Ke go tlotlile, Motlatsamodulasetilo wa Ntlo.
It's always an honour to be part of the discourse that is geared towards repositioning the House around the challenges that are facing our country and in this instance my emphasis will be on the theme of today, which is: Transforming our economic landscape through infrastructure, investment and development.
Hon Chairperson, the difficulties and challenges facing ourselves occurs in a specific context and the challenges that we are facing are not routine governance issues; but we are faced with huge effort to structurally transform the economy for our country, but also to put it and place on a sustainable growth path that is geared towards overcoming massive structural crisis we have inherited. But this, we will do it through one of the micro area of our economy which in this instance is infrastructure development.
Infrastructure development should be used, hon Deputy Chair, as a vector of change in addressing some of the most systemic development challenges such as social stability, rapid urbanisation, climate change adaptation and mitigation and natural disasters.
Many studies that have been conducted, including reports by development institutions and even our 20-year review of our government, have long recognised that infrastructure investment enable economic activities and thus support economic growth, job creation, poverty alleviation, and reduce inequality.
Deputy Chair, without infrastructure that supports green and inclusive growth it would be hard to close the gap to meet basic services and the needs of the people including the firms. Countries that are not prioritising infrastructure will struggle to improve competitiveness, and well-being of the people.
It was within this context that the ANC has mobilised the broad society to formulate and adopt the National Development Plan, NDP. This is the resolution that we took in 2007 in Polokwane that there is a need to have a National Development Plan that is geared towards mobilising and refocusing our country on a sustainable path of
development. Focus on infrastructure investment is one of the prominent policy themes featured in the National Development Plan.
The National Development Plan advocates that in order for the country to meet its developmental agenda, it would need to boost infrastructure investment by 30% as a percentage of Gross Domestic Product, GDP, by 2030. This is important, given the recent Stats SA release on the contraction of our basket of services which we call Gross Domestic Product.
In line with the National Development Plan, government prioritised infrastructure spending on social and economic infrastructure such as schools, health facilities, roads and transport, energy, and water and sanitation.
The President of the country has correctly captured in the 2020 state of the nation address that public spending needs to be moved away from the consumption to capital investment. This is geared towards changing the economic landscape of our country.
The 2020 budget recently delivered by the Minister of Finance placed budget strategy and action plans in line with the President's call
to rebalance the composition of public spending to enable inclusive economic growth.
The 2010 FIFA Soccer World Cup placed us as a country in greater heights, and indeed illustrating that as a country in Africa we can deliver and manage such a huge infrastructure undertaking. We did not fail! It demonstrated our technical capacity and capability to deliver. Let alone that there were number of corruption and collusion that was identified, particularly by big firms, but we are happy that the Competition Tribunal is ceased with the matter.
In South Africa, given the historical injustice of apartheid which marginalised and excluded the majority of South Africans from social, political and economic activity, socioeconomic transformation becomes a must. It is an integral part of the ANC broader transformative agenda. Government's fundamental aim is to transforming our economic landscape to eradicate poverty, inequality and unemployment.
The infrastructure investment agenda is linked to the trade and industry strategy which seeks to reindustrialised the economic market and government will soon release master plans that are
industry specific. The trade and industry strategy is framed to boost exports.
The Tripartite Free Trade Area, which will create an integrated market across 27 African countries, is a major opportunity for South Africa and the rest of the continent. It will lead to the creation of a single continental market of more than 1,3 billion people, with a combined annual output of 2,2 trillion. It is reported by the United Nations Conference on Trade and Development, UNCTAD, that the transition phase to the Continental Free Trade Area alone could generate welfare gains of E16,1 billion and boost intra-Africa trade by 33%.
In line with the NDP, government has prioritised infrastructure spending on social and economic infrastructure such as schools, health facilities, roads and transport, energy, and water and sanitation.
This is the commitment made by other countries in the continent that present opportunities for South African firms to further penetrate African markets and the reciprocal expectation for South Africa to open the markets.
South Africa has highly capable architecture, construction and engineering sectors in Africa. That could boost its foreign share in Africa. Thus, to create jobs.
There is a need for a co-ordinated effort by South African construction firms, banks, financial institutions, development finance institutions and government ministries in partnership with their counterparts in other African countries to boost growth in the continent for the benefit of our country and the rest of the continent.
Investment in special economic zones will boost, support economic growth and boost job creation. The announcement of further investment in the various special economic zones is a step in the right direction. Incentive schemes in the special economic zones should boost investment and jobs, particularly in labour intensive industries. South Africa has a surplus of unskilled labour which needs to be urgently absorbed to avoid social instability. We also take note of the commitment made by our government to also identify and strengthen the Upington special economic zones.
Chairperson, the recent reports by Stats SA including the National Treasury, about the performance of the construction industry needs
special attention. We need to jumpstart the economic activity in the construction industry. We do this through Infrastructure Fund project pipeline, which is valued at over R700 billion, announced by government; this would certainly support construction activity over the longer term.
Furthermore, our economy which is currently fractured, however, it still looks resilient. But we need to make sure that the implementation of the economic reforms, as announced by the State President during the state of the nation address, and which were given an economic value by the Minister of Finance, would definitely mend our economic growth trajectory. Given the fragmentation and fracturing that we made reference to earlier on.
I should report in this House that the governing party, the ANC, between 1998-99 and 2018-19, has deployed R3,2 trillion on infrastructure spending. Over the 2020 medium-term, the ANC-led government is anticipated to spend R815 billion.
State-owned companies continue to be the largest contributor to capital investment, spending a projected R314 billion over the next three years.
Spending on economic infrastructure, mainly by state-owned companies, accounts for 75,1% of the medium-term estimate. These funds are used to expand power-generation capacity, upgrade and expand the transport network and improve sanitation and water services.
Provinces are expected to spend R177 billion on infrastructure over the same period, while municipalities are forecast to spend R196,8 billion.
Metropolitan municipalities will play a key role in changing economic infrastructure outlook and thus contribute to the growth and development of the country.
Government plans to reprioritise funds from the integrated city development grant and neighbourhood development partnership grant to accelerate capital investment.
Provinces and municipalities need to step-up the pace of spending infrastructure budgets. Infrastructure spending has the potential to stimulate demand in the economy and boost future growth. But it must be spent very well.
Wasteful spending and corruption undermine efforts to attract investments and thus compromise inclusive growth agenda. Government's commitment to prioritise corruption would boost business confidence and attract both domestic and foreign investments.
Infrastructure investment initiatives will incorporate climate change in design and implementation. Government recognise that in firming the resilience of infrastructure and supporting low-carbon development of capital projects is a commitment that needs strong partnerships and new sources of capital. Furthermore, the role of the private sector needs no further emphasis.
Public housing and bulk infrastructure built through the human settlements development grant in provinces is expected to total R43,9 billion. Furthermore, government will also accelerate spending on social services infrastructure.
Furthermore, the urban settlements development grant has been allocated R26 billion to fund infrastructure provision for broader urban development in metropolitan municipalities.
The provincial roads maintenance grant has been allocated
R36 billion to maintain the provincial road network by resealing a targeted 16 226 lane kilometres, rehabilitating 6 199 lane kilometres and patching 3,7 million square kilometres of potholes.
Over the medium-term, Passenger Rail Agency of South Africa, Prasa, Eskom, Transnet and Rand Water are expected to accelerate capital spending.
The SA National Roads Agency Limited, Sanral, is expected to spend R64,6 billion over the medium term. This spending will cover R35,4 billion to improve and construct non-toll roads, and
R3,4 billion to construct the N2 Wild Coast highway, R2,5 billion to upgrade the R573 better known as the notorious Moloto Road.
Public transport remains a key priority as it offers socioeconomic benefits. Prasa needs to be fixed. People need to get to workplaces on time. Over the medium-term R32,4 billion will be used by Prasa to modernise the rail network.
Furthermore, R20,4 billion is expected to be spent to accelerate implementation of the integrated public transport networks in 10 cities across the country.
A hundred and fifty billion rand is anticipated to be spent on energy, with Eskom spending the bulk of the capital investment.
Through the Renewable Energy Development Programme, as we speak, Chairperson, the private sector investment in the programme amounts to R209,7 billion and R41,8 billion is from international investors and funders. Partnership initiatives need to be cemented so that the role of the private sector in development should be enhanced.
Government continue to prioritise Information and Communications Technology, ICT, infrastructure to make the economy more competitive and bridge digital divide between rural and urban economies. Furthermore, we need to increase the speed of conducting business and linking domestic businesses with global markets. Government will use current ICT policy reforms to leverage private capital to accelerate ICT infrastructure.
Chairperson, we are mindful of the challenges in spending of infrastructure budgets such as insufficient capacity and skills to build a sustainable development projects, infrastructure backlogs and the lack of business confidence.
Therefore, our country has a relatively well-developed and sophisticated financial sector. Studies show that the country's financial depth is in line with advanced economies. This presents an opportunity for government to deliver economic infrastructure in partnership with the private sector.
Institutional investment in infrastructure in successful Renewable Energy Independent Power Producer Programme presents a great case that need to be extended to other sectors.
Chairperson, the ANC took a deliberate effort to ensure that the public sector remain central to the delivery of infrastructure services as a provider and an enabler. More importantly, to become an infrastructure provider where there are clear market failures.
The current infrastructure gap in low and middle-income countries including South Africa need relations which are framed on developmental partnerships.
Therefore, the pressing needs need the private sector as well as the public sector to build and operate the essential infrastructure.
The state of the nation address emphasise the need for social compacts and partnerships. Government will leverage its capital by bringing more private sector financing into infrastructure as this would increase the financing envelope for infrastructure investment.
Fixing and restructuring of the SOEs is a critical factor for the success of the infrastructure investment. The balance sheet of our state entities needs to be addressed so that we are then able to ensure that the current platform created to review how in the past these SOEs were explored, it has to be rooted out. Our state entities have a critical role to play in the economic transformation agenda.
This House has a unique role to play to influence all stakeholders to combine their efforts to meet the needs of the people and our economy should be measured beyond GDP.
Deputy Chair, in conclusion, the well-being of society is of paramount importance and that should be the key indicator of our envisaged economic landscape. I thank you, Deputy Chair. [Applause.]