Infrastructure Development

Melanie Veness: PCB CEO 

Our nation’s physical infrastructure is underdeveloped and much of it is failing. The impact is felt throughout the economy, but most keenly in our failure to create jobs.

Studies show a clear correlation between infrastructure investment, economic growth, and job creation, and the President’s commitment to capital expenditure naturally is good news.  We do hope though that the commitment to infrastructure development is motivated by the economic multiplier effect, and not merely oiling the wheels of globalization and import trade.
Much as we want to see local companies benefit from government’s infrastructure spend, we also want to see a concomitant investment in skills, capacity, and competitive performance for our manufacturing and export sector to reap the rewards of improved transport.

Of critical importance to our region is the investment in rail infrastructure and the proposed development of the Durban-Free State-Gauteng logistics and industrial corridor, which will hopefully result in economic integration and will facilitate the movement of goods through our sea and air ports. This project is intended to connect the major economic centres of Gauteng and Durban, and the resultant improvement in export capacity and capability will have obvious benefits for Pietermaritzburg in view of our strategic location.

It is equally pleasing to hear that port charges will be reduced and efficiencies improved that will help reduce the cost of doing business. If carried through, these measures will help reverse the erosion of South Africa's competitiveness.

The commitment to airport development bodes particularly well for the city and vindicates the support of the Pietermaritzburg Airport by our Provincial Government that understands its strategic importance. Not only does it stimulate economic development, it also facilitates market access, eases business, and attracts investment.

The President also gave notice of government’s intention to improve water, sanitation, electricity and roads. These themes resonate loudly in Greater Pietermaritzburg and our long-suffering local industry is fervently hoping that the talk will translate into action.

Local industry is at the coalface of job creation and for too long, has been burdened with significant additional costs that are directly attributable to electricity outages due, in the main, to failing infrastructure.  The actual cost of this failure goes way beyond the inconvenience of not having power – it also means the loss of production, an escalating reject rate of products, the loss of future orders due to non-delivery, and damage to technology and equipment.  Add the loss of wages to workers, as short-time invariably is called during these times, and an uncomfortable picture of an uncompetitive environment begins to emerge.

Not only do we have challenges in the area of security and quality of supply, but business has long complained about the high cost of electricity. The President has asked Eskom to seek options on how price increases may be contained over the next few years, in support of economic growth and job creation.

For sustainability reasons, business tends to invest in capital and labour concurrently. It stands to reason that business only invests when conditions are favourable and a very real consequence of an unfriendly environment is disinvestment.  The very nature of disinvestment is catastrophic as it tends to ignite its own multiplier effect, but in reverse – loss of confidence, closure of factories, job losses, and a reluctance to invest in research and development.

Competitive enterprises are driven by innovation; the ability to problem-solve, create solutions and develop new products, and these qualities simply do not thrive in a negative environment.  Top of the wish list is investment in fast, reliable broadband connectivity.  Not only can cyber connectivity potentially boost operational efficiencies in all spheres, but global connectivity is a simple must in the new economic order.  The eastern aspect of KZN has a competitive advantage in as much as there is a natural affinity with the Asian tiger of India, and also China, and the host of technologically-savvy smaller South-East Asian nations. In this technological age, a remote small business in a rural outback may prove as competitive as any of its rivals elsewhere. Technology can indeed bridge the digital divide.

In short, spending on infrastructure unleashes a host of economic activities, with benefits. The ultimate goal, and most certainly in this developing economy of ours, is job creation. Progress on this front has been excruciatingly slow, and despite the macro-economic travails, there surely must be room for innovative thinking, and more importantly, effective action.

Matters of employment unfortunately, labour under a heavy political cloud that stifles innovative thinking. But it doesn’t mean the thinking should stop.  Alas, a great plan is only as good as its implementation and the plethora of institutional and governance challenges must be adequately addressed. Capacity and corruption are of concern, and more needs  to be done to silence the sceptics. But at least government can take comfort in knowing that business is an ally and fighting the same war in the same trenches.

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