Ur­gent need to fix trust deficit

Public-pri­vate part­ner­ship is SA’S only way for­ward

Financial Mail - - SPECIAL REPORT INFRASTRUC­TURE -

ý While there has long been talk about how to en­able in­fra­struc­ture projects in SA more ef­fec­tively, the talk has not tra­di­tion­ally trans­lated into ac­tion. The es­tab­lish­ment of the In­fra­struc­ture Fund in 2018 was ex­pected to gal­vanise more ac­tiv­ity around in­fra­struc­ture.

Even be­fore the Covid-19 cri­sis, the gov­ern­ment recog­nised the need to pri­ori­tise in­fra­struc­ture in­vest­ment as a ve­hi­cle to speed up slug­gish eco­nomic growth. It also recog­nised that due to lim­ited fis­cal space it would need to part­ner with the pri­vate sec­tor.

The eco­nomic fall­out as a re­sult of the pan­demic puts the state’s finances in an even more pre­car­i­ous po­si­tion. So es­sen­tially, the only way the gov­ern­ment can in­vest in in­fra­struc­ture projects is if it part­ners with the pri­vate sec­tor to pro­vide the nec­es­sary funds.

“Covid-19 and a dou­ble credit rat­ings down­grade com­bined to form a per­fect storm for an al­ready ail­ing econ­omy,” says Con­sult­ing Engi­neers SA (Cesa) CEO Chris Camp­bell. “Added to this is a grow­ing re­al­i­sa­tion in the gov­ern­ment that the only op­tion left to SA is to use in­fra­struc­ture as a lever to kick-start the econ­omy.”

Camp­bell says he is en­cour­aged by a re­newed will­ing­ness from the gov­ern­ment to in­ter­act with the pri­vate sec­tor, and a re­al­i­sa­tion on both sides that we can­not do this alone. He also be­lieves Kgosientso Ramok­gopa, the head of the in­vest­ment & in­fra­struc­ture of­fice (IIO) in the pres­i­dency and a qual­i­fied en­gi­neer, is the right per­son to be lead­ing the ini­tia­tive.

In­fra­struc­ture in­vest­ment, says Camp­bell, has to be done with

Chris Camp­bell: Sees a will­ing­ness from the gov­ern­ment to em­brace the pri­vate sec­tor value for money in mind, and by es­tab­lish­ing the to­tal cost of own­er­ship, in­clud­ing main­te­nance.

“For too long SA has not fac­tored main­te­nance into the to­tal cost of own­er­ship of in­fra­struc­ture as­sets. How­ever, with­out the nec­es­sary main­te­nance the as­set will re­quire even higher costs and pos­si­bly even need to be re­placed ear­lier than it should have been.”

SA can no longer af­ford to adopt coun­ter­in­tu­itive ap­proaches, he says. “We should rather be pay­ing top dol­lar for a last­ing so­lu­tion than set­tling for the cheap­est op­tion which costs more in the long run.”

On sev­eral oc­ca­sions Cesa has of­fered to help in engi­neer­ing ca­pac­ity-build­ing pro­cesses for mu­nic­i­pal­i­ties — an of­fer that has never been taken up. De­spite a crit­i­cal short­age of engi­neer­ing ex­per­tise within the public sec­tor, the pri­vate sec­tor does have engi­neer­ing ca­pac­ity.

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