Altman Advisory director, economist and National Planning Commission (NPC) commissioner Miriam Altman has emphasised the importance of public infrastructure in light of South Africa’s transformation agenda and getting people in houses and closer to transport networks and services, in addition to its role in stimulating the economy.

She was participating in the Business Day Dialogues, held in partnership with building materials manufacturer AfriSam, on November 22, with speakers debating whether infrastructure spend can still be a saving grace for South Africa’s economy, given the headwinds facing the industry.

The parties unpacked the value chain factors that should be well thought out and managed to achieve a prosperous South Africa and the National Development Plan objectives.

Continuing to drive spend with real impact had been a challenge, panel moderator and BASE Media Communications director Alishia Seckam said, in leading the panel discussion.

Altman highlighted the single-most important factor in realising impactful infrastructure spend was a capable State and it being a reliable partner. “So much capacity was destroyed during State capture. When you destroy the procurement function, which is vital in infrastructure delivery, you decimate institutions and performance management.

“Procurement has to be made a transparent and serious function, with technically capable people at the helm of these processes and decisions,” she stated, adding that the NPC was trying to embed these principles into its suggestions, from how leaders were appointed to how administration was undertaken.

She said that, as the procurement functions of national, provincial and municipal governments are strengthened, more structural reforms and infrastructure spend can get in the range of the State’s capability.

For Cement and Concrete SA CEO Bryan Perrie, a fundamental problem in the infrastructure sector was that of a lack of accurate statistics and information from the National Regulator for Compulsory Specifications, as well as the dumping of building materials in the country.

He explained that, although South Africa had a cement production capacity of 20-million tonnes, it was producing only about 12-million tonnes, according to demand, and yet imports continue coming in.

“We have managed to get anti-dumping tariffs for Pakistan imports, but what we need is a general import tariff through International Trade Administration Commission.

“We believe that many of these foreign cement suppliers are competing on an unfair basis, since they often do not have to comply with social and labour plans, for example,” Perrie noted, adding that the regulator does not always test all the necessary tonnages, certainly does not share information and ignores complaints lodged.

Business Day writer Denene Erasmus noted a common problem in the South African government was that of not implementing what were “excellently drafted” plans.

She said that if renewable energy projects, for example, were to fill the 22 000 MW electricity gap from Eskom decommissioning half of its coal-fired fleet by 2035, and spur vital infrastructure development, the State needed to set its own ideologies aside and relax some restrictive rules to allow the private sector to unlock development.

To this, Altman responded that it was not ideal to “relax” procurement rules, owing to the country’s localisation and transformation imperatives, and that the State would always be needed in infrastructure developments. She believed the private sector could not effectively undertake all of the country’s necessary development on its own, despite the regular requests for this to happen.

AfriSam sales and marketing executive Richard Tomes said the infrastructure sector was plagued by a lack of skills, hence the awarding of contracts to foreign companies by the only entity that was still regularly spending on infrastructure – the South African National Roads Agency Limited (Sanral).

He questioned whether the construction industry was doing enough to develop skills, and whether the State was creating a promising industry that young engineers wanted to enter. The State itself needed to have more engineers employed at municipalities, to properly vet and approve projects, Tomes recommended.

Over and above the skills shortages, Tomes pointed out that companies were struggling with high producer inflation, which was sitting at between 15% and 18%, compared with consumer price inflation that was at around 7%. He said there was also the issue of wage increases and the disruption of strikes, and that companies were expected to sustain jobs, pay reasonable salaries and manage inflation, amid an environment that was troubled by a construction mafia, high input costs and lacking public spending.

AfriSam CEO and chairperson Erick Diack said the construction sector was capable of employing many more people than the current 1.2-million; however, it would require impactful investment in the sector. He agreed with Tomes in saying that Sanral was the only public entity putting out new tenders at the moment.

Diack added that the energy crisis – including the cost of electricity and diesel shortages – was driving up the cost of infrastructure, as well as distribution. “We move heavy products around the country, which becomes more expensive if trucks are unavailable,” he noted, referring to Transnet using trucks to transport coal to Maputo owing to rail and port issues.

Tomes and Diack stressed the importance of State resources being directed to the right areas, such as skills development and the maintenance of critical infrastructure.