In view of the emerging challenges with raising funding for infrastructure projects and theirimportance to economic growth, TCTA recently brought together stakeholders to deliberate on how to navigate the changing landscape.

Misaveni Ngobeni, representing the National Treasury, impressed upon the participants the importance of infrastructure spending in stimulating an economy that is facing headwinds. The COVID-19 pandemic has aggravated the low-growth trajectory with the gross domestic product (GDP) sliding a considerable 7,2 percent in 2020.

In the current calendar year, the South African economy is expected to grow 3,3 percent, Dr Ngobeni said. The obtaining economic conditions have made spending on infrastructure even more crucial because of the potential to stimulate growth.

Infrastructure development benefits are well established and have been proven to have a relatively bigger effect on economic growth in the long-term. The government of South Africa recognises the potential of the investment and has over the years implemented several interventions to ramp it up.

A significant intervention has been the Strategic Integrated Projects (SIPs) programme, under the strategic direction of the Presidential Infrastructure Coordinating Committee, with the support of selected state-owned entities (SOEs). There are 36 SIPs in total and TCTA has been tasked with coordinating two, SIP-3 and SIP-18. The organisation has recently further been providing strategic support to SIP-19.

TCTA shared its experiences with capital raising over the last three years. The entity raisedR6,5 billion, R4,5 billion and R15 billion in July 2018, January 2020 and January 2021 respectively for projects related to the Vaal River Water System.

Speaking on behalf of TCTA during the workshop, Thabani Nomvalo told the participants that the capital raising indicated a robust appetite for the organisation’s debt from local and international commercial banks and development finance institutions. However, conditions attached to financing were becoming increasingly onerous, partly on the back of governance issues plaguing some SOEs and deteriorating sovereign credit rating.

The stricter financing conditions have sometimes delayed the issuance of government guarantees for loans while the National Treasury considers their potential implications for the national fiscus. to issue loan guarantees. However, regarding water infrastructure, another crucial challenge that the workshop noted was the sector played second fiddle to electricity in terms of government priorities—a state of affairs that needs to change urgently.

The workshop, held on 23 March under the theme “The Future of Infrastructure Funding in South Africa”, attracted participants from entities including the Department of Water and Sanitation and the National Treasury. The Development Bank of Southern Africa, the Department of Planning, Monitoring and Evaluation, Transnet and Coega Development Corporation were also represented.

Published On: June 14th, 2021 / Categories: TCTA News /

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