South Africa’s motion for economic and infrastructure development, including development of the road and rail network, and the impact on the economy, with reference to the 37th SADC Parliamentary Forum, Victoria Falls, Zimbabwe, 23 to 24 September 2014
FOR ORAL REPLY
QUESTION NO: 510 (NO4501E)
PUBLISHED IN INTERNAL QUESTION PAPER NO.15-2015 OF 28 OCTOBER 2015
MR A M SHAIK EMAM (NFP) TO ASK THE MINISTER OF INTERNATIONAL RELATIONS AND COOPERATION:
With reference to the 37th SADC Parliamentary Forum held at the Victoria Falls in Zimbabwe from 23 to 24 September 2014;
1) What are the details of the progress with regard to South Africa’s motion for economic and infrastructure development, including development of the road and rail network and
2) What will be the impact on the economy? NO4501E
1) South Africa works closely with its partners in SADC to stimulate economic growth in the region. The SAD C Regional Infrastructure Development Master Plan (RIDMP) is a 15 year blueprint for cross border infrastructure projects in the region in the Energy, Transport, ICT, Water, Meteorology and Tourism sectors. The total value of projects identified in the RIDMP for the period 2012 to 2027 is approximately US$ 500 billion and include a number of road and rail projects. However, in view of the very high cost of infrastructure development, the main challenge is to prepare priority projects for bankability certification in order to attract financing from the banking and private sectors as well as international cooperating partners.
The main mechanism for SADC infrastructure project preparation is the SADC Project Preparation and Development Facility (PPDF). The PPDF is coordinated by the SADC Secretariat and managed by the DBSA. A number of rail, road and energy projects are currently undergoing feasibility and bankability appraisals. In addition to the SADC PPDF, the Government of South Africa and the European Union (EU) have jointly developed the Infrastructure Investment Program for South Africa (IIPSA) to advance preparation of infrastructure projects in South Africa and the SADC region. In addition, under the EU EDF 11 signed in June 2015 in Brussels, EU direct financing could also be made available for project preparation for projects identified in the RIDMP.
It should be stressed that to take any project on the RIDMP to the implementation level, project preparation and appraisal approval are required, in other words certification that the project is indeed viable and bankable. Project financing for bankability is high and can be up to 10% of the total project cost.
2) In order to ensure sustainable economic development in SADC, it is essential to jointly develop the region’s infrastructure and manufacturing base through industrialisation. As a result, SADC has reviewed its Regional Indicative Strategic Development Plan (RISDP) for the period 2015 to 2020 and prioritised industrial development and market integration together with infrastructure development to advance regional integration and higher levels of intra-regional trade. The region has now also adopted the SADC Industrialisation Strategy and Roadmap which was approved by the SADC Summit in August 2015.
The industrialisation strategy focuses on economic and technological transformation, competitiveness and regional integration as the context for industrial development and economic prosperity. It is anticipated that the implementation of the SADC Regional Infrastructure Development Master Plan (RIDMP) and the SADC Industrialisation Strategy will place the region on a higher growth trajectory and increased job creation that will eventually improve the standard of living of all its citizens. Increased economic growth and trade flows in SADC will also have a profound impact on South Africa whose future is closely linked to the prosperity and economic development of its immediate region.