Can the South African government reach the required infrastructure spend for economic growth?

The National Planning Commission has said South Africa needs to boost its infrastructure spending to at least 30 percent of gross domestic product (GDP) in order to achieve growth.

Does the South African government have the ability to deliver the required infrastructure spend to achieve economic growth?

Infrastructure spending ‘should be at 30% of GDP’

The National Planning Commission’s commissioner, Mian Altman, said there was no question that infrastructure development boosted growth. The question was whether the country had the ability to deliver.




Altman told an SA Institution of Civil Engineering webinar that infrastructure spending was about 18 percent of GDP and, as a developing country, South Africa needed to get this figure up to at least 30 percent.

Altman said declining public sector investment in infrastructure had negatively affected the private sector’s capacity to deliver on infrastructure.

Altman said reeling off a number of new infrastructure projects was not difficult; the real issue was to get the government focused on priority projects and to make sure that the barriers to the implementation of those projects were removed. “For instance, currently in government there was a tendency to centralise decision-making in a few people, and capacity needed to be strengthened at municipal level to deliver infrastructure projects.”


Cannon Asset Management chief executive Professor Adrian Saville said the policy and planning framework around infrastructure development was good, but the deficit lay in the outcome. Saville said South Africa’s policy objectives were too ambitious, and goals were set so high there was no hope of succeeding.

“Smaller early wins (in infrastructure development) will get the fly-wheel of development moving,” he said, most notably by working to bolster “the free lunch” of better confidence among local and foreign investors in the country.

He said South Africa was not a “go-to” investment destination – he cited Ethiopia as an example, as it’s GDP had been growing at 9 percent a year for many years.

Saville said contrary to some people who believe that capital was trapped in South Africa, the reality was local and international investors had options about where they could invest.

He said there was little relationship between low interest rates and investment in South Africa, and low tax rates and investment, the main driver of gross fixed domestic investment was the public sector.

Saville said the economy had shown little ability to dent employment in the past 20 years, and the country did not need economic growth more than it needed a “different shape, form and flavour” of economic growth.

Source: IOL