Public investment ‘sustaining growth’

11 March 2009

A high level of public investment in South Africa’s infrastructure has helped sustain the country’s economy in the midst of the global economic recession.

Speaking in Pretoria this week, Trade and Industry Minister Mandisi Mpahlwa said that while South Africa’s economic growth between 2004 and 2007 was initially driven by high commodity prices and increased consumer spending, the global recession had seen both commodity prices and consumer demand fall.

The government’s decision to invest in infrastructure on a grand scale was now driving investment and sustaining the country’s economy, Mpahlwa said.

Finance Minster Trevor Manuel said in his Budget speech in February that the government would spend an estimated R787-billion on public infrastructure over the next three years.

This investment would not only boost the economy in the short, medium and long term, but also provide hundreds of thousands of people with employment during a period of expected economic hardship.

“The emergence of the global economic crisis has begun to impact on the real economy, which does pose challenges for the government’s economic plan of action,” Mpahlwa said.

“However, the crisis does re-emphasise the need to continue implementing interventions identified, as these address the long-term structural constraints to the economy and seek to promote a fast-growing, dynamic and resilient economy.”

Infrastructure investment

The work of the capital expenditure programme was vital in driving industrial development in the economy, Mpahlwa said, with undertakings such as Eskom’s build programme spurring mass investment.

Eskom’s R150-billion investment in electricity infrastructure for the five years leading to 2011/12 has begun, he added, with the return to service of power stations Camden, Grootvlei and Komati.

And in January, the Cabinet approved the broad policy framework that will guide the country’s Water for Growth and Development initiative, aimed at ensuring a safe, secure supply of water.

“Progress has also been made in the construction and maintenance of water infrastructure, as well as gaining a better understanding of the water challenges that face us,” he said.

South Africa has also been investing heavily in its infrastructure in the lead-up to the 2010 Fifa World Cup, with billions being spent on transport infrastructure, stadiums and surrounding areas.

Source: BuaNews