OPINION: SONA and Budget 2021 response from a Young Professional

Sibani Ntuli shares his views on the 2021 SONA and Budget speech and he also tells us why he is cautiously optimistic with these announcements.

The month of February brings about massive anticipation for the State of the Nation Address (SONA) and the Budget Speech, events that are both reflective and prospective for the country. This year, these come right after the country emerged from a devastating second wave of the coronavirus pandemic, where the need for a clear plan and direction was in high demand.

Like many other built environment professionals, I was keen to hear about the progress on infrastructure commitments since the announcement of the Infrastructure Fund and the Economic Reconstruction and Recovery Plan. President Ramaphosa has, over the years, made several undertakings on infrastructure investment as a catalyst for economic growth and its ability to increase employment in the short run.

In this year's address, President Ramaphosa remarked as follows: “We have now developed an infrastructure investment project pipeline worth R340 billion in network industries such as energy, water, transport and telecommunications.” President Ramaphosa further indicated that construction had commenced on some of these projects. These are encouraging developments to an industry that needs resuscitation and growth, following years of a decline in public-sector infrastructure investments.

Other notable infrastructure announcements were as follows:

·       The launch of the human settlement projects that would house 68000 families when complete;

·       The student housing infrastructure programme will have a capacity of 300 000 student beds;

·       The Lanseria Smart City will be home to 350k – 500k people within the next decade.

·       SA Connect broadband programme; Water Infrastructure programmes; etc. 

These announcements are positive, but over the years, one has learnt to listen with caution because the key is in the implementation. I have, over the years, been disappointed at the pace of implementation that followed pronouncements. As important as it is to inspire citizens and boost investor confidence, we need to be realistic. There must be a balance between commitments and implementation.

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We need measurable and trackable infrastructure investment objectives and commitments that can be traced to the budget. The minister of Finance, Hon. Tito Mboweni says, "The government has committed to an R791.2 billion infrastructure investment drive to this end. We are already partnering with the private sector and other players to rollout infrastructure through initiatives such as the blended finance Infrastructure Fund”. Annexure D of the 2021 budget review documents titled Public-Sector Infrastructure Update gives us a better look at this commitment as indicated in Table D.1 below.

There seems to be a gap between the R340 Billion mentioned by the President and the R791.2 Billion mentioned by the Minister of Finance which is problematic as it points to a lack of synergy between the offices. Another problem in the investment pipeline is that many of these projects are at the pre-feasibility stage which means they have not yet been approved and may not be bankable.

A case in point is the commitment to the student housing infrastructure programme that will have a capacity of 300 000 beds, but the budget shows different numbers. If we look again at Annexure D, Table D.2 of the budget review document, the estimated numbers are as follows:

As we can see, the projects at an advanced stage of planning can only provide 10 340 beds, which is a far cry from the 300 000 projection. If our history of implementation is anything to go by, we may wait a while before construction commences. While we tantalize the pockets of potential investors and financial markets with opportunities, we need to follow through with the real work on the ground. Over promising and under delivering erodes reliability over time.

Notwithstanding my concerns, I am optimistic about the government leveraging private sector expertise in the planning and implementation of infrastructure projects. I believe this will assist in the following ways:

·    Efficiently package the infrastructure projects to bankability status;

·      Accelerate the planning to implementation phase;

·     Effective management and monitoring

 In conclusion, I welcome the SONA and the budget for 2021, albeit with extreme caution.

This Hardhat Opinion was written by Sibani L. Ntuli a Young Built Environment Professional in the Public Sector.

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