South Africa and surrounding countries have a long way to go in ensuring the development of different industries. The infrastructure of many sectors is one of the most important things to modernise in order for those sectors to function in a modern society. In this article, we will take a look at how modernising infrastructure will be beneficial to multiple industries, the steps government and private companies need to take to ensure infrastructure modernisation and DBSA’s involvement in reaching these goals.
Why We Need Infrastructure Development
To achieve South Africa's long-term economic and social goals, infrastructure development is essential. The public sector must take the lead in this endeavour when a developing nation seeks significant structural change. One of the most important factors in South Africa's shift from a traditionally closed resources economy to one that is globally and regionally integrated, low carbon, inclusive, and encourages dynamism in the industries of the future, will be the delivery of infrastructure.
Investment in public infrastructure is essential for boosting productivity and competitiveness, reducing spatial inequality, and promoting the formation of new industries that generate jobs. Therefore, it is one of the essential tenets of change and inclusive development. Infrastructure development creates jobs and numerous prospects for black economic empowerment, furthering the objectives of the National Development Plan (NDP). The NDP aimed for a 30 percent investment-to-GDP ratio, with the state providing 33% of the funds. This is mostly provided by state-owned companies and local and provincial governments (SOEs). Only a small fraction of spending is coordinated by the federal government. Between 2016 and 2040, it is projected that building infrastructure to achieve NDP development goals will cost more than R6 trillion, with energy and transportation accounting for more than 72% of total expenditure. The NDP aimed for a 30% investment-to-GDP ratio, with the state providing 33% of the funds. This is mostly provided by state-owned companies and local and provincial governments (SOEs). The national government is only used to direct a small fraction of spending.
More Than Just One Industry
In order for South Africa and other surrounding countries to truly develop, there is more than one sector that needs to be modernised. Let’s take a look at how the infrastructure of certain sectors will help push South Africa and the continent eventually.
To enable economic growth and development, the way in which we supply energy needs work. Currently, South Africa is grappling with electricity supplies that are inconsistent and put the lives of many in danger. Decreasing reliance on coal and increased reliance on renewable energy, especially solar and wind, which play a dominating role as part of a least-cost energy mix and where South Africa has a significant advantage, will help us accomplish the sustainability targets we have for energy supply and usage. According to projections by experts, by 2050, energy demand will double, and the Covid-19 pandemic has shown the readiness (or lack thereof) for this type of demand. Solar and wind-powered generators will need to be put in place just as much as the geysers have been rolled out. Ensuring that we maintain this and grant impoverished regions in the country access to sustainable energy.
Upgrading energy supply also helps with employment opportunities for the people who live in the regions that need the energy supply, and government and private facilities need to work hard at ensuring employment opportunities are granted to those community members.
Given the year we are in, one would expect water supply to be up to par by now. However, there are still regions in South Africa where access to water is limited and causes hindrances for many people. To support a robust, inclusive economy and a healthy environment, water infrastructure will help provide universal and reliable access to water of an acceptable quality and quantity. The institutions responsible for managing water resources and services will also be successful in achieving this goal.
From freight to public transport, the upgrade and infrastructure development of this sector will be hugely beneficial. Freight transport will facilitate domestic and cross-border movement of goods to enable industrialisation, diversification, trade and development, while public transport will ensure that the many people who are living in these regions get access to basic yet sustainable transport services.
The idea of giving funds for infrastructure modernisation demonstrates the South African government's growing commitment to public-private partnerships. The Development Bank of Southern Africa (DBSA) has designed this with the intention of using R100 billion in public funds over the following ten years to crowd in private sector investment using blended finance methods.
When it comes to modernising infrastructure, there are a lot of sectors that will need to be onboarded. However, the greatest advantage of this is that these modernisation projects will not only create employment but also promote sustainable living, change the course of the economy and develop South Africa and Africa at large.