South Africa’s trillion rand challenge

One of the most promising policy proposals to have come out of the Jacob Zuma administration since it came into office has been the plan for large scale infrastructure investments across the economy to reinvigorate economic growth, re-industrialise as well as boost employment growth across South Africa. The government of South Africa is set to plough more than R3 trillion into infrastructure development over 15 years. This investment would go a long way in resolving the bottlenecks that have dragged down economic growth for years.  Major infrastructure build projects are also expected to create millions of jobs that would alleviate the country’s high unemployment rate.

This important investment will be guided by the National #Infrastructure Plan (NIP) announced in 2012, and which has outlined 18 Strategic Infrastructure Projects (SIPs) which include railways, ports, electricity generation and telecommunications. The infrastructure build programme is currently underway with over one thousand constructions sites across the country. Whilst progress is being made, the project may face obstacles in the form of labour unrest, conflict between coordinating bodies, and possible corruption and collusion over the multi-million rand deals.

Cross department cooperation

All three spheres of government, national, provincial and municipal, as well as state institutions such as #Eskom and #Transnet, and the Development Bank of Southern Africa will lead the charge on the infrastructure build programme. With the government at the helm there have been doubts whether it could manage the enormous endeavour, particularly with a history of state institutions under-spending their own budgets, and failing to deliver projects on time. The infrastructure build programme is also a complex coordination where conflicts may occur between departments. The infrastructure build programme entails 18 Strategic Integrated Projects (SIPs) with government departments working together over a number of areas. There is bound to be conflict of interests where the jurisdictions and priorities of departments are blurred. There already have been a few debates between departments over the prioritisation of individual projects within the 18 different SIPs. Should competing interests between departments not be managed appropriately this would only lead to further delays in infrastructure development.

Black economic empowerment

Another key concern with regards to the NIP is the issue of Black Economic #Empowerment. There have been suggestions that the multi-billion infrastructure build should be used to advance black business which have been unable to compete with larger, white owned companies. This is a positive step towards the government stepping up its transformation policies, however this process could be hijacked by unscrupulous individuals who may choose to advance close political allies. Such an act could lead to rifts within government and the ruling alliance. The state could also incur further costs, as a result of hiked up prices, delays, and poor quality of work. Such political issues impacting the infrastructure build programmes would exacerbate the country’s infrastructure backlogs.

Eskom’s challenges

Eskom will be a major contributor to the infrastructure investments in the short term, with up to R205 billion going to building new power stations. Eskom is close to completing the construction of three new power stations to add to the country’s power generating capacity. Eskom has however faced some challenges which present a case for the kind of problems the rest of the infrastructure build will face over the coming years. Eskom has experienced setbacks at its Medupi power station as a result of labour unrest. The labour issues at the Medupi plant have been particularly difficult to resolve, and have been ongoing since 2010. They have also turned violent a number of times. One issue that could be creating a complex labour dynamic for Eskom is the growing union rivalry between the National Union of Mineworkers (#NUM), and the National Union of Metalworkers of SA (#Numsa). Both unions are #Cosatu affiliates however there are number of blurred lines in the industries that they operate in.

The labour dynamics at the Eskom project sites are also complicated by the fact the workers are not contracted by Eskom, but by the various companies working on site. So while Eskom is not the direct employer of workers it is impacted by work stoppages. On top of the labour unrest, Eskom has had to contend with technical problems with equipment supplied by contractors. The #Medupi project is currently a year behind schedule which has raised fears that South Africa could experience another bout of rolling blackouts, as the country’s demand for electricity continues to rise.  These developments at Eskom highlight the challenges that may be faced on a number of the large scale infrastructure projects planned by the state.

Conclusion

The NIP will be a critical aspect for the next phase of the South African story. It will be a plan that will be aimed at solving various issues in South Africa, particularly the triple challenges of poverty, unemployment and inequality. While the projects planned will not directly reduce South Africa’s triple challenges they will unlock opportunities in other sectors to do so. The plan will also have to smooth over obstacles of inter-department conflict, labour demands as well as possible corruption scandals. These challenges can be overcome through a coordinated effort between the state, the private sector and the public at large.

Originally published on the africapractice blog here: http://www.africapractice.com/blogposts/page/29/?id=3543