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This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

7 Public Investment And Asset Restructuring

7.1 Investment in infrastructure

Investment in social and economic infrastructure will play an important role in increasing the productivity of labour and business and thus the achievement of higher growth rates. The National Infrastructure Investment Report indicated that South Africa currently faces a backlog in infrastructure of at least R170 billion, and that innovative financing strategies and careful prioritisation will be needed if sufficient progress is to be made.

This strategy envisages a substantial acceleration in government investment spending, together with improved maintenance and operation of public assets. Higher growth is clearly critical in this regard, as is a thorough restructuring of the responsibilities of relevant public corporations, development finance institutions and local and provincial authorities.

Public infrastructure needs include domestic and industrial grid electricity and other energy projects; domestic, industrial and agricultural water supplies; sanitation, wastewater and stormwater; roads, railways, airports, harbours and pipelines; telecommunications and postal services; urban housing-related infrastructure; rural development; and hospitals, clinics and educational facilities. Progress in all these areas adds to the quality of life in communities, while simultaneously building productive economic capacity. The provision of basic household infrastructure, in particular, is a relatively low cost and effective form of public intervention in favour of the poor and consistent with the reduction of income inequalities.

Four basic sources of finance are potentially available: fiscal transfers, concessional finance from multilateral institutions and other international sources, development finance channeled through development finance institutions, and loans raised on commercial terms. The nature of projects, including cost recovery potential and the risks involved, determine the appropriate funding mix. Recognising the limited capacity of the fiscus, Government is committed to the application of public-private sector partnerships based on cost recovery pricing where this can practically and fairly be effected.

7.2 Corporate governance and asset restructuring

Government has prepared a protocol on corporate governance of all state entities which ensures decisive leadership by government and includes the following :

     formulation of dividend policies, together with clear indications of the objectives and performance appraisal norms for all agencies;

     a revised policy regarding government guarantees;

     appropriate regulatory policies, aimed at ensuring that pricing policies are fair and fully recover operating costs, while also promoting competition or protecting consumers against monopolistic practices; and

     a programme of asset restructuring with respect to the ownership and governance of state entities.

Within the context of government policy and in accordance with the procedures agreed in the National Framework Agreement with organised labour, the process of restructuring state assets is now proceeding. Detailed sectoral consultation, planning and preparation are taking place. The telecommunications sector plans to complete negotiations in this year with a view to finding strategic equity partners and addressing other restructuring issues in this sector. In addition all stakeholders are united by a common vision to double the network rollout by four millions lines and deliver a range of services to our people to implement the RDP. A similar process will unfold in the course of this financial year in other sectors, including minerals and energy, agriculture, forestry and water, leisure and transport. In order to free the airwaves and encourage competition Cabinet has approved the sale of six major regional radio stations.

The nature of restructuring, as outlined in the framework agreement, may involve the total sale of the asset, a partial sale to strategic equity partners or the sale of the asset with government retaining a strategic interest. Work is in progress to address the outstanding issues on the restructuring of the remaining state enterprises. The restructuring will take place in a phased manner so as to ensure maximum value and adequate regulatory frameworks. Specific policy issues and further elaboration will be dealt with by the responsible Ministers.

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. Return to the Nelson Mandela Centre of Memory site.