The private sector is ready to assist government with investment solutions that can unlock at least three of the structural impediments hampering economic growth as identified by Finance Minister Enoch Godongwana in his Medium-Term Budget Policy Statement recently. The specific impediments are unstable electricity supply; costly and inefficient ports and rail networks; and weak state capacity.

This is according to Vuyo Ntoi, co-Managing Director of African Infrastructure Investment Managers (AIIM), a division of Old Mutual Alternative Investments, in response to the speech.

Ntoi said that Government’s reforms in the electricity sector through the removal of the licensing threshold for embedded generation projects and the finalisation of the Electricity Regulation Amendment Bill were important steps in transforming the electricity sector. 

“It is telling that more than R200-billion has been released in private investment in the power sector over the past decade, and the improving regulatory space is going to allow significantly more investment. Some 749MW of private renewable energy projects were registered with NERSA (National Energy Regulator of SA) in the third quarter of 2022 alone and it appeared that registrations were going to ramp up further.”

He said that costly and inefficient ports and rail were a big cost to the economy and therefore Godongwana’s announcement of several steps being undertaken to introduce greater competition and efficiency to ports and rail was welcomed and would hopefully show good progress.

These steps included the Economic Regulation of Transport Bill which would establish an independent transport regulator to encourage greater competition and enable regulated access to the network. In addition, requests for proposals had been issued for third-party access to the freight rail network and private-sector partnerships for the Durban Pier 2 and Ngqura container terminals. 

“Initiatives such as bringing in private operators on Transnet ports are a move in the right direction. The challenge will lie with integrating the new operators with existing Transnet operations. Labour relations will be a key challenge in this regard. Furthermore, capacity shortfalls on some of the linked rail and road infrastructure to the ports will potentially be a constraint to the targeted container volumes being reached,” he said.

Ntoi concluded by saying that the private sector could bring its capacity, both financial and human, to bear as a supplement to the public sector in getting key projects of the ground.