Question NW294 to the Minister of Public Works and Infrastructure
07 August 2023 - NW294
Zondo, Mr S S to ask the Minister of Public Works and Infrastructure
Whether, given that during the State of the Nation Address on 9 February 2023, the President of the Republic, Mr M C Ramaphosa, mentioned that approximately R600 million would be allocated towards Infrastructure South Africa for project preparation, with more focus in rural and under-resourced areas, her department intends to make use of the local skills pool in such rural and under-resourced areas in the specified project to provide residents in those communities with employment opportunities; if not, why not; if so, by what date can the residents expect such employment opportunities?
Reply:
The Minister of Public Works and Infrastructure
South Africa has seen declining fixed capital investment and economic performance over the past decade. Analysis of this widening investment gap to National Development Plan targeted growth levels, shows that an additional R1.6 trillion in public sector infrastructure investment is required by 2030, over and above that forecasted for current public sector entities. Delivering an effective infrastructure-led economic recovery plan will require the government to overcome various challenges currently faced in the infrastructure ecosystem, including but not limited to infrastructure under-spend due to poor project preparation and lack of capability and capacity in the public sector.
The pipeline of well-prepared projects is scarce, therefore limiting investment opportunities. Given the risks and uncertainties of project preparation, private sector has understandably been hesitant to get involved during the early stages of infrastructure projects or programme. It is important that government invests in project preparation. The intended objective of the project preparation funding is to:
- unleash significant quanta of private sector investment for catalytic public sector infrastructure projects;
- ensure viable, efficient and bankable project portfolio;
- augment the technical and financial engineering capacity in under resourced provinces and municipalities; and
- enable economic and social development impact through projects that are brought to financial close
Infrastructure South Africa has a pipeline of projects and programmes, a significant number of these projects are not sufficiently prepared and packaged such that funding and financing decisions can be made. Moreover, the majority of these projects are submitted by less-resourced municipalities. The R600 million allocated to Infrastructure South Africa is over the Medium-Term Expenditure Framework. That is, R200 million is allocated in the 2023/24 FY; R200 million in 2024/25 FY and R200 million in the 2025/26 FY. The funding will be directed to preparing and packaging infrastructure investment projects and programmes in priority sectors such as water and sanitation, rural and municipal roads, energy, education and health infrastructure projects and programmes.
Infrastructure South Africa does not own projects, the relevant projects owners, when procuring and implementing their infrastructure projects must ensure that partnership opportunities in relation to promoting gender and race transformation as well as technical capabilities by growing the community of skilled black professionals and companies in the built environment. In addition, the project sponsors need to ensure that where appropriated, the use of locally manufactured materials are used when the assets are built.
Infrastructure South Africa will provide continuous oversight and monitoring of the projects that benefit from the project preparation funds to support the successful execution of projects beyond preparation stages. Through the Infrastructure South Africa Centre of Excellence, the impact of the infrastructure projects will be monitored closely to quantify the extent to which, inter alia, job opportunities in the local area were realised and the value to society and economy that is derived from the infrastructure asset.