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Funding and payment for services

The ownership of land and access to dignified housing are key priorities in South Africa, alongside the need for a more concerted roll-out in electrification, water and sanitation. These are among the pressing issues that political parties are promising to address as they campaign ahead of the local government elections, now confirmed for 1 November 2021.

As a developing nation, South Africa’s social infrastructure challenges are not unique; these include spatial inequalities that divide the rich and poor. For this reason, sharing common experiences with other global stakeholders – including obstacles like access to external funding – is so important.

The developed world continues to support South Africa’s transition through donor funding and direct investment. The same is equally true for the developing nations in the form of BRICS, represented by Brazil, Russia, India, China and South Africa.

Since its formation in 2015, the funding platform for BRICS has been spearheaded by their jointly managed New Development Bank (NDB), which finances infrastructure and sustainable development projects among its members. In South Africa’s case, an example is the National Non-toll Roads Management Program, an approximately US$1 billion loan scheduled for phase-in between April 2020 and March 2023.

NDB expands country membership

For the first time, country membership of the NDB was expanded in September 2021 to include Bangladesh, the UAE and Uruguay. It’s a significant development as the NDB positions itself for further growth, working with the global financial sector to raise capital for projects.

Numerous well-known South African consulting firms and contractors have worked on iconic projects in UAE cities like Abu Dhabi and Dubai. The Middle East is also seen as a growth Alastair

market for construction, presenting opportunities for private sector, and intergovernmental initiatives. Either way, the UAE is a strong partner to have on the NDB board.

SA construction needs a boost

Our local construction sector remains under severe pressure, as confirmed by Stats SA’s Q2 2021 GDP figures, reflecting a minus 1.4% growth. In turn, government expenditure was recorded at minus 0.1%.

However, the fortunes of the construction industry will change for the better once more capital projects come online, making 2022 a possible boom market. The tabling of the Mediumterm Budget Policy Statement by the Minister of Finance on 4 November will further indicate the direction of future infrastructure spending.

Local Government Revenue and Expenditure Report

In the meantime, National Treasury’s recent Q4 2020/21 Local Government Revenue and Expenditure Report shows that surpluses were recorded against billed revenue. For the secondary cities, for example, the report states that “energy sources revenue billed was R26.1 billion against an expenditure of R24.8 billion.”

The reality, however, is that consumer debt remains a big challenge and collection rates need to step up a notch. For secondary cities, for example, some R44.8 billion is outstanding – of which around 75.5% is owed by households. Within metropolitan areas, a similar trend emerges. Since non-payment impacts a municipality’s ability to perform and maintain existing infrastructure, it’s a crucial area that needs fixing.

Investing in sustainable infrastructure builds economies, but funding support is interdependent on payment for services. It’s a collective responsibility.

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The official magazine of the Institute of Municipal Engineering of Southern Africa

INFRASTRUCTURE DEVELOPMENT • SERVICE DELIVERY • ROADS • BUILDING • MAINTENANCE

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Director & A� orney, HSG A� orneys Incorporated HSG A� orneys Incorporated

SAPPMA Perspective

Setting the benchmark for quality and performance

Water & Wastewater

Pressure management in eThekwini

Roads & Bridges

Edge breaks: causes and consequences

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@infrastructure4 Infrastructure News

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