How businesses are affected by a country's infrastructure

Infrastructure is a key contributor to business growth. 

In relation to business, infrastructure refers to essential facilities and structures that are necessary for the full operation of the business. An example of a type of business infrastructure is an office building, which a business runs from. Therefore, the impact infrastructure has on a business needs to be prioritised when developing strategies.

In political or government terms, infrastructure refers to roads, ports, transportation, power and water supplies, phone towers, internet, buildings such as hospitals, police stations, fire stations and all of the other basic facilities. These types of infrastructure are vital systems that play an important role in economic development and business growth.

What happens when a country invests in infrastructure?

When a country invests in economic infrastructure, businesses are able to produce and deliver more goods and services. Depending on the budget, the level of production for the products and services can be fundamentally increased, resulting in faster and long-term economic growth. 

For example, when roads are fixed, or new ones are built, the transportation industry is boosted. When transportation operates with efficiency, goods and services are delivered on time or even faster than estimated. The result of that is growth, on a large scale for all sectors and the national economy. 

When a country has a good economic infrastructure, the citizens and businesses benefit greatly from it. This is why the government, with the help of the private sector, channels substantial funds to economic infrastructure development, repairs and maintenance.

What happens when there’s an infrastructure failure? 

The short of it is that without adequate infrastructure, businesses cannot function. Let’s look at the energy crisis that continues to challenge South Africa. When load shedding is rolled out across the country, the small, medium and micro-enterprises (SMMEs) are heavily impacted. These companies suffer long-term consequences such as permanent damage to equipment and tools and the increase of wastage costs. 

SMMEs are crucial bodies of change, responsible for creating job opportunities for citizens. They contribute to the country’s gross domestic product (GDP). According to the Mail & Guardian, “globally, over 95 percent of enterprises SMMEs, which employ 60 to 70 percent of the working population.”

Overall, the persistence of this energy infrastructure problem means that the backbone of inclusive economic growth and development in South Africa face bottleneck challenges. This halts all processes of production and slows the growth of businesses and of the country’s economy. 

Infrastructure investment equals to business growth

Adequate infrastructure encourages the growth of businesses and the economy. It’s an essential component that connects businesses to their markets and employees to their work. Without substantial funds funnelled into the development, repair and maintenance of infrastructure, businesses will experience bottlenecks, and some won’t survive long-term.