The South African government is under increasing pressure to advance programmes and incentives that will drive the maintenance, upgrading and construction of housing and healthcare infrastructure within the country.
Funding and administration constraints have hampered service delivery in the past, and are likely to encourage an increase in public-private sector interaction in future years, as the government seeks private sector participation in key infrastructure development.
New analysis from Frost & Sullivan, African Infrastructure Tracker: South Africa’s Social Infrastructure, finds that South Africa’s social infrastructure sector is expected to grow as the government seeks to meet significant demand for service delivery, while the population increases. The government is increasingly shifting focus toward the promotion of public-private partnerships in order to speed up delivery processes and reduce funding pressures.
“Massive demand, driven by the effects of apartheid and a growing population, has intensified the need for the South African government to implement social infrastructure development programmes,” notes Frost & Sullivan’s environmental and building technologies research analyst James Milne.
“The provision of low-cost housing forms a crucial part of social service delivery in the country, while a lack of consistent maintenance of basic public healthcare infrastructure has led to a gap between levels of supply and demand. The government is currently attempting to resolve this issue by encouraging public-private partnerships, and the implementation of large scale infrastructure repair and maintenance programmes.”
The provision of low-cost housing and accessible, well-maintained public healthcare facilities will be crucial to South Africa’s economic growth.
At present, South Africa’s affordable housing backlog is estimated to be 2,3-million households, which equates to approximately 12-million people. The government has set the goal of eliminating the backlog by 2030, indicating that significant opportunities will exist for private companies to enter the market, through partnering with the government, at all stages of the value chain.
With the intended introduction of National Health Insurance in 2012, the rapid revitalisation of ageing healthcare infrastructure is a key priority for the South African government, with expenditure on healthcare expected to increase by 10,7% annually.
The scale of the demand to provide both low-cost housing and address the upgrading, repairing and building of public healthcare facilities has put the South African government under significant pressure to source and allocate funding and resources. In the past, the Government has been reluctant to forge partnerships with private sector participants, increasing funding pressure on the sector.
“The government of South Africa needs to actively seek and promote the creation of long-lasting partnerships with private sector entities that will lead to the continuous improvement of social infrastructure in the country,” explains Milne. “Increased interaction between public and private sector entities is vital in order for the government to reduce the public sector social infrastructure funding burden.”
While significant opportunities exist for private sector companies in social infrastructure development, the responsibility to actively promote and encourage relations with the private sector ultimately lies with the Government, as interaction between the two sectors in the past has been poor.