Pretoria: Infrastructure development is an important part of raising South Africa’s potential growth rate while at the same time, it should not be seen as an easy way to make money out of government, Deputy Finance Minister Nhlanhla Nene says.
“Infrastructure development is a crucial part of raising South Africa’s potential growth rate. A one percentage point increase in infrastructure investment will, by some estimates, raise long-run Gross Domestic Product by about 1.3% and employment by about 0.7%,” said Nene on Tuesday.
Speaking at the Banking Association’s Summit on behalf of Deputy President Kgalema Motlanthe on Tuesday, Nene said inadequate investment in infrastructure created bottlenecks and slowed development.
He added that South Africa could play a leading role in the region with infrastructure “literally” being able to create a bridge between South Africa with the region and the rest of the world.
South Africa had done a lot since the dawn of democracy but more needed to be done to address challenges. “We need to continue to build, grow, to develop. We need to keep on building.”
In his State of the Nation Address in February, President Jacob Zuma announced a massive infrastructure development plan that lists17 Strategic Integrated Projects (Sips) that cut across rail, road, schools and hospitals construction. The projects cover a range of economic and social infrastructure across all nine provinces, with an emphasis on poorer regions.
Nene said there was a role for the private sector to play in these infrastructure projects and added that while private sector investment was vital, the risks and benefits must be shared fairly between the private and public sector.
“Infrastructure development should not be seen as an easy way to make money out of government,” said Nene.
The deputy minister added that South Africa had a skills shortage in managing large infrastructure projects. Many of these needed skills, he pointed out, existed in the banking sector. “We should not let these skills go to waste. We must think how best we can work together so that these skills can be used to improve our country.”
Nene added that government stood ready to help banks expand into the continent.
“By expanding into Africa, we can uplift the continent, while creating new opportunities for us all,” said Nene.