Ramaphosa’s investment czar says South African infrastructure in dire state

Kgosientso Ramokgopa

Kgosientso Ramokgopa

15th February 2023

By: Bloomberg


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The head of South African President Cyril Ramaphosa’s infrastructure and investment office warned that the nation’s power, rail and water reticulation systems are in a dire state and that fixing them will take years even if immediate action is taken.

In a paper entitled South Africa’s Infrastructure Emergency: An Urgent and Collaborative Intervention, Kgosientsho Ramokgopa gave the country’s infrastructure a D rating. Ports, freight-rail lines, power plants, metropolitan roads, state schools and waste collection were all deteriorating, he said. Public hospitals were also assessed to be in a poor state.

“The hemorrhaging of technical and financial engineering skills in the country, the collapse of institutions and the dire ramifications of state capture have all conspired to degrade the quality of the country’s infrastructure offering,” Ramokgopa said, using a local term for State corruption.

South Africa is currently in the grip of its worst-ever power cuts, while coal exports fell to a 30-year low in 2022 because of the poor performance of the national freight rail company. That, coupled with poor water infrastructure and inefficient ports, is stifling investment.

The government isn’t in a good position to tackle the problems, Ramokgopa said in his paper, which was reported on earlier Wednesday by Johannesburg-based newspaper, Business Day.

“Insufficient capacity, skills and an inefficient regulatory and policy framework hamper government’s ability to develop a robust, credible and bankable project pipeline,” he wrote. “Government currently lacks the technical expertise and institutional landscape to attract private sector finance.”

South Africa’s National Development Plan, adopted by the government in 2012, set a target for a broad measure of infrastructure investment, or gross fixed capital formation, at 30% of gross domestic product but it hasn’t been met. In 2021, the ratio stood at 14.1%, compared with 19.7% in 2008, and for the public sector it was below 8%.

Energy provision was identified as the government’s most obvious infrastructure failing.

“In terms of the state of energy, it is no longer a crisis but rather, an emergency,” Ramokgopa said. “The country’s current inability to provide sustainable and reliable sources of power has long posed an immediate risk, with the situation drastically deteriorating on a daily basis.”

Ramokgopa laid out a range of remedies, including upgrading his office — Infrastructure South Africa — to a state-owned enterprise and giving it control of government infrastructure projects across all departments and state companies.

He also proposed establishing a dedicated intervention fund to tackle problem areas, allocating money to the national infrastructure fund in the annual budget and giving private companies concessions to run unutilized state infrastructure. Private investment in bulk infrastructure should be encouraged, he wrote.

Still, there is no quick fix.

“The spillover effects of infrastructure delivery will take approximately four to five years before the core benefits are realized,” Ramokgopa wrote.

Edited by Bloomberg



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