The South African government has placed infrastructure at the heart of the stimulus to realise economic recovery in the face of COVID-19.
This was highlighted in the inaugural Sustainable Infrastructure Development Symposium of South Africa held on 23 June.
President Cyril Ramaphosa spoke frankly about the country’s economy, which is expected to shrink by at least 7% compared to the anticipated 1% growth before the pandemic.
“A long period of recovery can be expected, even when we relax the interventions that we take to stem the transmission of the virus,” Ramaphosa acknowledged.
The economic decline has also been exacerbated by the downgrade of South Africa’s credit rating to sub-investment by all three credit rating agencies.
However, he said the country’s financial system remained resilient despite the ongoing crisis.
“A combination of policy measures has ensured that government continues to be able to fund itself through the domestic bond market at a reasonable cost, stabilising yields, injection of liquidity, reducing market volatility and alleviating disruptions to the flow of credit to the real sector”, Ramaphosa said.
Infrastructure investment even more compelling
Ramaphosa underlined that the Coronavirus pandemic has made infrastructure investment even more compelling, and more urgent.
He also noted South Africa’s dwindling infrastructure investment over the years, which has caused great hardship for construction and related industries.
The industry took another beating during the pandemic, as operations ground to a halt during the lockdown.
“Buyers of infrastructure services have delayed the procurement of new projects or cancelled projects. Lenders and investors, in turn, are revisiting their decision to invest in infrastructure projects that were deemed bankable prior to the pandemic,” the President said.
He said lower revenues, higher costs and non-payment has resulted in layoffs, financial losses and cash shortages.
“This requires that we not only push ahead to revive infrastructure investment but that we rapidly move to increase the scale of our ambitions.”
He told delegates that infrastructure investment provides both short- and long-term economic benefits.
“In the short term, it creates jobs and economic activity as roads, bridges, hospitals, schools, power plants and much else is built.
“It gets construction and related services companies back to work, inducing them to hire staff and expand capacity.”
President Ramaphosa said as construction services are procured, government could assess project proposals on the employment impact to ensure the job creation impact is maximised.
“Shovel-ready projects that have been fully developed for implementation will be the priority, ensuring the ground is broken as soon as possible.
Exploring green economy
Public Works and Infrastructure Minister Patricia de Lille said in this new normal, there is an even greater need to collaborate in the investment and implementation of infrastructure that will facilitate social and economic growth in a workable and purposeful way.
“In South Africa, infrastructure investment, together with the use of public land and buildings, is a critical lever to achieve spatial and economic justice by connecting our people, integrating our communities and bringing people closer to work opportunities.”
She said infrastructure is no longer talking about new construction but also the maintenance and upgrading of the existing infrastructure.
“Innovative construction methods, technologies and management systems are being explored, especially in relation to climate change and the green economy.”
The minister said government is also exploring the introduction of Green Infrastructure Bonds.
“At the policy level, we must do more to transform the construction industry, which is one of the least transformed industries in the country.”
Edited by ESI Africa. Source: SAnews.gov.za