Parastatal spending spree

6 February 2006

State-owned enterprises Eskom and Transnet are to get the lion’s share of the more than R370 billion set aside by government for infrastructure development, Deputy President Phumzile Mlambo-Ngcuka said on Monday.

Briefing the media in Cape Town on Government’s Accelerated and Shared Growth Initiative (ASGISA), Mlambo-Ngcuka said 40 percent of the R372 billion in state investment announced by President Thabo Mbeki on Friday in his State of the Nation Address would go to public enterprises.

Infrastructure upgrade
Eskom will be spending R84 billion, she said, mostly on energy generation, transmission and distribution. Transnet would be spending R47 billion, with R40 billion of this going to harbours, ports, railways and a petroleum pipeline.

The Airports Company of South Africa will be spending R5,2 billion on airport improvement and the Dube Trade Port, while R19,7 billion will go to water infrastructure.

South Africa’s hosting of the 2010 Soccer World Cup will lead to spending on the building or improving the 10 stadiums to be used, along with investment in the environment around stadia, as well as on access to these World Cup venues, the deputy president said.

Information and communications technology will also receive investment, “with a strategy to rapidly grow South Africa’s broadband network”.

This will also be facilitated by the pending operationalisation of a second national telecoms operator later this year, which is part of a broader plan to reduce telephony costs more rapidly in a bid to boost the call centre sector in South Africa, which has already attracted 5 000 jobs so far.

This sector has the potential, she said, to create 100 000 additional jobs, directly or indirectly, by 2009, and marketing, skills/training, telecoms costs and regulatory challenges are being addressed towards meeting this.

The other immediate priority sector is tourism. “This sector . is ready for a second phase of growth that could take its contribution to GDP from about 8% to about 12%, and increase employment by up to 400 000 people by 2014,” said the deputy president.

Job creation
With South Africa’s unemployment rate at 26.7 percent, the infrastructure programme also has the key focus of creating and sustaining jobs, along with a programme to address a “maintenance backlog”.

One of the key problems in job creation is a skills crisis. The deputy president said today that 70 percent of South Africa’s population was under 35 years of age, and the government intended to increase access to adult education and proceed with a number of other training programmes.

Skills shortage
The drive for skills is a critical priority for South Africa and a lack of these threatens to derail some of the interventions being undertaken by ASGISA, said Mlambo-Ngcuka.

The “binding constraint” of a skills shortage is receiving urgent attention, said the deputy president.

“For both the public infrastructure and the private investment programmes, the single greatest impediment is the shortage of skills – including professional skills such as engineers and scientists, managers and financial personnel, project managers; and skilled technical employees such as IT specialists and artisans,” said Mlambo-Ngcuka.

If necessary, skilled labour will be imported from outside the country, she said, while a new initiative, the Joint Initiative for Priority Skills Acquisition (JIPSA), that was mentioned also by Mbeki in the State of the Nation address, is to be established next month.

The job of JIPSA will be “to confirm the urgently needed skills and find quick and effective solutions”.

“Solutions may include special training programmes, bringing in retirees or South Africans who are working outside SA, and drawing in new immigrants when necessary.”

Overarching goal
Meanwhile, other binding constraints being addressed by ASGISA are the volatility and level of the currency; the cost, efficiency and capacity of national logistics system such as freight transport; barriers to entry to markets for new businesses, limits to competition and limited new investment opportunities; a loaded regulatory environment and the burden this places on small and medium-sized businesses; and deficiencies in state organisation, capacity and leadership.

These are all receiving urgent attention, said the deputy president, as South Africa strives to achieve an annual growth rate averaging 4.5 percent or higher, while between 2010 and 2014 South Africa will seek a growth rate of at least six percent or higher.

An overarching goal through achieving a six percent growth rate is to meet the Millennium Development Goals of halving extreme poverty and unemployment by 2015.

The target for government is to get unemployment to below 15 percent, said Mlambo-Ngcuka.

Source: BuaNews