Building infrastructure is a presidential priority

Projects worth R340-billion have been gazetted for implementation in South Africa.

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Richards Bay IDZ (Credit: TNPA)

The two central planks of the South African government’s post-Covid rebuilding programme are infrastructure and industrialization.

To promote and monitor the first priority, an Investment and Infrastructure Office has been created in the Presidency. It is headed by the former Gauteng MEC for Economic Development, Dr Kgosientso Ramokgopa. In 2020 national government gazetted 51 priority infrastructure projects, with a total investment value of more than R340-billion.

Sectors targeted for intervention include energy, housing, transport, water and sanitation, agriculture, agro-processing and digital infrastructure. Some of the “special projects” that fall outside sector categories include:

  • Rural pedestrian bridges and rural roads.
  • Energy and water savings on government buildings.
  • Digitizing of government information: 10 000 young people will be employed to digitize government information, including hospital files and police dockets.
  • Student accommodation.
  • SA Connect Phase 1B, broadband expansion.

A reconstituted Council of the Presidential Infrastructure Coordinating Commission met for the first time in July 2020. With President Cyril Ramaphosa in the chair, the commission includes national ministers, provincial premiers, mayors of big cities and representatives of the South African Local Government Association. Where the council intends doing things differently is by paying close attention to:

  • Preventing corruption through transparent tender processes and strong due diligence.
  • Community involvement in planning and implementation.
  • Emphasis on local employment and procurement and targeted involvement of SMMEs.
  • Blended financing through the Infrastructure Fund to mobilise more resources from the private sector, multilateral development banks and development finance institutions.

A World Bank report has shown that a 10% increase in infrastructure spending results in a 1% growth in GDP. A study carried out by KMPG for the Gauteng Province found that spending on infrastructure resulted in additional economic activity worth R26-billion in the province and created 92 000 direct jobs.

In the country’s biggest province in terms of economic activity, the Provincial Government of Gauteng spent R30-billion on infrastructure between 2013 and 2016. The Gauteng Infrastructure Master Plan is expected to account for expenditure of about R1.8-trillion over a 15-year period.

Special Economic Zones

A key component of the strategy to boost the value of the country’s products is to develop infrastructure where manufacturing can take place, namely Special Economic Zones (SEZs) and industrial parks.

Each province has been allocated SEZs that play to regional strengths. Described as “major catalytic projects” for the northern province of Limpopo, the Musina-Makhado SEZ (MMSEZ), the proposed Tubatse SEZ and several industrial parks are central to the strategy of expanding Limpopo’s manufacturing capacity.

As of February 2020, Shaanxi CEI Investment Holdings had committed to a $5-billion investment in a vanadium and titanium smelter project at the MMSEZ and a further $1.1-billion had been pledged from other sources. The first-phase focus is on energy and metallurgical processes but agro-processing, logistics and general manufacturing are expected to follow.

Gauteng Premier David Makhura on a visit to the the Nissan plant at Rosslyn in 2020.

In the Pretoria area, already home to several Original Equipment Manufacturers (OEMs), the Tshwane Automotive Special Economic Zone (TASEZ) has been launched. It is a joint project of the Gauteng Province, the Department of Trade, Industry and Competition, and the City of Tshwane. The implementing agent is the Coega Development Corporation (CDC), the developer and operator of the Coega Special Economic Zone (SEZ).

The Coega SEZ is at the Port of Ngqura near Port Elizabeth and it too has an automotive component, recently strengthened by the large investment of the Beijing International Automobile Corporation (BIAC). East London’s Industrial Development Zone (ELIDZ) has many companies that sell to and service the nearby Mercedes-Benz plant while both coastal SEZs have a strong suite in logistics and are planning expanded aquaculture parks.

Energy is a key infrastructural requirement for the growth of any economy, and SEZs are playing a role. The Coega SEZ has been named as the site for one of two liquefied natural gas (LNG) plants to be built (if partners can be found) in terms of the national gas-to-power plan.

The Richards Bay Industrial Development Zone (RBIDZ) in KwaZulu-Natal is the other site designated for an LNG plant, with the capacity planned for 2 000 MW. RBIDZ is also the location of a new biomass plant.

The OR Tambo SEZ in Gauteng underscores Ekurhuleni’s strengths in manufacturing and logistics. The OR Tambo SEZ has launched the biggest food processing operation in the southern hemisphere (and the world’s second-largest refrigeration plant). With a special focus on export-oriented value-added industry, the OR Tambo SEZ leverages its connection to the country’s busiest airport. The focus of this SEZ is on agro-processing, jewellery manufacturing and mineral beneficiation as well as the development of hydrogen fuel cell technology. The SEZ is a subsidiary of the Gauteng Growth and Development Agency (GGDA).

Two of the largest infrastructure projects in South Africa’s history have unfortunately been delayed and are running over budget. National utility Eskom set out to build two huge power stations in Mpumalanga (Kusile) and Limpopo (Medupi). Both are near existing power stations and should have a stable supply of coal.

Eskom committed to completing Medupi in 2020 and intends finishing Kusile by 2023. Medupi will be able to feed 4 764 MW into the South African power grid when in full commission. Kusile will have a capacity of 4 800 MW and will be the fourth-largest coal-fired power station in the world. It will also the first in South Africa to use flue-gas desulphurisation (FGD), a technology that removes oxides of sulphur, such as sulphur dioxide, from exhaust flue gases.