By Zeph Nhleko
Over nearly three decades, South Africa has seen a considerable surge in the development of infrastructure that has improved the livelihoods of citizens.
Coming from a reality where services were for some and not all our population, we have, throughout various plans, worked intently towards a well-functioning infrastructure and a built environment for all.
From the Reconstruction Development Programme coming out of our first democratic administration to the current National Development Plan (NDP), supercharged by the aggressive investment drive of this administration, infrastructure development remains central to sustainable livelihoods.
It is an enabler of inclusive economic growth, and a multiplier for citizens – many for whom upward mobility remains a goal that passes on from one generation to the next.
Even while we face an ageing infrastructure that is showing fissures in its capacity to meet the needs of our growing population, we have come a long way.
The DBSA, in the country’s vision, has certainly done its part and continues to. Led by the NDP, the ambition 30% investment-to-GDP ratio remains, with one-third of this goal coming from the state through all spheres of government. It’s a worthy ambition.
We have just over six years to achieve it; and it will be an uphill task.
The 1994 and 2022 investment in infrastructure as a percentage of GDP by the government, public corporations and the private sector remain the same at around 2%, 1% and 10%, respectively.
The DBSA was one of the institutions that delivered on its mandate, and with a R100bn balance sheet – the Bank is set to support the region’s growth. It is bolstered by a strong foundation to shield it from sudden and unexpected risks.
The reality is that investment by government was down 0,8% on average in real terms between 2014 and 2019, with SOEs down by 4,9% on average. The huge infrastructure underspending by the public sector remains notable, which gives a partial explanation to the infrastructure challenges we face today.
Investment South Africa estimates that the NDP’s development objectives need over R6 trillion, between 2016 and 2040. The energy and transport sectors are estimated to claim over 72% of the projections.
This makes sense, given the urgency to solve the energy crisis and the central role that transport plays in our economy and in connecting us to the rest of the continent.
The energy sector is well discussed, and solutions are underway from various players to address our current energy security crisis.
It remains the largest and fastest growing exposure by sector at the DBSA, with over R34 billion invested as at 2022.
The transport sector’s importance is about better networks for mobility within the country – which, among many factors, has a direct bearing on trade, and beyond our borders, on intra-regional trade.
Transport remains one of the major areas where aggressive development will significantly unlock and increase regional trade and realise the dream of the African Continental Free Trade Area.
Yet, there are other sectors that are crucial in development.
The strongest impact that access to infrastructure in African countries can realise is in Information Communication Technology (ICT).
This sector is nascent for many developing economies, compared to global north economies, and we are yet to figure out effective connectivity costing, the digital gender gap, and other issues plaguing it.
But even so, ICT promises unmatched opportunities to connect, innovate, and leapfrog interventions to local problems, while facilitating access to better e-services in the public and private sector.
Water and sanitation, of course, is fundamental as it is intricately linked with public health and was one of the first sectors to be enshrined in the then Millennium Development Goals, now Sustainable Development Goals.
This is one of the sectors that is the backbone of global south economies, springboarding other infrastructure such as social infrastructure.
DFIs, such as the DBSA, and public sector players, are crucial in bringing large scale, transformative projects in these sectors to bear, delivering critical public value that is a direct response to the socio-economic challenges of the region.
Beyond economic sectors, they facilitate the development of human settlement, education and health, to mention a few.
For example, between 2012 and 2021, the DBSA completed 614 schools, with 139 of the schools being new while 475 were refurbished. The development impact of this work was on the lives of 330,349 learners.
The importance of these facilities and the built environment, that serve citizens, cannot be overemphasized.
But none of them make sense without institutions, particularly well-governed institutions.
To quote the Chairman of the DBSA Board, Prof. Mark Swilling, “Institutions matter… Where there are strong institutions, funds can be deployed in ways that have a development impact.”
Strong institutions deliver and maintain infrastructure that enables and empowers. It is common understanding that maintenance of that infrastructure extends the life of assets, thereby ensuring available investment goes a long way, and achieves more. Strong institutions deliver that.
They have the agility and dynamism to timeously address blockages and weak points that stand in the way of progress and prosperity.
Therefore, as we commemorate Freedom Day and Freedom Month, we ought to pay attention to how far we have come as a country, and the role infrastructure development has played in ensuring access to essential services for all.
Our freedom as individuals, families, and communities, is enabled by strong institutions that produce working infrastructure and a stable built environment. In that same vein, we are all equally called on to bear the responsibility of this freedom, to be custodians of the infrastructure delivered.
Only through that can we unlock economic growth and deliver further progress.
Zeph Nhleko is the chief economist at the Development Bank of Southern Africa.
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