Port of call: Standard Bank’s summit to be held in Dubai next week will be themed ‘Unlocking Africa’s Infrastructure Capital – Resilience through Reform’ and aims to find investors in infrastructure. Photo: Attached
South Africa’s cash-strapped state-owned companies, including Transnet, Rand Water and the South African National Highways Authority, will meet with investors in Dubai next week to discuss opportunities for the Gulf state to pump money into local infrastructure.
Under its National Development Plan, the government has set an ambitious target to increase infrastructure investment from less than 20% of GDP to at least 30% by 2030.
This equates to spending of more than R4.8 trillion over the decade, which will require significant private capital, said Standard Bank, organizer of the annual summit.
This year’s theme is “Unleashing Africa’s Infrastructure Capital – Resilience through Reform”.
“At least R3.2 trillion of this infrastructure investment must come from domestic and international investment partnerships,” Standard Bank said.
The conference aims to bring together state-owned enterprises (SOCs) and investors, sovereign wealth funds and companies in the Gulf region to promote infrastructure development and trade between Africa and the Middle East.
Next week’s three-day summit will bring together more than 100 representatives, including South African officials from the Treasury, Transnet, Rand Water, the Development Bank of Southern Africa, the Industrial Development Corporation, the Government Employees’ Pension Fund, Sanral, Steinweg Bridge, the Trans-Caledon Tunnel Authority and the Land Bank, as well as Gulf-based investors.
Luvuyo Masinda, Standard Bank’s chief executive of corporate and investment banking, said the summit will consider a range of opportunities, from port expansion to a power grid upgrade that will cost more than R350 billion and a R900 billion water infrastructure program due to be delivered by 2030.
South Africa’s public sector infrastructure spending in the 2025 Medium-Term Expenditure Framework period (the three-year budget planning cycle the government uses to set spending estimates) is estimated to reach R1.3 trillion, according to the Government Technical Advisory Center’s latest bi-annual Infrastructure Trends Report.
Transportation, energy, and water will account for 75.5% of total spending over the medium term, with approximately 40% going to state-owned enterprises, 21% to states, 20% to local governments, and 13% to public bodies. Public-private partnerships account for only 2.8% of total spending estimates, the center said.
State-owned enterprises are grappling with financial and structural problems that are leading them to failure and hindering South Africa’s economic growth.
Freight and logistics company Transnet faces a number of problems, from financial mismanagement to declining rail networks and ports, that require a government bailout or cash injection.
Ratings agency Fitch said this month that it expects South Africa’s “contingent liabilities to continue to rise given state-owned freight transport and logistics company Transnet’s dependence on guarantees from the sovereign.”
It added that although the logistics sector is gradually recovering, “Transnet remains hampered by maintenance backlogs, vehicle shortages, theft, vandalism and years of mismanagement.”
