Gideon Chitanga
Calls for South Africa to build new infrastructure while maintaining the old have been getting louder since more than a decade ago.
There is no doubt that going into the 2024 elections, the calls will become an issue of political contestation between the key political parties and their leaders.
For the ANC government and its leaders, there can be no better time to look at their consolidated diplomatic relations with China for a new deal on mutually beneficial infrastructure that would stimulate and transform the sluggish South African economy while renewing infrastructure in the country.
China has critical experience in infrastructure development, and the resources, political will and strong diplomatic ties with Africa to help its countries with infrastructure development, as evidenced by widespread win-win projects on the continent. Infrastructure investment played a crucial role as a key driver of rapid economic growth in China. China's sustained high economic growth and increased competitiveness in manufacturing has been underpinned by a mix of infrastructure stock, labour force, public and private investments to drive one of the major cases of socio-economic transformation in recent history, lifting close to a billion people out of poverty in less than half a century.
There is no doubt that in the face of the 2024 elections, national problems around infrastructure development will be a front of contestation among the main political parties. In comparison to many African countries, there is no doubt that South Africa has some of the most sophisticated infrastructure, and probably the most advanced in the South African Development Community region.
However, the country faces demonstrable collapse of infrastructure ranging from transport and affordable housing to water, sanitation and energy. Incessant load shedding has been blamed on dilapidated and inadequate infrastructure at Eskom. Road transport is showing signs of immense pressure, while railway transport systems have collapsed.
While South Africa has made a huge leap in digitalisation, there is room to further expand and innovate in ensuring that digital infrastructure is available and accessible to people.
A 2022 report by the South African Institution of Civil Engineering painted a gloomy picture of the state of infrastructure in the country. The institute graded South Africa’s overall infrastructure at D, indicating that the infrastructure was not coping with normal demand and was poorly maintained. The report assessed 32 infrastructure segments and found only 15 to be “satisfactory” or above (graded C or higher), with the remaining segments falling into “at risk of failing” (D) or “unfit for purpose” (E).
A 2021 report by Business Leadership South Africa says public investment in infrastructure has declined over the past decade. The report states that infrastructure investment fell sharply over the past six years since 2021, from 20.3% of gross domestic product in 2015 to 17.9% in 2019, way below the National Development Plan’s target of 30% of GDP. Public sector spending, including both state-owned entities (SOEs) and main budget spending on infrastructure, dropped from 7.3% of GDP to 5.4% over the same period.
The report says public infrastructure investment, which include the construction of new universities and the Renewable Energy Independent Power Producers Programme, have not realised good value for money. Although private sector investment has averaged 12.7% of GDP over the past five years, there is a huge gap in funding infrastructure. While there is recognition of growth in sectors such as roads and bridges, transport and ICTs equipment, there is need for large-scale, broad-based state-driven investment in infrastructure projects to meet national needs, while creating jobs at the lower end of the market, putting money in the pockets of the people to boost the economy.
Although the South African government has set its sights on infrastructure development, it will need to make a radical policy shift and inject massive capital investment into infrastructure development and renewal. In 2020, Minister of Public Works and infrastructure Patricia de Lille rallied the government to contribute a targeted 23% of GDP by 2024 towards infrastructure, of which 15% would come from the private sector and 8% from the public sector. The minister said her ministry was championing the raising of a R100 billion Infrastructure Fund to be established and operationalised by 2024.
Delivering his Budget speech on February 22, Minister of Finance Enoch Godongwana drew attention to the need for the government to commit more resources towards major infrastructure initiatives such as electricity, water and municipal projects. Government spending on public sector infrastructure over the 2023 Medium-Term Expenditure Framework was estimated at R903bn. Of that, SOEs and public entities are the largest contributors to capital investment, at a projected R302.1bn over the next three years. However, the government needs more capital investment to drive sustainable infrastructure development and renewal.
There are many factors contributing towards the dire state of infrastructure. Economic and demographic shifts, including population growth since 1994, has exerted immense pressure on housing, power, water, sanitation, roads and railways, among other demands. Diminished public investment under competing interests has strangled the role of the state in expanding and maintaining infrastructure.
Although the private sector has made significant investments in infrastructure development, the provision and maintenance of infrastructure should be among the main roles of the state, given that infrastructure is a critical strategic public good with broader national socio-economic and political resonance. In short, the government should not only play a facilitatory role in the provision of infrastructure but proactively intervene in infrastructure development and maintenance.
The government will need to make radical interventions to arrest the decline in infrastructure while turning the challenge into an opportunity to foster socio-economic transformation. Given perennial financial constraints on the state which impinge on large-scale public spending, the government may need to draw from its relations with China for financial resources, leverage China’s extensive multilateral and bilateral projects in Africa to engineer a mutually beneficial transformative new deal for South Africa, which will uplift the well-being of South Africans while rebooting the domestic economy.
The government could therefore leverage its strong diplomatic relations with China to learn from its experience in infrastructure and wider economic development, and its expertise and mutually beneficial experience in infrastructure partnerships in Africa and capital investment.
China and South Africa have consolidated their bilateral relations to a strategic partnership denominated by hefty bilateral trade volume which ballooned from $1.6bn in 1994 to $57bn by 2023, making it the largest bilateral trade relationship for South Africa while accounting for one-fourth of China-Africa trade. Chinese enterprises have invested more than $25bn in South Africa, creating more than 400 000 local jobs. South Africa is one of the 34 African countries which are member of the Belt and Road Initiative (BRI). South Africa is also a key member of the Forum for China Africa Cooperation, the continental platform bringing continental Africa and China multilateral relations, the BRI and the BRICS, critical south-south multilateral institutions through which vast successful co-operative initiatives with China were implemented in many African countries.
China has been the leading trading and development partner with Africa for more than two decades. According to the China daily newspaper of October 25, 2023, China achieved robust investment growth in Africa over the years and is ready to continue to work with the continent to further advance bilateral co-operation in investment. Mr Wang Dong, the deputy head of the Ministry Commerce’s Department of Western Asia and African Affairs, said China made more than $1.8bn of direct investment in Africa in the first half of 2023, a 4.4% year-on-year increase in Chinese investment in Africa. He said Chinese companies had carried out infrastructure projects valued at more than $400bn in Africa.
During his visit to South Africa, President Xi Jinping agreed with President Ramaphosa to join hands to take the bilateral comprehensive strategic partnership with South Africa to a new level and build a high-level community with a shared future. The presidents agreed to strengthen co-operation in electricity and energy, and witnessed the signing of several relevant co-operation documents. South Africa recently received 450 generators from China to cushion critical public facilities from long hours of power outages.
Building on the strong relations South Africa has a willing friend in China to help with infrastructure development and renewal to boost economic transformation.
Gideon Chitanga, PhD is a research associate at the African Centre for the Study of the United States, Wits University, Johannesburg.
The Star