By Dr. Enyinna Nkem-Abonta, Chief Operating Officer at BICACON
Low investments in infrastructure development, coupled with lacklustre Gross Domestic Product (GDP) growth, remain the key threats to long term growth in the infrastructure development market.
Earlier this year, President Jacob Zuma announced the allocation of R 847 billion towards public infrastructure investment over the next three years – 3.7% short of the targeted government infrastructure spend of 10% of GDP.
The recent report compiled by Statistics South Africa shows that the country’s GDP increased at a marginal rate of 0.6 per cent in the second quarter of 2014. Annual GDP growth averaged 5% but has since struggled to reach 2% in the last five years.
Furthermore, the International Monetary Fund (IMF) has cut South Africa’s economic growth outlook for the fourth consecutive time this year to 1.4% from 1.7%, making it the latest in a number of institutions to lower the GDP forecasts. The IMF also revised its projection for next year down to 2.3% from 2.7%.
The infrastructure development market has the potential to contribute large fiscal taxes, develop communities and create jobs on a large scale, however low investments and GDP growth trends hamper the ability of the industry to achieve these objectives.
It is further predicted that the SA’s economic growth is likely to deteriorate, making unemployment an even bigger problem than it already is.
Government has outlined its growth plan in the National Development Plan (NDP). While this blueprint is commendable, it can only be brought to life if it is speedily implemented. Uncertainty associated with the county’s policies had been seen as a large contributor to impeding investments – local and foreign, infrastructure development and economic growth. Speedy implementation of the NDP will do a great justice to economic growth.
Private sector should also play their role and not wait for government to speed up the NDP implementation. They should be encouraged to invest more in the national infrastructure development projects with a view of helping the government to grow the economy and create jobs.
As infrastructure developers, we should also look for innovative ways of providing quality and sustainable infrastructure development solutions that improve quality of life.
The construction industry development has shifted slightly to a more global perspective. In order to attract foreign investments and grow the market, standards have been raised to satisfy the needs of potential investors while staying true to the country’s environment responsibilities.
At BICACON, we support these standards and believe in strategic foreign partnerships that enhance technical knowledge, skills transfer, generate job opportunities and attract more foreign investments.