Private sector a critical partner in the infrastructure development space

In an opinion piece written recently by the nation’s minister of transport, Fikile Mbalula, he underscored the importance and the benefits of government entities working with the private sector to better infrastructure in the transport section.

“Roads make it possible to move goods, connect markets and people and therefore increase trade,” said Mbalula in his opinion piece.

“The national road network spans 22 207 kilometres and carries 87% of all freight and 93% of person trips every day.”

Mbalula said he recently visited two projects along the N4 in Mpumalanga – the Belfast-Machado Road Rehabilitation and Upgrade and the New Karino Interchange.

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“They are part of the 570-kilometre N4 Toll Route that stretches from just outside Tshwane right through to Maputo in Mozambique.

“The N4 eastward is a particularly unique road infrastructure asset because it is entirely funded by the private sector, demonstrating how government working together with the private sector can deliver infrastructure,” he said.

He added that in 1997, the national implementing agency SANRAL signed a 30-year concession agreement with Trans African Concessions (TRAC) to finance, construct, maintain, and operate that section of the N4.

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He said the state identified the geostrategic position of the Port of Maputo for South Africa’s mining, agricultural and other sectors but to access that port, South Africa needed reliable road infrastructure on both sides of the border and both Mozambique and South Africa decided to tackle the corridor as a bilateral project.

The challenge however, was that both governments were cash-strapped and so the decision to bring in private sector capital – through open bidding – to finance, build, maintain and operate the route as a cross-border project was made.

“The result has been a well-maintained road infrastructure that supports the economy and facilitates the movement of people and goods.”

Mbulala however, said the financial crisis brought about by Covid-19 makes the participation of the private sector in the delivery of infrastructure even more critical.

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“In our attempt to use infrastructure investment and development to reconstruct and rebuild our economy, government cannot do it alone. We need to supplement the limited public sector resources and capabilities to meet the growing demand for infrastructure development and to spur on the economy.

“Of course, public-private partnerships are not panacea for all our infrastructure challenges. They do have their own pitfalls and challenges but what is clear with this particular one is that between government and the private sector there are things which can be accomplished that neither side can do alone – expanding infrastructure when funds are limited, for example,” he said.

“During my visit to Mpumalanga I was pleased to hear from SANRAL and its concessionaire that apart from the job opportunities the projects had created, at least 168 SMMEs have been contracted to work on the N4 projects currently underway, amounting to R380 million worth of subcontracts.

“The work on this corridor is a good example of how SANRAL, as an entity of government, involved the private sector to create a successful and sustainable public-private partnership (PPP). With infrastructure development prioritised as a catalyst in our country’s economic recovery plan, we cannot overemphasise the value of working with the private sector,” said Mbalula.