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Gauteng reaches out to private sector

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Gauteng is planning to spend R100-billion on infrastructure projects over the next four years – but the balance of the R1,67-trillion needed for the province to maintain its position as the powerhouse of Africa will need to come from the private sector.This is according to Gauteng Premier David Makhura, speaking at the inaugural Gauteng Infrastructure Investment conference.

“In Gauteng, we are finalising a 30-year Infrastructure Master Plan for the entire Gauteng city region which outlines our infrastructure needs regarding transport, energy, human settlements, broadband and ICT, water and sanitation, education and health,” he says.

The plan outlines the main areas where investment will be required:
* R105-billion per annum in infrastructure investment from both the public and private sectors;
* Energy, transport and water make up 74% of the investment required while asset renewal represents 56% of capital needed;
* Infrastructure backlogs will require 6% of total funding and resource constraints will require new technology;
* Demand management, loss reduction and waste management is urgently required to ensure sustained economic growth; and
* Skills shortages and institutional misalignment should be urgently addressed.

The premier explains that, over the next four years, together with national government, Gauteng provincial government and municipalities will spend more than R100-billion on infrastructure projects in the five development corridors of the Gauteng City region focusing on:
* Rollout of public transport infrastructure;
* Rollout of broadband connectivity; broadening the energy mix;
* Building mega human settlements and new cities;
* Fast-tracking the development of the aerotropolis and new logistics nodes;
* Revitalising old townships, mining towns and inner-cities; and
* Expanding social infrastructure (education, health and sporting facilities) and water and sanitation.

The state-owned enterprises such as Passenger Rail Agency of South Africa (PRASA), Transnet and Airports Company South Africa (ACSA) will spend more than R200-billion in energy, water, transport and logistics infrastructure in the Gauteng City region over a twenty-year period.

The Gauteng Provincial Government has set aside R300-million for ICT and Gauteng’s infrastructure investment programme will focus on public transport, broadening the energy mix, ICT and broadband, and water and sanitation.

“All these public sector investments will have a huge impact in addressing poverty, unemployment and inequality,” he says. “However, the elephant in the room is raising business confidence to unlock private sector skills and resources, without which all our public sector infrastructure initiatives will make a limited impact on our economic and social development goals outlined in the National Development Plan (NDP).”

To this end, the premier outlined a package of incentives to facilitate private sector investment and propel industrialisation and re-industralisation:
* The Municipal Infrastructure Grant which is accessed by municipalities to fund critical social and economic infrastructure projects in municipalities. Municipalities, especially the Metros, also offer incentives in terms of reduced rates and taxes as well as payment holidays on rates and taxes for a fixed period of time. Municipalities can also lease municipal land particularly to manufacturing companies at reduced rates or non-market related rates. Over an agreed period of time these rates will increase and become market related.
* The DTI’s infrastructure-related incentives include the Critical Infrastructure Programme which gives back to the investor up to 30% of the cost of the infrastructure investment covering areas such as the building of roads, railways as well as the laying out of pipelines and transmission lines. This incentive is capped at R30-million.
* The DTI also administers the Manufacturing Investment Programme which incentivises especially manufacturing firms when setting up their capital infrastructure projects. There is also the foreign Investment Grant which supports industrialists when bringing capital assets acquired abroad into the country.
* The South African Revenue Services also offers incentives for upgrades in urban areas as well as infrastructure developments in industrial precincts. SARS also makes provision for depreciation allowances that give back some of the costs incurred in effecting improvements on land and buildings. There are also building construction allowances and allowances on commercial properties new or unused. Provision is also made for urban development allowances which cover up to 20% of infrastructure development costs in urban areas. Infrastructure development tax deductions provide for up to 10% rebate on the capital equipment used to lay out infrastructure investment.
* The National Treasury offers incentives under the Neighbourhood Partnership Programme which makes funds available to municipalities for purposes of upgrading underdeveloped areas and areas experiencing urban decay with a view to attracting private sector investment into those areas.

“Mobilising private sector resources and aligning private sector initiatives with our provincial development plan, the TMR, is one of the priorities of the government,” Premier Makhuru says.

“Gauteng will require a total of R1,67-trillion in infrastructure investment over the next 15 years. Building meaningful and transformative partnerships with the private sector is therefore not a luxury.

“The private sector remains the mainstay of fixed investment in the Gauteng economy, accounting for 80% of gross fixed capital formation at the moment. Most investable capital is in the hands of the private sector and it is therefore important to work closely with business leaders to unlock this capital and direct it towards improving the infrastructure for the common good.

“My interaction with business leaders over the past 12 months – and I have met more business leaders in one year than I have ever done in the entire 20 years – give me the confidence that many businesspeople are tired of complaining about what is wrong in our country.

“Many of you want to contribute to getting things right and making our province a leading and winning province on the continental and global stage.”

The premier acknowledges that there are major infrastructure challenges and huge resources required needed to build a globally competitive Gauteng City Region economy that meets the needs of our democratic and inclusive society.

“On the other hand, we see massive economic opportunities that derive from these challenges. We see opportunities to build green infrastructure that reduces our carbon footprint. We see opportunities to revitalise and mainstream the township economy and build black industrialists.

“We also see opportunities to train more young black professionals and technicians. We see opportunities to have more women and people with disabilities included in our economy. We see opportunities to address the scourge of youth unemployment. And lastly, we see opportunities to work together, sharing skills and resources to build a country and province of our dreams.

“Public-private partnerships are the only way to survive. Citizenship participation is the only way to build safe and thriving communities.”

Premier Makhuru points out that Gauteng is the economic powerhouse and the industrial hub of the Southern African Development Community (SADC) region, contributing 36% to the country’s gross domestic product (GDP), 40% to total industrial output, 60% of exports and almost 10% to the GDP of the entire African continent.