MPs raise concerns over infrastructure underspending by government and SOEs

Public Works Minister Patricia de Lille.
Public Works Minister Patricia de Lille.
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  • Government and state-owned entities have over the last four years underspent by more than R140 billion on infrastructure.
  • The head of infrastructure and investment in President Cyril Ramaphosa's office, told MPs the country is far from the  National Development Plan's target for public sector infrastructure investment.
  • The construction sector has been hardest hit by a ratings downgrade and the Covid-19 pandemic has made this worse.

Government and state-owned entities have over the past four years underspent by more than R140 billion on infrastructure, officials told Parliament on Wednesday.

Public Works and Infrastructure Minister Patricia de Lille and her officials briefed Parliament’s Portfolio Committee on Public Works and Infrastructure on the country’s infrastructure investment plan when the Covid-19 crisis is over.

Kgosientso Ramokgopa, the head of infrastructure and investment in President Cyril Ramaphosa's office, told MPs that the country was far from the National Development Plan's target for public sector infrastructure investment.

Between 2014 and 2019, SOEs and government departments underspent by R109 billion and R38 billion on infrastructure respectively. 

"Investment by general government is down by 0.8% on average in real terms between 2014 and 2019. State-owned enterprises (SOEs) are down by 4.9% on average. (There has been) a massive underspending in infrastructure by all spheres of government and SOEs," he said.

Ramokgopa said the downgrade in the economy and the Covid-19 pandemic hit the construction industry hardest.

He said there has been a 14.2% contraction in the construction sector while some of the biggest job losses have been seen in the construction sector.

"History has shown that there has been a substantial underspend by all spheres of government and SOEs on infrastructure. There has been no clear national direction and strategy for infrastructure and the oversight has been scattered and in the wrong place," he said.

READ ALSO| ANALYSIS: Will SA's new infrastructure investment drive get investors' attention?

But Ramagkopa said, in this time of crisis, a clear plan was needed on targeted infrastructure investment.

According to Ramaphosa’s announcement during South Africa's inaugural Sustainable Infrastructure Development Symposium on Tuesday, the country is looking to embark on 276 infrastructure projects at a cost of more than R2 trillion.

De Lille told MPs there had been consultations with provincial premiers and mayors of metro councils.

"We have developed systems to detect corruption and ensure money is well spent. It has become clear that, with the backlog of infrastructure, government’s fiscus will not be to tackle this alone. That is why we are drawing the private sector in. Covid-19 has worsened the crisis and that is why we have targeted infrastructure projects," she said.

DA MP Samantha Graham said amending legislation would delay all the department's planned projects.

"We are giving infrastructure to the South African National Defence Force and Department of International Relations and Cooperation.

She continued:

Also, it’s taken us how long to review White Papers. Legislation is a major weakness of this department. Enforcement will not be possible without legislative reforms

EFF MP Mgcini Tshwaku said the state should consider establishing its own construction company.

"This underspending has not been aligned. Some of the infrastructure work has been given to organisations such as the Industrial Development Corporation. Maybe we must think of a state construction company, where you will have engineers and specialists. We will cut costs and save money," he said.

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