Fitch: Sanral woes to take a toll on infrastructure plan
Agency warns of muted roads construction
We expect Sanral to remain reliant on government support
Research agency Fitch Solutions Country Risk and Industry Research has warned that South Africa’s road network will come under severe pressure due to the financial difficulties of the South African National Roads Agency (Sanral).
The entity, in its latest report on South Africa, said the outlook for the country’s roads construction was muted.
“Absent of any prospect that e-toll collection will improve in the near or medium term, we expect Sanral to remain reliant on governmental support. As we expect the National Treasury’s fiscal space to remain constrained over the medium term, governmental support to the parastatal [Sanral] will likely focus on debt-servicing costs rather than capital spending,” the report reads.
“Accordingly, and in line with the latest national infrastructure plan, public transport infrastructure investment in South Africa will likely focus on rail and ports infrastructure – sectors led by Transnet, a parastatal with a healthier financial position and greater capacity for infrastructure investment without governmental support.”
The Fitch report comes just weeks after Sanral CEO Skhumbuzo Macozoma told the Consulting Engineers South Africa Infrastructure indaba that the stand-off over the e-toll scheme and doubts about the financial viability of Sanral had resulted in the agency losing two key project funding opportunities to the tune of R14-billion.
Luzuko Nomjana, a portfolio manager and credit structuring specialist at Prescient Investment Management, said “the scale of investment needed to solve our infrastructure deficit dictates that we can no longer rely only on the government to drive this investment class”.
“Investment in infrastructure has an incredible ability to unlock economic growth, which, in certain cases, can be localised to communities in which projects operate. This not only helps to create jobs, but also to drive SMME development [local content procurement] and an inclusive economy through local ownership,” Nomjana said.
Fitch said despite its outlook on the country’s roads outlay, the high demand for urban and freight road infrastructure would continue to enable a baseline of road construction opportunities that was high if compared with the vast majority of other markets in sub-saharan Africa.
“The country has a comparatively large vehicle fleet, forecast to comprise 10.5-million vehicles in 2021 and to grow by an average of 3.6% per year between 2021 and 2025. Urban road infrastructure development will be supported by SA’S sizeable urban population, as the country is expected to count 15 cities with more than 300 000 inhabitants by 2035 – the second-highest number in the region.”