Foreign investors and rating agencies are watching every event, especially politics. The magnifying glass is out after Nenegate.
I AM no fan of hyperbole, but this year strikes me as possibly the most important year since 1994 for the economy, the medium-run direction of policy and SA’s potential for job creation and development.
There will be difficult political, microeconomic and macroeconomic choices to make in such a weak foreign and domestic growth environment. SA will be at a nexus dealing with a substantial terms-of-trade shock and Chinese slowdown, amplified by the negative effects on domestic sentiment from the political risk premia shock last month and the government’s policy choices in recent years. Add succession battles within the African National Congress (ANC), a raft of left-leaning policies as outlined in the party’s January 8 anniversary statement and a need to keep investors onside…. That is a fiery mix of risks.Investors and businesses that can understand and navigate these currents will be best placed to outperform. Indeed, I expect the result to be growth of just 0.9% this year. Our forecast does not include two quarters of negative growth — a technical recession. But I would characterise this year as a “feels like recession” year, and indeed that is what should matter to the government.
No jobs a shock signal for change
The best way to crystallise this is to say there are likely to be no (net) new jobs created in the economy for the first time since 2010, although the rate of jobs growth in recent years has already been inadequate to reduce unemployment. No job growth in so many countries is generally a shock signal for change — the question is in which direction, for the government and SA.I think next month will be the most important month, through which we should get a good sense of the direction of policy. The answer may well be confusing though. Cognitive dissonance may be the order of the day — a challenging state of the nation address for business and foreign investors (and rating agencies), but followed by a decent budget that does (in a somewhat threadbare fashion) hang together okay. These divergent forces for investors and local business mean we need to understand what is important over the medium run.
Rewinding to Nene-gate
Rewind to Monday, December 7, before the Nene-gate saga, just after the rating agencies’ downgrades the Friday before.We are currently in a position not that different to then — trusting the Treasury to deliver the goods in the political space it is given, but doubting the size and shrinking nature of that political space. With Finance Minister Pravin Gordhan at the helm, investors are more confident that the space in which the Treasury can operate is slightly bigger. But the concern is that it is not that much expanded, and that thinking about it like this in the short run misses the point.Rating agencies’ reports and feedback from investors since last month indicate that the fiscal situation is not the primary concern. The situation is only a concern as a secondary consequence of wider (particularly micro-) economic policy choices by the government, and the political backdrop. The concern is what effect these policy shifts will have on growth, and then fiscal and debt risks and sustainability in the long run.
Again, we return to the idea of how the state of the economy and the political space in which the Treasury has to operate are central. Therein lies the important juxtaposition of the state of the nation address and the budget.I think investors and rating agencies will be happy with tax hikes and continued cuts to keep expenditure under its ceiling, although there will be a real test of what macro forecasts are used because the International Monetary Fund has now cut its growth projection to just 0.7% and the medium term budget policy statement forecast was 1.7%. We will, in particular, be watching the overall ZAR long-dated issuance data, which largely caused the market to sell off after the minibudget and will likely have to deteriorate again this time.However, the budget may be as good as it gets this year, both on the pure fiscal front and on the wider risk story.
This is where the state of the nation address comes in. While we already had an appetiser with the January 8 statement, this is likely to be one of the most analysed ones yet. Now investors’ eyes are firmly on the wider policy direction. We should also not forget the potential for protests at Parliament by opposition parties. Again, the question is in what direction SA moves in response to this growth shock. The government knows the budget can do little to help turn the economy around this year, but it can damage further job creation by accelerating a downgrade to junk status.
Instead, the government’s policy choice, seen through the state of the nation address, will be a minimum wage, sold as redistribution from the corporate sector, that benefits growth, revenue and employment. It will be about amplifying black economic empowerment under the existing model without fundamental reform in that area to drive true localised empowerment. It will be about more dialogue and “consensus” between the government and businesses, despite the fact that in the past 18 months, there has been a record number of meetings between the president and businesses, and with the National Economic Development and Labour Council still somewhere in the background doing this job.
Land reform and National Health Insurance are likely to appear too, wrapped into the president’s larger economic vision about redressing “300 years” of economic inequality. Indeed, that has been a key take-away from his public speeches for several months. That could well be the key defining narrative for this year, around which we need to think about policy direction.There seems little yet to shift the direction of policy from the status quo. The shock to the economy this year should be sufficiently large to drive policy forward along the existing path, but not big enough to define and then explore a new breakout path. As I said in this column last month, there are no new ideas for SA to jumpstart growth, opportunity and job creation, but old ideas need to be explored. The idea of an economic Codesa, which is increasingly being raised, could do this if all sides come with open minds and leave existing ideologies at the door, concentrating instead on aims such as maximising redistribution through job creation.
An announcement of such a forum would be a rabbit-from-a-hat for the state of the nation address and SA more generally, although its timing might be better suited to when the political environment is open to different directions and win-win agreements could be reached. I am concerned that more policies will have to be tried first, such as the minimum wage (set at a high level), before we get to a point of openness to a real Codesa-type negotiation, rather than more of the same “interactions”.
It’s going to be a bumpy ride. Foreign investors and rating agencies are watching every event, especially politics. The magnifying glass is out after Nenegate.
Thirty-three planned and existing road and rail projects across Africa will help economic development but they’ll hurt African wildlife irreparably, according to a report in TheGuardian.
The economic development that comes with new African transportation corridors could destroy Africa’s savannahs and equatorial forests as people move into protected areas, according to a new study published in the journal Current Biology.
Proposals for African transport corridors range from building or upgrading major roads and railways across the Congo basin and east-west links in Southern Africa. One route is planned to link Port Harcourt in the Niger delta to Dakar, Senegal. Another would link Chad with Kenya.
Africa is experiencing a frenzy of mining activity with most of the investment coming from overseas, said Prof. William Laurance, an ecologist at James Cook University, Cairns, Australia, and the study’s lead author, TheConversation reported.
Even if a transport corridor is likely to yield only modest benefits for food production it may be very difficult for governments to say no to big mining investors and the billions of dollars of foreign investments pouring into Africa each year for mining, Laurance said.
New African road and rail corridors will open up sparsely populated areas to major development pressures and not all these regions will be suitable for agricultural production, the study said.
When completed, the 33 planned or existing corridors will cover more than 53,000 kilometers (33,000 miles). Collectively, the corridors will bisect over 400 protected areas.
Researchers mapped each corridor and estimated human occupancy (using the distribution of persistent night lights) and environmental values (endangered and endemic animals, plant diversity, critical habitats, carbon storage, and climate-regulation services) inside a 50-kilometer-wide band overlaid onto each corridor, according to CurrentBiology.
Six of the 33 corridors are have been planned well with large benefits and limited environmental costs, the study said, according to TheGuardian. Another six risk damaging critical environments, especially rain forests in the Congo basin and West Africa and biologically rich equatorial savannah regions.
About 20 corridors need further evaluation. “If they do progress, it should only happen under the most stringent conditions,” Laurance said.
Researchers also assessed the potential for each corridor to increase agricultural production and concluded that many of the development corridors will result in irreversible environmental changes and some should be cancelled altogether.
Africa will likely become a global epicenter of environmental conflict, Laurance said.
The African transport projects have a variety of funding sources including African Development Bank, African and foreign governments, international donors and lenders, and commercial agricultural and mining interests. They’re intended to promote large-scale development and their scope is breathtaking.
“Africa is changing faster than any continent has ever changed in human history,” the study said. “A key priority in the coming decades will be increasing agricultural production and efficiency to improve food security and alleviate poverty for Africa’s rapidly growing population while harnessing the unprecedented scale of foreign investments focusing on land and natural-resource exploitation.”
Built in 1921, the Grain Silo complex at Cape Town’s V&A Waterfront is set to become a hive of activity for travellers and locals.
Visitors are in for a visual feast at one of Africa’s top tourist attractions – the V&A Waterfront in Cape Town.
Together with leading architects, the Waterfront is transforming six grain silos into spectacular sustainable spaces with harbour and mountain views. The complex, originally built in 1921, will house the Zeitz Museum of Contemporary Art Africa (MOCAA) and Silo Hotel.
The V&A Waterfront’s Silo District is already home to a six-star green office space and more than 30 luxurious apartments (these are silos one and two). Since completion in 2013, both developments have scooped national awards.
Plans for silos three, four and five include additional residential development, a Virgin Active Classic Health Club and another office building. All three are scheduled for completion next year.
According to siloblog.co.za, the state-of-art Zeitz MOCCA will also be finished in 2016. It’s been described as “… a new public non-for-profit cultural institution focused on being the first major museum in Africa and a leading museum in the world”.
Once the tallest building on the Cape Town skyline, the repurposed complex will showcase what is considered “the most extensive and representative collection of contemporary art from Africa … gifted in perpetuity … by ex-Puma CEO and chairman, Jochen Zeitz”.
Spanning nine floors, gallery spaces will also display travelling international exhibitions. In addition, CapeTownMagazine.com reports that the museum is dedicating “an entire floor to art education, a fancy rooftop sculpture garden, a storage and conservation vault, a number of reading rooms, a bookshop, a café and a restaurant and bar”.
The Silo Hotel, located atop the museum, will boast 360-degree mountain and sea views. The Waterfront’s CEO, David Green, believes the luxury boutique hotel “will offer something rather unique by virtue of its size and incredibly spacious location”.
Another unique offering at the V&A’s Silo District will be the first Radisson Red hotel in Africa, Europe and the Middle East. Occupying silo six, the concept hotel is set to open its doors to guests early 2017.
President and CEO of hotel group Carlson Rezidor, Wolfgang Neumann says, “Radisson Red is inspired by the trends and lifestyle of the millennium and is totally tapped into modern, high-octane and high-tech travellers.”
Says Green, “The Silo District will offer business opportunities, accommodation, lifestyle options and eateries.”
He adds, “Developments will be focused around the Zeitz MOCAA that sits at the heart of this district and the surrounding new central pedestrian plaza – Silo Square – providing a gathering place for locals and international visitors alike.”
Western Cape MEC of Finance, Economic Development and Tourism Alan Winde has applauded the developments at the V&A Waterfront, saying “They are continually reinvesting and reinventing their offering.”
Water and Sanitation Minister, Nomvula Mokonyane, will today attend the Southern African Development Community (SADC) Water Ministers Meeting in Harare, Zimbabwe.
The ministers, who represent 15 member states of SADC, will be reviewing the progress on the implementation of the third phase of the Regional Strategic Action Plan on Integrated Water Resources Management and Development (RSAP III) 2011 – 2015.
The ministers are also expected to provide strategic and political guidance on the fourth phase of the SADC Water Programme (RSAP IV), which is currently under development.
Several meetings have been held among senior government officials representing the 15 member states of SADC in preparation of the meeting of ministers.
South Africa has over the years promoted cooperation within SADC on the sustainable management of water resources in the region and their use to unlock both social and economic development.
Water is an economic and social asset that must be harvested and utilised to provide adequate water supply, sanitation, energy, food security and industrial and infrastructure development across SADC.
In this regard, the country has several bi-lateral agreements with neighbouring states and SADC member states on water management, security and provision.
This includes the recently signed agreement with Zimbabwe during the State Visit to South Africa by Zimbabwean President, Robert Mugabe in April 2015.
The minister will be accompanied by senior officials of the Department of Water and Sanitation, some of whom have been engaged in the pre-negotiations in preparation for the Ministers meeting.
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Infrastructure investment spending has quadrupled, exports have increased and Africa is receiving a growing share of foreign direct investment, according to President Jacob Zuma.”It is not surprising therefore that infrastructure development took centre stage at the World Economic Forum on Africa meeting in Cape Town on 3 to 5 June,” he said.”These positive trends come on the back of improved governance and a much sounder approach to macroeconomic management in our continent. We need to sustain these trends and deepen them,” Zuma said yesterday during the President’s Co-ordinating Council (PCC) meeting at Tuynhuys in Cape Town.At the meeting were premiers and local government representatives; it was held to discuss governance and how to improve the performance of government at all three levels.Infrastructure development work in all provinces and municipal metros is co- ordinated through the Presidential Infrastructure Co-ordinating Commission (PICC), led by the president. The president also chairs the Presidential Infrastructure Championing Initiative (PICI), a programme of the New Partnership for Africa’s Development. It reports to the agency’s Heads of State and Government Orientation Committee.
The PICI aims to facilitate continuous dialogue and work to boost infrastructure development. South Africa was given the task of co-ordinating the North-South Corridor, focusing on road and rail. The initiative links heads of state and government to specific infrastructure corridors to ensure strategic political leadership in the championing of cross-border infrastructure projects.It is primarily tasked with bringing visibility to the infrastructure projects, facilitating the unblocking of bottlenecks and any political impasse, providing leadership in resource mobilisation and subsequently ensuring speedy implementation.”Infrastructure development is one of our key job drivers together with tourism, manufacturing, mining and beneficiation, the green and blue economies and agriculture,” Zuma said.”We are refurbishing and building new schools, clinics and hospitals; we are building three universities and 12 training and vocational education colleges; and we are constructing and improving rail, roads, ports, broadband, roads, dams and power stations.”What we are doing in the country dovetails with the continental infrastructure programme.”
Catalyst for economic development
Regional integration is the key and infrastructure development is a catalyst for economic development on the continent. Many of the regional economic communities have developed regional infrastructure plans to facilitate regional trade and investments. However, it is also important to invest in national infrastructure, in addition to regional infrastructure.These are projects that should ultimately unlock the economic potential of the continent and provide development opportunities for communities, cities and regions.The North-South Corridor championed by South Africa is a multimodal and multidimensional infrastructure corridor that includes road, rail, border posts, bridges, ports, energy and other related infrastructure. It passes through 12 countries – Tanzania, Congo, Malawi, Zimbabwe, South Africa, Zambia, Botswana, Mozambique, Kenya, Ethiopia, Sudan and Egypt.These projects form the nucleus of the implementation of the broader Programme for Infrastructure Development in Africa (Pida). Pida is a multi-sector programme covering transport, energy, transboundary water and telecommunications and ICT. It is dedicated to facilitating continental integration in Africa through improved regional infrastructure and is designed to support implementation of the African Union Abuja Treaty and the creation of the African economic Community.Pida is a joint initiative of the African Union Commission, the New Partnership for Africa’s Development Planning and Co-ordination Agency and the African Development Bank.Progress has been made by the championing countries to bring these projects to a reality, which will be discussed at the 33rd Nepad Heads of State and Government Orientation Committee meeting tomorrow.
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Tourism Minister Derek Hanekom says the new Stony Point Eco-Centre in Betty’s Bay, in the Western Cape, is an important asset to tourism which will contribute towards efforts to conserve endangered species.
The eco-centre, situated alongside the On The Edge Restaurant, will also go a long way in benefiting local communities through job creation.
The Minister said the project was a perfect example of how social, economic and environmental responsibility can come together to create a workable and sustainable solution.
“This is a community project and the leadership of the community is central to the success of the project.
“When we launch a project, it is something that deserves a celebration. There are years of hard work that go behind a project that may seem small but are significant to our country. We have got good things to tell the world and we must tell it,” he said.
The launch of Stony Point is part of government’s National Imbizo Focus Week which is a platform for political principals to articulate messages around the priorities of government as outlined in the State of the Nation Address.
Minister Hanekom said it was important for government to invest in projects like Stony Point as it will, in the long run, contribute to domestic and international tourism.
Stony Point was in the past used as a whaling station, which Minister Hanekom said was an unsustainable practice.
Johan West, the chairperson of the Kogelberg Biosphere Reserve Company, said the area held huge potential for eco-tourism.
He said of the 11000 marine species that are known around the world, 3500 were endemic to the area. The area also has 1400 plant species per square kilometre, making the area one of the most bio diverse place in the world.
Stony Point Peninsula is adjacent to the Betty’s Bay Marine Protected Area and forms part of the Overstrand Hope Spot. The Overstrand coast is home to an important seabird colony which includes five endangered species.
“I am glad that government invested in this area and this project will benefit people from this area,” said West.
The project was funded by the national Department of Tourism through the Expanded Public Works Programme, which is one of government’s programmes aimed at providing poverty and income relief through temporary work for the unemployed.
It was developed in partnership with the Mooiuitsig Community Trust. The Trust holds the commercial rights to manage the eco-centre and the restaurant.
The On The Edge restaurant is staffed by members of the nearby Mooiuitsig community, who underwent training prior to the opening.
As part of the project, a parking area, paving and walkways, as well as ablution facilities were built. This is expected to enhance the experience of tourists.
About 70 members of the community were provided with jobs and skills training during the eco-centre and restaurant construction phase. Upon completion, the workers were all able to find work.
Solly Fourie, head of Western Cape Department of Economic Development and Tourism, said any successes of tourism in the province were celebrated as they contributed to the region’s economy.
He said the project was a clear job creator and will be a vehicle for small and medium enterprises to participate in the local economy.
“Tourism has been elevated as one of the 3rd growth drivers in the Western Cape.
“Any development within the tourism space carries the full support of the Western Cape government.”
Source: All Africa
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Norway’s state-owned development fund, Norfund, plans to double or even triple its investments in Sub-Saharan Africa’s power sector by 2020, its managing director said on Wednesday. Norfund is developing hydropower in sub-Saharan Africa in partnership with Norway’s power group Statkraft, and has teamed up with Britain’s development fund CDC to invest in Globeleq Africa, a power company with an ambition to add 5 000 MW of new capacity.
“We expect to double or even to triple the capital invested in Africa by 2020, depending on the projects,” Kjell Roland, managing director of Norfund, told a conference in Oslo, which included energy ministers from Ghana and Zambia. The fund, backed by the government of the oil-rich Nordic country, has invested more than two-billion Norwegian crowns ($248.85-million) in Africa so far, mainly in Sub-Saharan Africa.
The fund is seeking to develop power projects in partnership with private investors, like Kenya’s 310 MW Lake Turkana wind power park, which will be the biggest wind park in Africa. “The project is on track to start producing power in 2016, and it should become a showcase for wind power in Africa,” Mugo Kibati, a chairperson of the project company, told Reuters. Lack of access to electricity is holding back economic development in many African countries.
“Power deficit is the biggest single issue for Ghana’s economy,” Ghana’s Minister of Power Kwabena Donkor told the conference. Sub-Saharan countries will need to invest $490-billion in power generation to reach 80% of electrification in 25 years, a study by McKinsey&Company showed. To bring investment into the power sector, African countries need to have cost-reflective electricity tariffs, clear regulations and a political will, said Adam Kendall, McKinsey’s head of power and gas in Africa. Currently only about a third of the population have access to electricity in Sub-Saharan Africa, and in some countries, like Zambia, only 5% of rural and 26% of the urban population have electricity.
Source: Engineering News
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The City of Johannesburg is pioneering a fresh approach to sustainability and to tackling the issues facing Africa in the new century.
The Green City Startup Challenge is a world first, calling on individuals throughout industry to come up with sustainable ideas to overcome the social and ecological challenges the world faces today, and will encounter tomorrow.
The competition, run over three phases, provides business support and mentoring workshops to enable even the smallest entrepreneur to develop a ”green idea”.
“With its large urban forest, Johannesburg is renowned as a green city,” says Ravi Naidoo, executive director for economic development for the city.
“The City of Johannesburg looked at how to turn the challenges of sustainability into opportunity and growth by callingfor fresh ideas under the Green City Startup Challenge.”
Run in conjunction with University of Johannesburg and Resolution Circle, a UJ-owned company, Green City invited applicants to submit their ideas for change via its Facebook page.
“Anyone could put forward their idea as long as they were based in Johannesburg, or their idea could unfold in the city,” says Naidoo.
The 86 entrants were whittled down to 20, and after a week of workshops eight were chosen. Each received a R250000 grant to develop their project or pilot a prototype. In August, two winners will be announced – each will receive a R1-million grant.
The finalists include Harold Oswin, a young man studying at Harvard in the US, who has devised an electrical timer switch that can be available to market for a fraction of the cost of current commercial timers. “This is extremely valuable for lower LSM households,” says Naidoo. “It helps the city and helps the consumer.”
Another finalist has created a modified electric bicycle that can help waste reclaimers become more productive.
Gabriel Ally is the former mayor of the Johannesburg Junior Council. Inspired by the determination and resourcefulness of “trolley recyclers”, Ally developed a model for the transformation of the informal recycling industry. The Recycle e-Trike is a 500w electrically assisted tricycle. It is designed to double the output of trolley recyclers and improve their safety on the road.
It can transport 150kg of recyclable waste over a distance of 50km. It is fitted with disc brakes, brake lights, indicators, a headlamp and an interesting-sounding hooter. The 1.2m loading box and the rear hubcaps act as a canvas for recycling awareness campaigns.
These bikes not only create micro-entrepreneurs, they may also provide a solution to the city’s landfill problem. Should Johannesburg continue to landfill up to 90% of the city’s waste, the city will probably run out of landfill space by 2030.
”We’re so encouraged by what we’ve seen that we’re going to start our fundraising for next year now and ask for new submissions in September,” says Naidoo.
“This is the first version of the competition, so it’s important to leverage private sector fund-raising to expand what we can offer. We’ll present to investors and the business forums,” sats Naidoo.
“It’s been fantastic to be a part of the challenge,” says Ally. “The process has gone quickly. We had an opportunity to present our ideas and moved fast into making them a reality. I’ve met the committee that’s helping me with my goals. I’m meeting an intellectual property lawyer through Resolution Circle and in a few weeks I will receive the total of my grant to develop my product and expand my fleet of vehicles.”
Source: Times Live
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Road infrastructure is a key pillar in unlocking Africa’s economic potential. It is a long-term investment that has a big socio-economic impact in the development matrix of any country.
“Importantly, road infrastructure sustains economic development not only in Zimbabwe but in Africa and the world over,” said Zimbabwe’s minister of Transport and Infrastructural Development, Obert Mpofu during the African Road Maintenance Funds Association (ARMFA) annual general meeting in Victoria Falls recently.
The Ministry of Transport and Infrastructural Development’s Permanent Secretary, Munesu Munodawafa, added, “The provision of good and modern road infrastructure is a condition for economic growth and technological renewal.”
Sharing same views, Elly Twineyo, an economist and author of “Why Africa Fails” adds, “The continent of Africa fails because of poor road infrastructure. Once you have built road infrastructure, our traders, our business people and tourists can get better roads.”
The New Partnership for Africa’s Development (NEPAD) agrees that improving road systems in Africa will significantly boost the transportation of goods, facilitate transactions, boost tourism and positively impact ordinary lives in diverse ways such as ensuring that people get to the hospital quickly during emergencies.
Sadly, with vast natural resources in most, if not all, African countries, the continent is poor when it comes to road infrastructure. The African Union (AU) and the Southern African Development Community (SADC) chair, President Robert Mugabe always testifies that Africa is one of the richest continents in terms of natural resources, but is probably ranked as lowest when it comes to infrastructure development.
The Democratic Republic of Congo (DRC), for instance, is one of the world’s richest countries in terms of natural resources (cobalt, copper, niobium, tantalum, industrial and gem diamonds, gold, silver, zinc, manganese, tin, uranium, coal) as well as timber, but the second biggest country in Africa has no roads connecting one end of the country to the other. The only way to travel between two distant points is by air of which many Congolese cannot afford air travel.
This road infrastructure deficit in DRC as well as other African states is a momentous barrier to sustainable social and economic transformation. Transport costs are higher in African countries as compared to other continents due to this deficit.
“Transport costs alone are 63 per cent higher in Africa than in developed countries. This is hampering the continent’s competitiveness in local as well as international markets,” agrees the African Development Bank (AfDB), adding that transport costs represent between 30 per cent and 50 per cent of total exports value in Africa.
These costs, according to the AfDB, which last year approved projects amounting to US$615.2 million in Zambia and Zimbabwe, with infrastructure, transport, energy, information and communication technology, water and sanitation receiving 62.6 per cent of the share, are even higher in 16 landlocked countries such as Zimbabwe, South Sudan, Mali, and Niger, and constitute up to three quarters of their total exports value.
Isaac Shinyekwa, acting head of the Department of Trade and Regional Integration at the Economic Policy Research Centre, mourns inadequate investment in road infrastructure saying it is impacting negatively on intra-African trade, which is currently just 11 per cent of total trade.
“When you look at countries that have developed, road infrastructure is crucial. We need the roads to move our goods as well as to cut down the cost of doing business,” he said.
Shinyekwa, therefore, urged African countries to invest in road infrastructure if the continent is to reduce the cost of doing business and transform socio-economically.
It is, however, estimated that countries within and across Africa need to invest nearly US$90 billion per year over the next decade to bridge the road infrastructure deficit, but for the effective provision of good and modern road infrastructure, there is need for accountability in the administration of funds, in the words of Munodawafa.
World Bank’s senior transport specialist, Mr Justin Runji, concurs, “It is critically important to reconstitute policy formulation, policy oversight and performance monitoring and evaluation capacity as a minimum, within transport ministries in Africa.”
He goes on to say: “Transport policy objectives and related performance indicators should be simplified and limited to a set of measurables commonly used and understood key transport indicators that are known to contribute to intended outcomes. To underpin reforms, strategies are also required to safeguard operational autonomy along with corporate governance within the sector institutions, such as road funds.”
Honestly, raising enough finance for infrastructure development is one of the key challenges facing Africa’s expanding economies. Governments, development partners and private sector stakeholders in the continent should, thus, simply develop road infrastructure in partnership as well as commit more resources to improving the continent’s road networks.
Without good roads, Africa’s agenda of an accelerated industrialisation via valuable and realistic interventions such as promoting and enabling the continent to use its diverse natural resources to achieve socio-economic development will remain a pipe dream.
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The raging debate over the suitability of nuclear energy is typical of South Africa’s flawed approach to energy policy. We are driven by desperation to consider alternatives rather than being proactive and acting strategically to optimise outcomes.
The Eskom debacle has forced the government to consider other options such as gas in addition to nuclear – just like the sale of state assets is driven by the need to bail out Eskom rather than economic policy. Invariably, we ask the wrong questions and then proceed to provide the most precise answers to them.
The strategic energy policy question is not whether nuclear energy is better than renewable energy or vice versa. The question is: what is the optimal energy mix for South Africa that will best address our economic development challenges? Any optimisation problem relies on the formulation of the objective function and the constraints imposed on it. While some are fuzzy on the objective function, they seem clear that we can either have nuclear, wind or solar, and nothing else.
My argument is that there are other alternatives to be considered in the energy mix. Firstly, the strategic envelope for the analysis of our energy policy should be the Southern African Development Community (SADC), not the Republic of South Africa, given that there are significant energy sources outside South Africa, with South Africa being a massive energy sink. The DRC has hydro energy resources, Botswana has coal resources, Mozambique and, to a lesser extent, Namibia have significant natural gas resources. It is also unclear why our own coal resources are not in the future energy mix, given our relative size to massive coal burners such as China and India.
Back to the objective function: what do we want to achieve through our energy policy? The goals of an energy policy should include competitively priced energy, energy security, supply stability, minimal environmental impact, employment creation, and positive transformative impact on the overall economy. One could use the current energy mix as a base case to compare alternative mix options, including all the energy sources mentioned above.
We have not even considered importing Liquefied Natural Gas (LNG) as an alternative or local hydraulic fracking. We could divert all our thermal energy demand to LNG and simultaneously use LNG to provide feedstock to the PetroSA GTL plant. That would reduce our electricity demand and also make sure we sweat an existing investment at the Mossgas plant.
At face value, it seems a nuclear plant investment will have less positive transformative effect on the overall economy.
We need a breath of fresh air in this energy policy debate. This is too important an issue for South Africa’s future to be driven by sector specific interests.
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