Done Right, Infrastructure Will Unlock Africa’s Vast Potential

An expert panel comprising Coenie Vermaak, chief executive of Electronic Toll Collection (ETC); Bongani Mankewu, executive director of the Infrastructure Research Development Centre and Mesela Nhlapo, CEO of the Railroad Association, discussed ‘Transforming Africa – Africa’s transport and logistics infrastructure – The prospective business opportunity,’ on day two of Infrastructure Africa 2018, which took place recently at the Sandton Convention Centre in Johannesburg.

Mankewu opened the panel discussion by stating that South Africa should have created a sovereign wealth fund back in 1994 and that not having done so represented a lost opportunity to accelerate infrastructure development in the country.

“For us to industrialise, we need to create demand. There is a relationship of supply and demand in this country, but we are struggling to create the necessary demand,” he said.

A key theme for Mankewu was the mobilisation of finance. “We are not mobilising our own financing in Africa,” he lamented. “The best mechanisms to finance infrastructure, which leads to industrialisation, are insurance and pension funds. Institutional investments are long-term. We can mobilise our own finance by transforming our approach,” he said.

Unlike South Africa, most countries in Africa have no facility to collect pension funds. He added that the African Development Bank had established the Africa Infrastructure Fund, which includes a mechanism to mobilise finance on the African continent.

“The private sector has to teach government about the ability to mobilise finance,” he suggested. He believes that infrastructure spend is not an expenditure item, but rather an investment item. “Infrastructure must be used to generate revenue for a country. 

Nhlapo said several infrastructure opportunities were available in Africa. However, how the country went about accessing them presented it with challenges. She believes businesspeople in South Africa need to change how they do business.

“We can't wait for business to come to us. As a country, region and continent, we need to decide exactly what we want and then invest in achieving that,” she said.

Nhlapo was confident that local content in South African rail manufacturing was going to become a reality, although she conceded the desired percentage may not be reached. Nhlapo also believes South Africa needs to develop its own rail standards.

“The 1 064 trains the country bought are compliant with the European EN standard. These standards limit and exclude local supplier involvement. We cannot accept being dictated to in terms of which standards we comply with,” she argued.

She added that, when it came to infrastructure projects, the policies that governed them in South Africa were not the problem. “The problem lies with the implementing agencies in government. Civil society needs to hold individuals within state-owned enterprises to account.”

Vermaak contributed that local empowerment must become an urgent focus area when major infrastructure projects are executed in Africa.

“Africa tends to use funders that bring outside contractors in to execute their work, so there is minimal benefit going back into African economies. Governments in Africa need to prioritise the transfer of knowledge, experience and skills. The continent doesn't need to stand back for anyone,” he added.

“ETC is a South African business employing 1 200 South Africans on a permanent basis,” he said. “While the technology we use is international and the infrastructure world-class, SANRAL has been insistent about the need for knowledge transfer. Our favoured next step is to have this technology deployed elsewhere in the SADC region,” he advocated.

Vermaak said that while roads and infrastructure unlocked further investment, as could be seen in Menlyn and Midrand, public-private participation was vital going forward.

“Those partnerships have to be authentic and they have to be Africa-centric. In Africa, we need to do business with companies with proven track records that wish to truly empower the region and create sustainable new businesses,” he said.

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