Infrastructure focus can boost GDP by R260bn - report

Dane McDonald

Cape Town – South Africa could boost annual gross domestic product (GDP) by R260bn by 2030 through smarter infrastructure delivery, according to a McKinsey report.

On Tuesday, McKinsey Global Institute released its latest report on South Africa titled, South Africa's Big Five: Bold priorities to unleash inclusive growth.

“The country could save up to R1.4trn over the next decade and boost annual GDP by R260bn by 2030 if it invests these savings in additional infrastructure, creating 660 000 jobs,” according to findings in the report.

The report drew expertise from leaders and experts across government, business, and academia.

In May, Economic and Development Minister Ebrahim Patel told delegates at the Asisa (Association for Savings and Investment South Africa) conference that SA’s infrastructure strategy should be put under the spotlight.

According to Patel, SA’s infrastructure project pipeline would cost R4.7trn.

The country’s investment in infrastructure as a percentage of GDP is 4.9%, rating among the highest in the world.
The report identified several barriers that could hamper the delivery of the planned infrastructure investments.

These included: “constrained public finances, a pattern of cost and schedule overruns in key projects and a lack of trust between government and its implementing partners in the private sector”.

The report further suggested “three major strategies” to ensure that the country’s infrastructure spending is as productive as possible.

Firstly, SA should work harder to maximise the use of its existing infrastructure, the report said.

“Second, it can optimise its capital portfolio, prioritising the projects with the greatest social and economic impact and bringing greater rigour to planning and monitoring the chosen projects.”

As its last major strategy, SA should streamline the delivery of projects by adopting more effective management approaches and practices.