admin@bevsa.co.za | |
May 17, 2018

Infrastructure
Life without infrastructure roads; power lines; water and sewage systems; bridges; ports and airports; public buildings like schools, hospitals and housing; communication towers; railway systems and many others that enable communities to achieve their goals, would be difficult.

To better understand why infrastructure is the foundation of economic growth, one needs look no further than the detailed blueprint for how South Africa country can eliminate poverty and reduce inequalities, the National Development Plan, which asserts that: “Infrastructure is not just essential for faster economic growth and higher employment. It also promotes inclusive growth, providing citizens with the means to improve their own lives and boost their incomes. Infrastructure is essential for development.”

That is why there are infrastructure conferences and summits every few months in our country, with the last one happening past month of October.

These summits are confirmations that our infrastructure, from roads and bridges to sewers and publicly owned housing, is the adhesive holding our nation together.

Without roads, rail and air transit systems we would be challenged just trying to get to work and our children would also find it difficult to go to schools. Without water treatment plants, we wouldn’t have clean water to drink.

Adequate and efficient infrastructure is extremely important to economic development and progress. In a country where our society faces the triple burden of unemployment, poverty and inequality, we would benefit immensely from infrastructure development initiatives aimed at bringing much needed economic activities and closing the growing gap of poverty because of lack of jobs.

Transportation and telecommunications are important links between producers and the market for their goods and the source of their basic materials. Equally, electricity and water are essential in certain production processes. These links are required in supporting low-cost production of goods and giving our country’s products greater competitiveness, consequently infrastructure investment acts as a catalyst for economic growth.

For businesses to thrive and entrepreneurial competitiveness encouraged, our country must have a good infrastructure system. An efficient infrastructure system enables our country to achieve substantial efficiency gains, higher levels of service from existing infrastructure resources and improved access to essential services for our people, especially the poor.

Significant leap in industrial and agricultural production is not possible if infrastructure facilities are lacking. As a result, infrastructure revolution is the foundation of economic growth.

For centuries, infrastructure connected our cities and towns enabled commerce to thrive. About 240 years ago, Adam Smith published an Inquiry into the Nature and Causes of the Wealth of Nations. He observed that there were large differences in economic prosperity across countries and concluded that infrastructure development was the differentiator.

The policies that nations adopt may not be individually revealing, but in their totality they reflect an economic infrastructure that the state helps build.

In addition to machinery and technology, human capital also plays an important role in economic development. The health of a country’s population, and thus the quality of its human capital, depends crucially on an infrastructure network supporting the necessities of life.

According to the World Bank, one in six people worldwide, mostly the poor, have inadequate access to water, more because of limited access to infrastructure than because of water scarcity. The availability of clean water, a challenge South Africa still faces is a requisite for maintaining a healthy population.

Insufficient access to electricity can also prove devastating to public health. Some HIV/AIDS and Diabetes medication, for instance, must be refrigerated, so the insufficient supply of electricity in rural areas impedes the delivery of basic health care services to the poor.

It is the same challenge with poorly maintained or non-existent roads as they also inhibit access to health care services and medicines in the developing world.
Inadequate transportation infrastructure is also a major factor behind what is considered one of the biggest public health crises in the world–road traffic deaths.

Globally, road crashes are now the top cause of death for people aged 10 to 24, according to the World Health Organization (WHO). Eighty-five percent of traffic casualties occur in developing countries, where transportation infrastructure is poorly maintained or non-existent. Children, pedestrians, and cyclists in developing countries represent the vast majority of these casualties.

It is projected that by the year 2020, traffic injuries could rank third among causes of death and disability in the world, ahead of such other health problems such as malaria, tuberculosis, HIV/AIDS and diabetes.

Those with the most to gain from infrastructure development are the poor. Investment in infrastructure is often cited as one of the most effective tools for fighting poverty. Access to infrastructure is essential for improving economic opportunities and decreasing inequality.

Infrastructure can drive economic growth through investment, incentives, institutions, innovation, skills development and public private partnerships.

Most public infrastructure projects – roads, passenger railways, light rail, ports, water, electricity, hospitals, schools, courts, prisons, stadiums and entertainment precincts – are procured and delivered by the government.

Accordingly, it is generally the government and provinces that determine how infrastructure will be funded, delivered, used and regulated.

The government must allocate funds significantly to sustainable infrastructure. But, given severe fiscal constraints in our country, public investment alone is not enough and therefore the private sector will still have to meet more than half of the total need.

For example, our country’s non-alcoholic beverage industry is comprised of some of the most innovative and well-respected companies in the world. From our manufacturing plants to products in the aisles of grocery and neighbourhood stores, to our local delivery drivers who distribute them, we need infrastructure such as roads, trucks, warehouses and many other infrastructural facilities.

The beverage industry directly employs thousands of people, and supports some many more jobs across the economy in total.

As an industry body for importers, producers, bottlers, distributors, merchants and resellers of non-alcoholic beverages, the Beverage Association of South Africa (BevSA) is raising the profile of a sector that has been a key contributor to the national economy over the years.

The industry’s supply and distribution chains are overwhelmingly local–manufacturing and recycling bottles in local plants, selling through small scale spaza shops, and buying sugar from domestic farmers.

The beverage industry is an example that mobilising private sector investment in high-quality, sustainable infrastructure is crucial to ensuring access to markets and basic services that will boost trade and productivity, create jobs, and improve people’s lives.

Therefore public-private partnerships are critical in meeting infrastructural development initiatives to boost economic growth. And investment banks could make more money available for infrastructure across our nine provinces.

We are strongly committed to South Africa’s economy with plans to invest in opening more than 50,000 new outlets, creating more than 120,000 much needed new jobs over the next five years.

I believe there is no better way to create jobs and put our local economies on a path to long-term economic growth than to focus on infrastructure to boost economic growth.

We should never ignore our nation’s deteriorating infrastructure or our state’s growing need to expand the current infrastructure system. As we work to position South Africa as a continental leader in business and as a global economic player, we must first ensure that our state’s infrastructure is top-notch.

Repairing and rebuilding our roads and bridges, developing, ports and rail opportunities will be key to facilitate economic activity and for our continued economic recovery. These projects not only create jobs in the short term, they also strengthen our infrastructure, helping to boost commerce and economic development in the long term.

Investments in infrastructure can serve as a foundation for economic development and growth, help lift families out of poverty and, if done properly, make communities more resilient and help ensure delivery of development benefits over the long term.