CESA Supports Government's Infrastructure Fund in partnership with Private Sector

Johannesburg 24 October 2018 In response to Minister Tito Mboweni’s Medium Term Budget Policy Statement (MTBPS) presented in Parliament today, Consulting Engineers South Africa (CESA) welcomes Government’s focus on infrastructure development in support of economic recovery and job creation. The organisation supports the development of an infrastructure fund in partnership with the private sector aimed at enhancing economic growth and improving governance.

Neresh Pather, President of CESA states, “As a partner to Government CESA and our member firms are ready to assist in providing South Africa citizens with long term value for money invested in the delivery of sustainable infrastructure. Our members are bound by a professional code of conduct that ensures quality and integrity in the delivery of services.”

CESA is however, concerned about the impact on job creation based on the revised GDP growth forecast for 2018 down from 1.5 per cent in February to 0.7 per cent with inflation expected to remain within the 3-6 per cent target band over the medium term.

CESA welcomes the strengthening of infrastructure planning and the plan to address shortcomings in public administration and finances and is in support of the work of commissions investigating corruption and governance failures at several institutions, along with ongoing management training, financial strengthening and organizational renewal across the public sector.

CESA is pleased that Government is in the process of developing a framework for financing infrastructure that will allow investors to assess potential long-term returns on public infrastructure projects. Over the next three years, public infrastructure expenditure is estimated to be R855.2 billion, of which state-owned companies account for R370.2 billion. General government accounts for the remaining R485 billion, mainly in the form of conditional infrastructure grants.

The infrastructure fund announced as part of the President’s economic stimulus and recovery plan is intended to encourage capital investment by the private sector and development finance institutions in public infrastructure. The fund will build on work under way in government to improve the planning and management of large infrastructure projects.

Chris Campbell, CESA CEO states, “We are pleased that Government has announced its intention to partner with the private sector to increase investment in public infrastructure with the establishment of an infrastructure fund and we are confident that this will provide a clear signal to investors that could kickstart economic growth if managed correctly.”

Although CESA welcomes these positive steps by Government they caution that there are still many challenges to confront. As stated by Minister Mboweni the quality of public expenditure is often poor and governance problems are often severe, particularly in provincial and local government, and state-owned companies. Government needs to put strong measures in place to tackle these problems.