Address by Deputy President Thabo MBeki
at the Conference on Infrastructure Investment, 28-29
Ministers and Deputy Ministers,
Provincial Executive Council members,
Leaders of the union and civic movement,
Firstly let me welcome you all to this conference on
infrastructure investment. This conference is a historic
moment in our interaction with the private sector regarding
the challenge of reconstruction, development and economic
growth confronting the nation. We salute those within
the private sector, and those Ministers within the Government
of National Unity, whose hard work has made this conference
Today we meet as the leadership of government and the
domestic investor community, together with representatives
from labour and the civic sector, to agree on a framework
for investment in much needed economic and social infrastructure.
This is no easy task, as this funds we are discussing
include major company assets, and the accumulated life
savings of our working populations. We are mindful of
the sensitivity of these discussions and the concerns
regarding risk and undue exposure of investments. We
are also mindful of the crucial decisions facing the
country as a whole; decisions which are necessary if
we are to meet head on the challenge of growth and development.
Only through linking our collective resources, and
through maximising the synergy of our combined actions,
will be able to effect the socio-economic changes our
society requires. Inequality, unemployment and poverty
will destroy the political gains we have made thus far
unless they are addressed urgently.
They are scourges that blight the enjoyment of freedom
for a large majority of our people. They are therefore
a weight on the conscience of every one of us here today.
This underlines the urgency of our discussions here
today, and the importance of the decisions we will reach.
Soon after its establishment the Government of National
Unity adopted a programme of reconstruction and development.
The Office of the RDP has succeeded in infucing the
fundamental principles of the RDP throughout government.
Government expenditure priorities and programmes increasingly
reflect our overall perspective as defined by the RDP
Similarly as government charted a new way of governing
and deciding on priorities, the private sector came
out in support of the RDP principles, supported some
of the RDP projects and made a strong commitment to
supporting to the RDP. Various industries have generously
supported government's programmes through grants, technical
support and even secondments of staff into crucial areas
of expertise. This was an unprecedented move, that we
Since then discussions with the private sector have
taken place on a broad range of issues - the Labour
Relations Act, the tariff and trade strategy, restructing
of taxation, the formation of NEDLAC, the national training
strategy, to name but a few.
But the central component of the relationship between
government and the private sector has remained vague,
ill-defined - I am referring here to the way resources
from government, and resources from the private sector,
are combined to maximise both development and growth.
How do we use our collective resources in ways which
can deliver basic services to all our people, create
jobs, and grow the economy? These are the fundamental
questions of the day, these are the matters with which
you will be grappling at this conference.
The economists will talk to us about public sector
spending "crowding in" private sector investment,
and of course will advise us against "crowing out"
private investment. These are important concerns for
all of us. What is clear is that there are simply not
sufficient funds within the budget alone to deliver
full services to everyone. Planners at central and provincial
level have done detailed work on costing these programmes.
For example we know that to deliver municipal services
to everyone within an urban local authority at an affordable
level will cost us in the region of R61 billion over
the next ten years. The combined resources of central
and provincial government will not be able to cover
much more than half these capital costs. For the remainder
of these resources we must look to other sources - local
authority budgets, community contributions, and the
extensive investment portfolios of big business and
the institutional investors.
What I am talking about is partnerships between major
stakeholders on growth and development. One of the fundamental
approaches of the GNU is to ensure that development
takes place in a way that empowers people and communities
and enables them to take control of their own development.
We believe that this must be taken forward through a
concrete set of partnerships around local projects,
in which local authorities, the private sector, the
community and organised labour have a role to play.
For instance, the private sector has significant capacity
in the field of project management and infrastructure
maintenance - there are new ways of delivering and managing
infrastructure more effectively based on international
best practice. We are working with local authorities
and government parastatals to find new ways of organising
projects, so that the private sector can have a role
in the different stages of planning, implementation,
financing and management
At the same time the workers involved in implementing
and maintaining these projects have a major contribution
to make - it is often the frontline workers who have
the most acute insights into how a job can be done better.
We believe in empowering front line workers, because
their skills and insights give them a leading role in
restructuring public sector operations. It is also their
contribution to improving productivity and creating
a client centred service that will assist the massive
expansion in services that our people require.
Organised labour also has a crucial role to play in
directing the resources of worker controlled pension
funds. We have been impressed by the success of these
initiatives in broadening access for workers to the
economy, and believe that government must support the
extension of such programmes through a facilitatory
Unions therefore have a critical role to play in the
infrastructure investment program.
Communities must shape their own destinies through
their democratic institutions of local governance. Government
cannot create miracles. The process of democratisation
imposses certain responsibilities on people and communities.
It demands that ordinary citizens take part in stabilising
communities, in driving out crime and violence, in maintaining
proper community facilities, in getting all our children
into decent schools, and in contributing towards municipal
services South Africa simply cannot afford to carry
those who are not paying for services despite adequate
incomes. Non payment of service charges is unacceptable.
The rebuilding and reconstruction of community facilities
and the maintenance of services and their improvement
will remain largely impaired unless communities contribute
by paying for the services they receive and defending
the assets such as electricity cables within their areas.
The government wants to state here and now that it will
use its scarce resources to fund any shortages that
may emerge as a result of non-payment, especially shortages
that arose after the January 1994 agreement which committed
the government to the funding of pre-January 1994 shortfalls.
From the government side we have been working intensively
with all line departments and tiers of government to
create the basis for a major programme of investment
by government in infrastructure.
Government has developed detailed strategies for urban
and rural areas, which seek to link the program of different
government agencies in ways which will address the apartheid
past and create a prosperous future. We have published
these strategies for comment, and government has received
excellent feedback from many hundreds of organisations.
The centre piece of both these strategies is a program
of investment in infrastructure, which will create the
necessary supporting framework for expanding local economies,
creating jobs, and putting people in charge of their
Government has given effect to this infrastructure
investment program by auditing all the investment programmes
of different government departments, and then programming
these in the context of fiscal constraints. This has
been an unprecedented project. For the first time we
can provide a detailed and comprehensive program for
infrastructure investment, which covers both social
and economic, urban and rural areas. Investors are now
able to have a clear picture of the scope and scale
of public investment programmes, and the envisaged requirements
for both private sector loans and equity. Minister Naidoo
will explain in greater detail the work behind this
exercise, and the importance of the program for both
public and private sectors.
We are now finalising a medium term fiscal framework
for government, which gives indicative financial allocations
to public sector programmes for a five year period.
In addition we have indicated our intentions with some
major short term commitments from the Reconstruction
and Development Fund to financing infrastructure.
Through the Department of Finance we have co-ordinated
a number of projects relating to financing mechanisms
and the regulatory framework. The rationalisation and
restructuring of the development finance institutions
(e.g. the restructuring of the Development Bank of South
Africa into an Infrastructure Development Bank) forms
the basic starting point in this regard.
Minister Liebenberg and Deputy Minister Erwin will
address you on the macro-economic and financial framework
for our infrastructure investment program. We have made
major advances in finalising the borrowing powers of
different tiers of government, and in establishing a
taxation and incentive regime for infrastructure investment.
We are working on a new Local Government Act, which
will further enhance and entrench the principle partnerships
between communities, the local state and private sector
on infrastructure delivery, maintenance and effective
management at a local level.
There are also a number of major projects underway
which provide opportunities for private sector involvement.
These include the Gauteng - Maputo development corridor,
an investment program for the Transkei Wild Coast, upgrading
the N1 route in the Northern Province, major water resource
management projects run jointly with Southern African
states, such as the Magugu dam in Swaziland, and literally
hundreds of local authority infrastructure projects
already funded out of the RDP Fund, and currently in
Government is now putting the finishing touches to
a growth and development strategy that provides the
context and rationale for the infrastructure investment
program. Infrastructure is one of the pillars of this
strategy - it provides the link between economic growth
and meeting basic needs. It creates efficiency in urban
areas by linking services and housing closer to work
opportunities. Water, transport, electricity and communications
are the supporting web for small and medium scale enterprises,
and job creation. And by meeting basic needs we are
building our human resources for the national effort
to rebuild our economy.
Let me take this opportunity to invite the private
sector to join us in investing in the necessary infrastructure
that will make this economy a growing economy. As government
we have identified infrastructure provision as one of
the key pillars for meeting basic needs and economic
growth. I would be very pleased if at the end of this
conference we can come out with concrete commitments
to actually going out there on the ground, roll our
sleeves, put our money where our mouths are, and put
the nation to work.
I therefore urge you to use the unique moment this
conference provides to the full. There is a window of
opportunity for us to cement a relationship that will
lead us on the path of prosperity. I am calling on you
to meet us half way - let us invest in the future of
this country, in the human resources that are the heart
of the economy, in the technological development and
innovations that are at the cutting edge of competitiveness.
Let us put our resources together to create an infrastructure
base that will project us into the 21st century; let
us together work to expand job creation, both in the
short term through a public works approach on infrastructure
development, and in the long term through building a
competitive and more equitably owned economy. Let us
use this conference to develop a vision for the country,
and to chart the routes we must travel to attain that
vision. Let us go forward together in the spirit of
a new patriotism, to build and develop our people and