Ramaphosa speeds up funding for infrastructure

Says investments must grow from 13% to 30% of total spending by 2030 to achieve NDP growth targets.
President says the state will have to galvanise all of society behind an orchestrated, comprehensive and bold effort to turn the fortunes of the country around. Image: Shutterstock

President Cyril Ramaphosa is moving at speed to try and secure funding for infrastructure development in the country, including for the Infrastructure Fund.

Ramaphosa disclosed in his State of the Nation Address (Sona) last week that the Infrastructure Fund has a project pipeline of potential investments of over R700 billion over the next 10 years.

To assess the progress of efforts to intensify infrastructure investment, Ramaphosa met with key stakeholders – including government financiers, CEOs of commercial banks, leaders of multilateral development finance institutions and representatives from organised business, along with infrastructure-orientated industry players – under one roof for the first time on Tuesday.

In his opening remarks to the meeting, Ramaphosa said overall infrastructure investment in South Africa needs to grow from about 13% of total spending to 30% by 2030 to achieve the National Development Plan (NDP) growth targets.

“Multilateral development banks, development finance institutions and the private sector all have a critical role in financing and implementation of this investment,” he said.

Read: Cosatu want private pensions to fund infrastructure

Construction industry bodies, companies and analysts last week welcomed Ramaphosa’s Sona statement that the Infrastructure Fund has a project pipeline with potential investments of over R700 billion over the next 10 years but cast serious doubt about the government’s ability to implement these projects and revive the beleaguered construction sector.

Ramaphosa stressed on Tuesday that the state will have to galvanise all of society behind an orchestrated, comprehensive and bold effort to turn around the economic fortunes of the country.

He said an aggressive public sector build programme presents a plausible, immediate and universally tested intervention to achieve the desired economic turnaround.

Ramaphosa announced that he has instructed the Investment and Infrastructure Office in the Presidency to convene a Sustainable Infrastructure Development Symposium with the aim of immediately producing a suite of projects that are of national significance and will enhance quality, sustainability and capacity.

“They should be projects that have the potential to drive economic growth, attract significant private sector investment and help in meeting the government’s strategic objectives,” he said.

Interventions

Ramaphosa also announced a five-pronged intervention to address barriers to infrastructure investment.

The interventions include:

  • The creation of technical and financial engineering capacity
  • The development of a detailed infrastructure investment plan
  • Initiation of policy and regulatory reforms
  • A rethink of the public sector financing space, and
  • Revising the public sector infrastructure institutional framework.

Ramaphosa reiterated that infrastructural investment is a critical driver of future growth in an economy that has been stuck in a low-growth trajectory for the past 10 years. 

He admitted that the haemorrhaging of technical engineering and financial skills in the public sector has contributed significantly to the bleak state of public infrastructure.

“Decimation of these necessary skills in the public sector has undermined planning, prudent asset management, and the production of a credible and transparent project pipeline,” he said.

“The net effect has been the collapse of industry, divestment from the country and erosion of funder confidence. This is a picture we want to correct and correct immediately.”

Ramaphosa said it is unlikely that government will recreate the lost skills to the required levels in the immediate term and it is therefore important to create a legally permissible transitional dispensation – premised on private sector collaboration – to ramp-up state capacity in the technical and financial areas. 

Wants a ‘visible’ pipeline of projects

He stressed that a detailed infrastructure investment plan should provide a positive signal to investors and lenders, revive the stagnant construction industry, and improve skills and institutional capacity across line ministries and sub-sovereign entities to generate a visible pipeline of projects.

“It should outline a public-private partnership [PPP] framework and remove policy bottlenecks in engaging with the private sector,” he said.

“It should strengthen preparation of bankable projects, mobilise long-term finance and implement projects through comprehensive contract management towards achieving sustainable infrastructure delivery and service.”

Regulatory universe ‘prohibitive’

Ramaphosa admitted that South Africa’s public sector policy and regulatory universe is among the most elaborate and prohibitive in the world and has the unintended consequences of delaying and derailing investments at great cost to the economy. 

“There is a need for a speedy, robust and transparent decision-making process. The public-private partnership legal environment requires revision, and innovative ideas should be accommodated in the procurement space,” he said. 

Ramaphosa announced the creation of an Infrastructure Fund in September last year as a way of crowding-in private sector participation in the roll-out of public infrastructure. 

The aim of the fund is to improve the quality and rate of infrastructure investment by strengthening project preparation and governance so that there is a visible pipeline of projects and to close the viability gap and provide blended finance for projects that have social and economic elements and/or to address market failures. 

“This will ensure that the government strategically uses the limited fiscal resources to mobilise financing from the private sector, development finance institutions and multilateral development banks,” he said.

Ramaphosa said it is critical to review the distribution of functions and roles across different institutions and optimise processes and controls to ensure optimal infrastructure investment. 

This is because the optimal roll-out of infrastructure is impeded by functional fragmentation, institutional overlap and unclear processes, incentives and controls.

Presidency as the strategic centre

Ramaphosa said the recently-established Investment and Infrastructure Office in the Presidency will spearhead the revision exercise with a view to ensuring better coordination and alignment and positioning the Presidency as the strategic centre for investment and infrastructure in the country.

Ramaphosa will be releasing an Infrastructure Investment Policy Statement, which among other things, will provide an “eco-system” within which good infrastructure investments, including PPPs, are undertaken, remove “institutional confusion” and create an oversight mechanism.

He said this policy will help build consensus, and provide clarity to all stakeholders on how infrastructure projects should be conceived, how government support mechanisms should be structured, and how the infrastructure project life cycle should be streamlined.

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Every article about Mr.Ramaphosa and development start with ‘to try and secure funding’. Eskom is also ‘trying to secure funding’. And SAA and Denel. Looks like Statistics also have a funding problem.

Or it continues with “we need to ensure this” and “we need to ensure that…”
But very little action is seen after that.

Hmmm. I couldn’t get passed “is moving at speed” before I spat my coffee all over my screen. In fairness, “speed” is a relative term. And moving doesn’t provide a direction.

Anyway, with their communist policies, the entire country is trying to secure funding just so they can afford milk and bread. Including the construction industry who are just trying to secure payment for work they’ve completed for the government. Now once again they’re being promised new government work? Perhaps the R700billion could be spent on erecting a giant cardboard box and checkers packets around SA.

According to my speedometer, zero is also a speed. It seems that reverse also has speed.

Quite so. Lost me on the first sentence….President Cyril Ramaphosa is moving at speed…

“premised on private sector collaboration”

What this actually means is that…over the last 20 years we forced technically strong people to leave government institutions and replaced them with technically weak people who cannot do the job but still earns a massive salary. Now we need the private sector to assist and who charges high fees as well. So BAM now we are paying double for every project. So the 700 billion pipeline is only actually worth 300 billion…

Talk and more talk but little/no action…

Private Sector funding, Banks and foreign investment……. All the while in the background rewriting the rules of engamement.

Considering that Unions can own large portions of SOE’s fundned by everyone else’s pensions, punish companies who want to employ the right person for the Job because Goverment will fine you based on a BBEEE scorecard, because that has worked so well for them across Eskom, SAA, municipalities etc etc.

Banks must help fund this so that Government can take what is essentially collateral for banks ie property and and give it to someone else with the impunity welcome EWC in a society that refuses to pay for anything. Bye bye Goverment income on rates and taxes, bond transfer fees, income for SOE’s like eskom case in point Soweto that does not pay for basics with the highly subsidised electricity and water will all of a sudden start paying if given a piece of property.

You cannot conceivably believe that you are creating an environment where anyone will want to give more when you plan tax it to death and eventually take it when it’s suits Goverment.

What a JOKE..

If u don’t sort out Electricity Supply the rest is a pipe dream !! Lest see how fast he can do it ….. . Municipalities and Mines allowed to produce within the next 120 days !! Time will tell . Africa is not known for its speed , that’s my worry .

To late for Group 5 and others !! Maybe the Chineses will be the big players in the construction space . Government has already done a hatchet job on most of SA’s major and previously capable construction companies ……. Late payers and broken promises by Government !

The infrastructure spend program always gets stuck with corruption and procurement.

What funding? All has been stolen.

The “money is not available” is strictly and specifically a result of the widespread corruption and consequential fiscal drainage. And note the qualifier “widespread”, this is not just the zupta debacle.

Just on that point, really big amounts of money are still leaving the country into foreign coffers and will continue to do so, until corruption is dealt with. Cyril & Co, are you paying attention, or just continuing to pass opinion on “what should be done.”

Leadership, please, please stand up and come forward.

Ramaphoney is just hot air with no follow through. Why has money web not published the speech by the leader of the opposition to parliament after sona? That was worth listening to.

He is admitting that there has been a detrimental loss of skills but won’t do away with BEE !!??

I’m starting to think that he has some pretty good spin-doctor speechwriters churning out this nonsense for every interview, without giving it any thought himself- mind you, maybe therein lies the problem!

the trough chowers must eat or no more job for the farmer..

It’s fantastic! Finally we are talking about big projects. It’s only a matter of time. Embrace being wealthy! The time is now.

“only a matter of time..” Africa is always fine with waiting..

Stop the stealing. Then you will have money for development.

End of comments.

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