Infrastructure assets should be viewed as investments
SA Infrastructure Fund must be Investment Rather than Expenditure
Bongani Mankewu (BM), Director at the Infrastructure Research Development Centre (IRDC) who was part of the panel at the Infrastructure Africa Conference, was quoted to have said that the SA Infrastructure Fund needs to look at infrastructure assets as revenue-generating assets. The HardHat Professional (THHP) caught up with him to share his views.
THHP: You are recommending that the infrastructure fund should be used as an investment, rather than expenditure. Why?
BM: Infrastructure is the input to a wide range of industries and, as such, an important driver of long-term growth. Therefore, the delays in the realisation of infrastructure projects pose potentially large economic and social costs. To realise returns on investment, the efficacy of infrastructure delivery requires prowess focused on GDP at factor cost.
THHP: How is this likely to impact on infrastructure development going forward?
BM: If the Fund views the infrastructure development as an input to other industries, then infrastructure in this context becomes the antecedent of industrialisation.
THHP: How is this likely to impact on the ecosystem of the economy?
BM: Growing manufacturing, multidisciplinary engineering abilities, and extending the expertise to other sectors such as mining lead to an economy that performs, creates new enterprises as our cultural totem, and absorbs skills; an economy that is inventive.
THHP: You are suggesting that the fund can be used to ensure that value-chain businesses, especially in manufacturing and industries around these infrastructure projects, generate a return on investment?
BM: Value Chain or National Value-Add “NVA” is the source of the current trade war within the large economies on the globe. Pity that we opt to be audiences. African RECs needs to negotiate for what is best for their member countries at the Economic Partnership Agreement discussions with big trade partners like China, EU, US, etcetera. The win-win trade arrangement is about a shared NVA; otherwise is the zero-sum game.
Industrialisation is influenced the most by Value Chain, or else we will have an engineering workshop in China or Europe for African industrial components. Ability to mobilise finance is pivotal in such negotiations. African governments must bring the private sector in these negotiations to selfishly protect their sovereign interests. So this Fund, if well-thought, can potentially add to that required forte.
THHP: In your suggested model, how do you ensure that social needs are not compromised by the drive to generate revenue?
BM: Ruthlessly negotiating for a fair value chain in any mega project and efficiently managing the impact to the GDP at factor cost will influence the ability for the creation of new enterprises, sustaining and creating new jobs.
THHP: What are the consequences if this fund is not viewed as an investment?
BM: It will be open to inefficiencies that are mainly the entry point of corruption. The negative incentives will add to the current high levels of debt while others loot the fund. The generations to come will have to sort the mess, unfortunately, or we will be forever unable to achieve self-sustenance.