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By Roy Cokayne

Moneyweb: Freelance journalist

SA’s road maintenance backlog now over R416bn

Hiking the Vat rate to 19% would be one way of addressing the problem, with provincial road maintenance now at six times the provincial annual expenditure.

The cost to eradicate South Africa’s road maintenance backlog has more than doubled to R416.6 billion from about R197 billion in 2013.

This is one of the conclusions reached in research conducted by Matthew Townshend, a transport economist and economics PhD student at the University of Cape Town. He presented his findings at the Southern African Transport Conference in Pretoria this week.

Townshend says the magnitude of the backlog means it will be immensely difficult to eradicate.

“At best, we can perhaps address [the backlog] over the long term, especially given South Africa’s current low growth trajectory and the National Treasury’s commitment to fiscal consolidation.”

‘High degree of prioritisation’ needed

He adds that a high degree of prioritisation is required within the road network maintenance space, and that possible alternative funding sources to finance the backlog within a five-year period have been explored.

The maintenance backlog would take up the entire R400 billion budget for the new economic stimulus plan presented by President Cyril Ramaphosa, says Townshend. It would also equate to an extra four percentage points on the value-added tax (Vat) rate, or add an extra R3 a litre to the national fuel levy.

He says the opportunity cost in redirecting the entire economic stimulus plan would be extremely high, while the idea of increasing the Vat rate to 19% is not realistic, given how difficult it was from a political economy perspective to get the recent one percentage point hike approved.

Townshend believes the welfare cost of an extra R3 a litre added to the national fuel levy seems “relatively palatable in relation to the other options”.

The big paved road backlog

Townshend says R61.2 billion is required to eradicate the functional paved road backlog. The functional backlog is the performance indicator set by the Department of Transport that no more than 10% of the road network should be in a poor or very poor condition.

The majority of this backlog is concentrated in provincial roads networks. “Although provinces are only responsible for 29.9% of the total paved road network, they actually account for 78.1% of the functional backlog … and are a very large driver of the paved roads maintenance backlog,” says Townshend.

The massive gravel road backlog

He adds that 77.5% of all gravel roads are currently in poor and very poor condition, which translates into a R243.7 billion functional backlog.

“There are huge backlogs on the gravel road network and that in itself is surpassing the figure which is currently being reported as the total road maintenance backlog.”

The research is pointing to a shift in emphasis towards sealing solutions for gravel roads, instead of rehabilitating them and maintaining them as gravel roads.

To upgrade only the high volume gravel roads, the majority of which are within the provinces, will take R115 billion, says Townshend – and he stresses that not all of these gravel roads should be maintained.

“We are looking at such high backlog estimates that there needs to be a rationalisation exercise. Roads which are contributing positively should be kept, and those that are not should be actively unproclaimed to try and get these figures to reasonable quantums that the department can address.”

Townshend points out that the provincial road maintenance backlog of R150.7 billion is six times the provincial annual expenditure, while the municipal road maintenance backlog of R242.9 billion is eight times the annual expenditure of municipalities.

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