There is no doubt that South Africa urgently needs to upgrade its infrastructure across multiple sectors; however, for us to achieve this at the speed that is required, it is critical that the public and private sector work much closer together than they have in the past. 

For the most part there has been agreement between the public and private sectors regarding which infrastructure should be prioritised in order to stimulate the economy and create jobs, and RMB supports the focus on water, energy, ICT and transport infrastructure that has been communicated by the Infrastructure Fund (IF) and Infrastructure South Africa (ISA). Infrastructure investment as a means to increase job creation is supported by recent International Monetary Fund data which states that, amongst OECD countries, an increase of 1% in infrastructure investment, decreases unemployment by 0.11% in the short term and 0.35% in the medium term. However, South Africa has not yet tapped into this potential at scale. 

Development cannot be restricted to economic growth alone especially given the massive social needs in South Africa. It is therefore important that we invest in social infrastructure as well and RMB is encouraged by the IF and ISA also prioritising investment into human settlements and student accommodation. 

To move forward at pace, we need to increase the use of Public-Private Partnerships (PPPs), which has fallen dramatically in recent years.  Of all the PPPs that have been implemented in South Africa, approximately 85% of them were implemented in 1999-2009, the first decade of the PPP framework. Since then, there has been a marked drop in the number PPPs, with most infrastructure being delivered by the public sector. Government is currently looking to simplify legislation and regulations around PPPs, however we must be careful not lose traction as speed of delivery is now critical. In addition, there is scope for the public and private sector to continue to work together to create innovative infrastructure funding solutions, including blended financing which is less reliant on the fiscus, that are workable within the current legislative framework. 

However, for this innovation to occur, it is important that we address the country’s massive skills shortage in the infrastructure space particularly on the public sector side. Over the years government’s capacity has dwindled and on the private sector side we have seen the dissolution or exit of a number of significant contractors which previously acted as key sponsors and developers of PPP projects. The capacity constraints on the government side can be remedied by skills sharing and more collaboration between the private and public sector whilst the shortages on the private side may require that our localisation requirements be loosened as we bring in international resources to help us upskill and achieve greatly needed efficiencies. We need to welcome the participation of the international community if it moves our objectives as a country forward. Take the case of the Renewable Energy Independent Power Producer Procurement (REIPPPP) – in the earlier rounds of the programme, the project sponsors were international with a long track record of doing these types of deals elsewhere in the world. However as more bidding rounds have been rolled out, we see a number of local sponsors playing lead roles in this space. 

As a bank, we are actively involved in supporting infrastructural development from various angles. On the skills shortage issue, RMB seconded an experienced infrastructure expert to ISA to assist with project preparation, prioritisation and finding innovative funding solutions that take into account our current limitations. In addition, RMB continues to offer funding solutions to a wide array of players in the infrastructure space from debt to equity. We are also able to play a financial advisory role in these projects which is evidenced by the recent Beitbridge border project where we not only acted as a lead arranger but the financial advisor as well. 

As RMB we believe in partnership, and actively broker relationships with key players, formulating consortia that hold the skills to bid and deliver infrastructure projects on time and on budget. To move forward as a nation, we need to champion partnership and innovation. While there may be risks involved in infrastructure investment, and often a steep learning curve, the rewards for the country are exponential. 

Judy Kobus is Co-Head of Infrastructure Finance Solutions at RMB. She joined the RMB Infrastructure Sector Solutions team in 2009. Judy has wide experience in the banking, insurance and asset management sectors, having worked at FirstRand and at MMI prior to joining RMB.