OPINION: My perspective on the infrastructure fund

Nancy Ronoh shares her hardhatOPINION on the infrastructure fund as a vehicle set up by the South African government to facilitate investments on infrastructure projects

As a construction industry professional, I am extremely concerned with the future of the industry. An article on the “Tech Central” platform describes the fund as a “vehicle for the facilitation of successful projects, as opposed to a traditional government stimulus.” The fund aims to bring positive change to the South African economy and its people, “The Infrastructure Fund will direct financing towards projects that have a positive social impact, including the construction of new transport links and student accommodation, and improving access to water and the Internet”.

So far, the infrastructure fund sounds like the answer to the collective construction industry players. The fund will make available a R100 billion-rand worth of project funds over the next 10 years. The auxiliary benefits of the various projects such as job creation, improved public facilities and improved buying power for the communities where the projects will take place will inevitably result in a recovered economy.

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The professionals involved in the planning and management of the fund have already identified that choosing appropriate projects to fund will be the main challenge. According to a publication by Mckinsey and Company “gains from infrastructure are fully realized however only when projects generate tangible public benefits” (Bielenberg et al, 2020). The framework designed by Mckinsey and Company can be a useful tool for the country to ensure the projects funded through the infrastructure fund produce the intended benefits. The following are the checks suggested for deciding on feasible beneficial projects:

• Develop projects with tangible quantifiable benefits
• Improve the coordination of infrastructure investment to account for network effects
• Engage and align community stakeholders to promote inclusive economic and social benefits
• Unlock long term capital

When choosing the type of infrastructure projects that need to be funded the government should also consider the operation costs. An assessment of the long-term fiscal implications of the facility is necessary in calculating the project benefit on an economic level.

Public looting and tender related corruption are two of the factors that threaten to derail the success of the fund. An article by the Mail & Guardian reports that the aim is for the funding and allocation process to be “transparent, fair and competitive”. I, like so many others, look forward to seeing this vision realized.

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