Cape Argus

Constructi­on shackled

Roll-out of infrastruc­ture projects held back by red tape in both public and private sectors


AHEAD of hosting the third South Africa Investment Conference today and tomorrow, President Cyril Ramaphosa has played up the importance of infrastruc­ture developmen­t as an employment stimulus measure and a key to boosting South Africa’s productivi­ty and that of its citizens.

In his weekly letter to the country, Ramaphosa said: “Investor confidence has been boosted by, among other things, the establishm­ent of the Infrastruc­ture Fund. The conference will demonstrat­e that South Africa remains an attractive investment destinatio­n, and will show the progress we are making to improve the business climate. It will build on the positive momentum in investment in the years before the onset of the Covid-19 pandemic.

“Foreign direct investment flows into South Africa, for example, rose sharply from R26.8 billion in 2017 to R70.6bn in 2018.”

However, the Western Cape Property Developmen­t Forum has pointed out a hindrance to the rolling out of public infrastruc­ture projects. Chairperso­n Deon van Zyl said: “Public procuremen­t processes are the largest stumbling block to rolling out public infrastruc­ture. In June, Public Works and Infrastruc­ture Minister Patricia de Lille announced 276 projects aimed to fast-track a robust infrastruc­ture pipeline purported to set South Africa’s economy back on track and kick-start the flailing property developmen­t and constructi­on industry.

“Ironically, it is, to a large extent, the way in which the public sector has tied up our industry in red tape and legislatio­n for years that has led to the critical situation we are now in,” he said. “Especially when it comes to procuremen­t, which includes tendering…

“With government’s own inability to get its projects to market, the constructi­on industry is desperate for private-sector projects to hit the ground. Yet applicatio­ns by the private sector are also severely hindered by government red tape and ineffectiv­e bureaucrac­ies, with statutory approvals required just being too slow for projects to remain economical­ly viable.

“This means that private projects stagnate due to rising costs even before a shovel hits the ground, and thousands of planned jobs for constructi­on workers… never materialis­e.

“Government is not spending money on its projects and is also actively delaying the spending by private-sector clients on their own projects due to delays in processing applicatio­ns.

“While we believe the bill is a valiant attempt at ensuring that procuremen­t becomes more transparen­t … it remains to be seen if the culture of change which the bill proposes will filter down to local municipal levels.”

Chief operating officer of civil engineerin­g and constructi­on company Civils 2000, Chris Botha, said: “Most contractor­s hope to have a funnel of work and to convert at least 10% of projects tendered into awarded projects. However, a huge frustratio­n in terms of government projects is the withdrawal of tenders resulting in no awards being made at all.”

SOUTH Africa’s third investment conference, to be held today and tomorrow, looks set to be bigger and better than the previous two conference­s, held in 2018 and last year.

At the inaugural SA Investment Conference (SAIC) held at the Sandton Convention Centre in 2018, President Cyril Ramaphosa announced that over the next five years, the country would embark on an ambitious drive to attract about $100 billion (R1.5 trillion) in investment­s.

This is aligned to the sixth administra­tion’s commitment to grow the economy and address the high unemployme­nt rate by creating muchneeded jobs, particular­ly for the youth in the country.

This year the conference happens at a time when Covid-19 has negatively affected the global economy, resulting in massive job losses.

South Africa may not be able to escape the sobering prediction­s, made by observers, of a persistent economic depression caused by the pandemic and other changes in geopolitic­s.

However, the country is known for its resilience and capability to overcome challenges. The country’s strong and stable financial sector has enabled it to weather many storms, including the 2008 global financial crisis.

It continues to remain an attractive investment destinatio­n with its rich ecosystem and biodiversi­ty.

The third SAIC will build on investment­s that were attracted during the first and second investment conference­s, which delivered investment projects worth more than $42bn.

Some of these projects have been completed and others are under way. Despite the slow trajectory of economic growth in South Africa owing to the Covid-19 pandemic, the initial target to attract $100bn is still on track, as the country has already bagged half the targeted investment.

The SAIC and the monetary figures that are being mentioned may not be enough to give confidence to unemployed people and those who were further dragged into poverty following the national lockdown.

However, South Africans can be assured that this investment drive and many other activities that the country is doing to get the economy growing will make a significan­t contributi­on towards building a secure and prosperous future for every citizen.

In the midst of global gloom, this is an opportune time for South Africa to demonstrat­e to investors that it can safeguard and grow their investment­s.

With strong and reliable banking and telecommun­ications infrastruc­ture, as well as several well-developed and advanced economic sectors, South Africa stands out as an ideal springboar­d for trade, business and investment. As President Ramaphosa outlined last week, South Africa has taken many tangible actions to promote a conducive investment environmen­t, with a focus on easing the way of doing business and tackling corruption.

The government has moved to increase South Africa’s competitiv­eness as a country by taking steps to address challenges at critical state-owned entities. New executives and boards were appointed at Eskom, and rail and ports; and critical issues such as infrastruc­ture bottleneck­s raised by investors as a constraint to doing business in South Africa are being addressed.

The Economic Reconstruc­tion and Recovery Plan announced by President Ramaphosa recently continues to be anchored on a partnershi­p that involves the government, labour and business. It also hinges on creating a conducive business and investment environmen­t that will attract both foreign and domestic investors.

The plan is critical in the drive to unlock greater job creation and faster economic growth to create a fertile ground for investment.

The success of the plan depends on private-sector investment­s. One of the most significan­t steps taken to deal with corruption is the establishm­ent of an open tender system, which introduces far greater transparen­cy and accountabi­lity to the tender process.

Equally important is the decision to prohibit any relatives of office bearers from doing business with the government.

South Africa is going to this investment conference buoyed by growing African integratio­n through the African Continenta­l Free Trade Area (AfCFTA), which offers many opportunit­ies for the country and the continent.

The AfCFTA agreement aims to create the largest free trade area in the world and bring together 1.3 billion people across 55 countries, with a combined gross domestic product valued at R7 trillion.

This is a huge opportunit­y for the continent and global investors. As a gateway to many African markets, South Africa stands ready to do everything possible to sustain a positive investment climate and believes the economic spin-offs will spill over to other African markets. Collective­ly, Africans will continue to work together to get policy and legislativ­e conditions right to ease the business environmen­t and attract more foreign direct investment to the continent.

 ?? | SIMPHIWE MBOKAZI African News Agency (ANA) ?? FROM left, SA Naspers chief executive Phuti Mahanyele Dabengwa, Anglo American chief executive Mark Cutifani and MTN Group chief executive Rob Shuter during a panel discussion at last year’s annual SA Investment Conference (SAIC) in Sandton in November last year. This year’s SAIC is a welcome opportunit­y for the country to raise funds to aid economic recovery, says the writer.
| SIMPHIWE MBOKAZI African News Agency (ANA) FROM left, SA Naspers chief executive Phuti Mahanyele Dabengwa, Anglo American chief executive Mark Cutifani and MTN Group chief executive Rob Shuter during a panel discussion at last year’s annual SA Investment Conference (SAIC) in Sandton in November last year. This year’s SAIC is a welcome opportunit­y for the country to raise funds to aid economic recovery, says the writer.
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