SA must be realistic about its resources - Gigaba

Friday, August 5, 2011

Durban - South Africa can contribute significantly to African infrastructure development, but there is a need to be realistic about the resources available in the country, cautioned Minister of Public Enterprises Malusi Gigaba.

Speaking at the 13th African Renaissance Conference, Gigaba said African countries can access the core logistics - telecommunications and energy infrastructure - from South Africa, however, there is still a significant infrastructure gap in the country.

"For example, just through providing access to our electricity grid, we will enable neighbouring countries to invest in energy generation at a far larger scale than they would do in isolation, which would provide business with confidence it requires to make further investments in these countries.

"... We have a significant infrastructure gap in South Africa that needs to be funded. While our development finance institutions can contribute to the African challenge, we clearly need to partner with players that have greater quantities of resources at their disposal," said Gigaba.

The minister stressed, though, in relation to the African market, South Africa has a "locational advantage."

"By failing to foster high levels of economic cooperation and integration in Africa, we are effectively imposing limits on the growth of the South African economy. South Africa's future, and her future prosperity, is intricately linked with and dependent upon that of the rest of the African continent," he said.

Delegates, especially those attending the business part of the conference, were asked to deliberate on infrastructure, electricity and water supply, telecommunications and the logistics network being both, sources and enablers, of economic activity.

"Infrastructure is also a key enabler of trade and economic integration. Logistics infrastructure enables the efficient movement of goods; telecommunications enables commercial activity, whilst an integrated energy grid enhances security of power supply for all participants... Hence, the building of African infrastructure is a key stepping stone to regional integration," said Gigaba.

It is estimated that significant amounts of finance is needed to get infrastructure in Africa on track. An Africa Infrastructure Country Diagnostic estimates annual investment needs in infrastructure in Africa at $38 billion a year over the next 10 years, with two thirds of this required from the energy sector.

Gigaba urged Africans not to contribute to the "China-phobia we hear all around us, we must not be romantic about the nature of Chinese involvement in Africa."

"Africa has been identified by Beijing as a strategic source to meet this resource and new market requirements and consequently, Chinese engagement in Africa has increased dramatically over the last decade.

"However, the Chinese engagement has been accompanied by an accelerated process of infrastructure investment, albeit with the challenges and dynamics of its own," said Gigaba.

He said China is involved in Africa to further its own national interest.

"International relations are based on power and interest and it would thus be fool-hardy and na«ve to suggest that China has any intention of being Africa's saviour.

"Whilst Chinese pragmatism has certainly enabled infrastructure and broader investment in a range of African countries, the lack of institutional pre-conditions to such projects has often resulted in negligible local skills, technology and business development.

"What is clear is that South Africa needs to develop a strategy for engaging, if not partnering, China in Africa," added Gigaba.