The government has unveiled 50 strategic infrastructure projects (Sips) and 12 special projects involving a total investment of R360 billion, as the first tranche of a massive infrastructure expenditure programme to drive the post Covid-19 economic recovery effort.
These initial Sip projects are expected to create an estimated 275 700 jobs in six sectors: water and sanitation, energy, transport, digital infrastructure, agriculture and agro-processing, and human settlements.
Dr Kgosientso Ramokgopa, head of the investment and infrastructure office in the Presidency, said on Monday these “are projects that are shovel-ready, so in the next three months we will be able to go into the ground … and ensure that we are able to stop the haemorrhaging of jobs in the economy.”
Ramokgopa said funding from the debt capital market accounts for R340 billion of the total investment in these projects and “these projects don’t draw money from the fiscus.”
“These are projects that are commercially viable through the Sips methodology. Some of them will require a bit of unlocking. It’s about non-financial instruments, such as guarantees, increasing borrowing limits and, where we have to invest in bulk infrastructure, it is allocations that already sit in the fiscus.
“We are just going to draw them early so that we are able to open up this economy going forward.”
Ramokgopa said the R340-billion investment came from multilateral development banks, commercial banks and development finance institutions that have made commitments to specific projects.
To unlock these investments, Ramokgopa said the government, for instance, has to increase the borrowing limits of the Trans Caledon Tunnel Authority and provide sovereign guarantees to the SA National Road Agency (Sanral).
The bulk infrastructure investment for human settlement projects that will be drawn from the fiscus amounts to “about R1.7 billion or so”, which is a fraction of the total about R138 billion of the private sector project investment.
“But we are able to show what comes to the municipalities in the form of rates and taxes as a result of that – so we were able to show the commercial case,” he said.
He added that all the student accommodation projects are private sector-funded but need offtake guarantees from the National Student Financial Aid Scheme, which government is facilitating.
Implementation to be prioritised
Minister of Public Works and Infrastructure Patricia de Lille said the projects have been gazetted in terms of the Infrastructure Development Act, which enables their development and implementation to be prioritised.
De Lille provided a breakdown of the projects in the six sectors, saying that:
- Collectively the water and sanitation projects are worth R106 billion in investment, spanning all provinces, with the potential to create an estimated 25 000 direct jobs.
- Three projects in the energy sector involve a total investment of R58 billion, with the potential for direct job creation estimated at 6 000.
- A total of 15 projects in the transport sector involve R47 billion in investment value and have the potential to create an estimated 50 000 direct jobs.
- Human settlement sector projects involving an investment of R138 billion have the potential to create an estimated 190 000 direct jobs.
- The digital sector has a single project worth R4 billion with the potential to create an estimated 700 direct jobs.
- Two agriculture and agro-processing sector projects with an investment value of R7 billion have the potential to create an estimated 4 000 jobs.
De Lille added that the 12 special projects also have a specific aim to create much-needed jobs and assist in skills development, because many of our most vulnerable communities have been the hardest hit by the economic impact of the Covid-19 pandemic.
The Rural Bridges ‘Welisizwe’ Programme will connect rural communities to the social amenities they need to access while the Rural Roads Upgrade Programme and Comprehensive Urban Management Programme will also greatly improve the living conditions of the poorest communities, she said.
Taking ‘government information’ digital
Ramokgopa said another special project involves the digitisation of government information.
He said it is looking at employing about 10 000 young people in the immediate future to help digitise this information across the country.
“If you visit a hospital today, your file is kept in those old brown files. If you go to a police station, the docket is still in those brown files. If you go to court that is still the case.
“Government has information at its disposal, but it can’t mine that information because it is not digitised,” said Ramokgopa.
“Going into the future we will be introducing the NHI [National Health Insurance], which is predicated on the existence of a very robust information system that is digitised, that allows government to be agile and be responsive,” he said.
Ramokgopa stressed that the projects gazetted are just the first generation of projects to be gazetted, adding “we will come with the next wave of projects.”
He said it has received about 276 projects and continues to evaluate these projects.
Corrupt construction co’s get a warning
De Lille said the construction industry is the most corrupt industry in the country and government is putting systems in place to detect and prevent corruption.
“Our country is littered with projects where the contractors have left with the money but the projects are not there. So I’m warning all those corrupt ones in the sector, we are going to make sure we reduce corruption in the construction industry,” she said.
Master Builders South Africa (MBSA) executive director Roy Mnisi welcomed the gazetting of the projects, adding it “will go a long way in terms of assisting our ailing industry.”
Mnisi said MBSA members are worried about the implementation of projects, because in the past they got excited by government announcements and only later realised not all of the projects were implemented.
However, he said they are “very positive” about this government announcement, because these projects are not fully dependent on funds coming directly from the fiscus.
Mnisi also expressed concern that municipalities may not be able to “play their part” because they have hindered projects in the past, adding: “We are ready and available to help government roll out these projects.”
News welcomed, implementation questioned
SA Forum of Civil Engineering Contractors CEO Webster Mfebe said the projects “are good news for the construction sector” after the significant loss of jobs and negative growth in the industry.
“It’s going to be a boost for industry provided these projects get to implementation stage, which has been a perennial problem with infrastructure delivery in South Africa, together with the failure to maintain existing infrastructure,” he said.
Mfebe said the projects are mostly public sector projects and his expectation is that more projects will have come from the private sector through the platform of the Public-Private Growth Initiative.
“The only involvement of the private sector that I see in these government projects is the funding institutions.
“That kind of participation is also welcome, without any doubt, but what about pure private sector-initiated projects where the major stumbling block is permitting and licensing issues that need to be sorted out? It is that which is missing.
“Government has a triple role [to play]. That of a regulator, an enabler and a facilitator, not only in relation to its own public sector-initiated projects – because of government’s role to create an environment within which the private sector can participate in the economy and create jobs,” he said.
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