US
President Donald Trump made a point in his inauguration speech to
emphasise his election pledge to spend $1 trillion on infrastructure
investment over 10 years. He has repeatedly promised to “rebuild our
highways, bridges, tunnels, airports, schools and hospitals”.
In
his inauguration address, the Republican president said the nation’s
infrastructure “has fallen into disrepair and decay”. Those words could
just as easily have been applied to South Africa’s infrastructure, and
that of many other countries. South Africa is not alone in facing an
infrastructure backlog. Rapid wealth accumulation and assets such as
cars, as well as a far more mobile population, in many countries means
their infrastructure is as inadequate as ours.
Corporate
South Africa is currently flush cash, sitting on more than R725 billion
balance sheet cash. It’s obvious South Africa Inc is on a long-term
investment strike – at home, at least. It’s possible Trump could be the
key to unlocking these corporate balance sheets. It is evident that
business will be prepared to invest in the local economy where
incentives are in place to overcome other concerns. We already have
templates of successful Public-Private-Partnerships (PPPs) in several
sectors of the economy. In the renewable energy and toll road sectors,
regulations exist. Car manufacturing companies also invest due to well
thought out policy and predictable incentive packages. These examples
create many jobs and stimulate the economy at negligible cost to
government. It needs to be rolled out to many more sectors, starting
with accelerated toll road building.
The
South African government could take a leaf from Trump’s book – he has
agreed to a policy that provides tax credits or tolls on new roads. The
US plan in its current rough form would seek to incentivise the private
sector to increase investment in infrastructure projects on the basis of
tax credits and future usage fees, such as road tolls. As a result, US
governors have already flagged 300 high-priority projects that are ready
to proceed ‘today’.
In
the US there is a full consensus that there are infrastructure problems
in the US. We could do well to follow policy leads from some of these
countries. There is already a full consensus in South Africa. There is
also the capital on South Africa Inc’s balance sheet.
To
kickstart South Africa’s own infrastructure roll-out would simply
require a change of heart by government as to the level of private
participation. For instance, Trump’s policy aims to essentially sidestep
political squabbles by focusing mostly on private investment. Here is a
policy choice that South Africa could immediately follow for quick
results.
Trump
is not the only leader looking to stimulate infrastructure development
through the private sector: Germany, India and Chile are also looking at
private sector participation in their road systems. Tolls generate
sufficient cash flow to develop the infrastructure more efficiently.
By Thandokazi on May 09, 2017 09:39 am
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