Avoiding The Greenwash SpinAugust 4, 2023
Fund News – August 2023August 14, 2023
An Article By Ian Kilbride.
Infrastructure failure hits us personally every day. Some failures are an inconvenience, others are life-threatening. What is clear, however, is that the rapid and sustained rehabilitation of our country’s infrastructure is vital for economic growth and human development.
The 2022 claim that South Africa had 25 million potholes is of course a gross exaggeration, given that we have a network of some 168,000km of paved roads as this would equate to 149 potholes for every kilometre. But the extent of the problem is illustrated by the fact that after its 2022 launch, more than 50,000 residents downloaded the SANRAL app and recorded some 27,000 potholes. The regional spread of potholes is notable too, with Johannesburg reporting the largest number pro rata and Cape Town the least.
The connected nature of the infrastructure crisis in South Africa is made clear when we consider that while the country experienced its worst ever power cuts over the past 12 months, our coal exports also fell to a 30-year low, not due to a drop in demand, but as a direct consequence of a breakdown in local freight rail capacity and the inefficiency of our ports. Looking more closely at the performance of our ports, Durban, Cape Town and Ngqura were rated in the bottom ten out of 370 ranked in the World Bank Container Port Performance Index. Exports from Durban alone fell by one third in April and May, compared to the previous year.
The scale of the energy infrastructure crisis is illustrated by the fact that from 1961-1996, South Africa built 15 power stations, adding a combined 37,000 MW of electricity to the grid. In the entire 21st century, a mere 9,500 MW has been added via the fundamentally flawed and under-performing Medupi and Kusile mega coal power stations. The dearth of new power generation not only leaves consumers in the dark and the economy structurally hamstrung, but it also means that many of the existing coal-based power plants are between 30-50 years old and reaching their scheduled decommissioning age.
The South African Institute of Civil Engineering found in its 2022 annual report that just 15 out of 32 infrastructure segments were satisfactory, with the balance rated as at risk of failing or unfit for purpose.
As ever, rural populations bear the brunt of infrastructure failure. I have witnessed this in my own work with the community of Bonnievale in the Western Cape, although we are now heading on the right track to correct some of the past mistakes and towards building a more sustainable community.
Yet with 19% of rural communities lacking access to reliable water supply and 33% still without adequate sanitation, we have a monumental task ahead of us. It is hard to believe (less still accept) that today 26% of ALL schools and 45% of all clinics lack direct access to clean potable water. This is all the more alarming when recognising that access to water is a basic right enshrined in the South African constitution. How is it possible then that at least 15 people died earlier this year from a cholera outbreak in Hammanskraal? The answer is painfully obvious and that is the failure to maintain even the most basic services for those most in need.
So much for the negative side of the equation. Investment in infrastructure can have a significant gearing effect and has the potential to boost economic growth. Frankly, infrastructure build is a no-brainer for the South African economy above and beyond the dire need to repair what is already broken. Firstly, infrastructure is the foundation of economic growth, but is also a unique job creator. With our country nudging towards 40% unemployment, labour intensive infrastructure build (particularly in deprived rural areas) will provide much needed employment, learnerships and skills development opportunities. Relatedly, our world class civil engineering, built environment and cement and concrete sectors are barely surviving the economic downturn since the 2010 FIFA world cup and facing a life-or-death crisis without a much-needed boost from massive infrastructure spend.
More broadly, our cities and towns are still separated by the scars of apartheid urban planning and need to be far more connected by better road and rail networks many of which have simply fallen into disrepair, particularly since the Covid lockdown. The current taxi strike in Cape Town which has deprived hundreds of thousands of workers and scholars the means to commute, highlights the dire need for the rehabilitation of public transport, rather than good folk being held to ransom.
The call for a massive boost in infrastructure spending is not a theoretical exercise. The World Bank notes that in reviewing 300 case studies over four decades, provides strong evidence of the positive contribution of infrastructure investment towards achieving development objectives, including output and productivity, poverty and inequality, labour market outcomes, human capital formation and trade.
So, the announcement by Business Leadership SA that it was launching a programme of investment, skills development and support to boost national infrastructure is music to my ears. This constitutes an important step in the call I have made publicly for some time now for greater co-operation between government and the private sector and the recognition of the vital role played by the private sector in the future of our country.