Still a struggle

South Africa holds great promise and opportunity,” International Monetary Fund (IMF) first deputy MD David Lipton has said recently. However, he adds that the country “faces great challenges, in particular, to accelerate growth, create jobs for . . . millions of people . . . and reduce inequality”.
Besides weak external demand and soft commodity prices, Lipton highlights that “home-grown shocks” are undermining the performance of Africa’s most diversified economy.

Topping the list of domestic constraints are electricity-supply disruptions and protracted strikes – structural impediments that have prompted the IMF to lower South Africa’s potential growth to between 2% and 2.5%, from between 3.5% and 4% some years ago.

Infrastructure delivery – not only in the electricity sector – will undoubtedly be critical in restoring South Africa’s growth potential to higher levels. Unfortunately, activity in the domestic project economy remains lacklustre.

Much of this lacklustre performance can be attributed to weak business confidence levels and low commodity prices – factors that are leaving the private sector stranded on the fixed-investment sidelines.

However, even a cursory glance at the order books of South Africa’s main contractors indicates serious underdelivery on the National Infrastructure Plan.

Public infrastructure projects are being pursued and money invested, but many projects are behind schedule and over budget, while others have not progressed at an adequate pace from concept to implementation.

The combination of weak government revenue growth and rising debt is also making it increasingly difficult for projects to be financed in the traditional way. However, the pipeline of public–private partnerships remains too narrow, with the most of the activity concentrated in the renewable-energy sector.

In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the infrastructure horizon, but grid connectivity constraints could hamper future progress.

Other major electricity projects are also featured in this edition, along with developments in the transport and water sectors. Updates are also provided on key resources projects in the coal, diamond, gold, platinum, ferrous minerals and uranium sectors.

Projects in Progress also offers insight into the project economies of Botswana, Mozambique, Namibia and Zambia, where some major resources and infrastructure developments are being pursued.

The project economy does, however, remain under pressure, but there are some pockets of resilience, which we hope will offer some hope amid that current gloom.

Published on: 27 March 2015.