold and drastic decisions must be taken to increase the supply of the logistics and the energy infrastructure to reduce the cost of doing business and improve efficiencies," he said.

Government had also taken cognisance of the fact that the programme needed to ensure jobs were created, hence the National Skills Accord was signed last year between business, government, labour and communities, among others. Gigaba said all spheres of government needed to work together to make the programme work

An automotive forum had also been established with the automotive sector, which will produce quarterly reports for the minister.

Gigaba invited the City of Tshwane to engage with the department on a sustained basis to realise opportunities that may come up.

Additionally, South Africa should strengthen domestic and regional trade with the African continent. Africa, he said, was in dire need of transport and energy infrastructure.

"Intra-African trade is at a paltry 12%," he noted.

Tshwane mayor Kgosientso Ramokogopa said the city was a prominent contributor to economic activity in the country as well as on the continent and it boasted state-of-the-art infrastructure.

Meanwhile, the mayor as well as Proudly SA CEO Leslie Sedibe signed a pledge to support local procurement of goods.

"We don't want South Africa being a warehouse. There is a need to support local industries," said Sedibe.

The city has been forecasted to achieve 4.6% growth this year.