South Africa looks to shift infrastructure risk to private sector partners

The article addresses Africa's significant infrastructure investment gap, estimated by the African Union Development Agency at $130-170 billion annually (R2.25-3 trillion), which constrains economic growth by about 2% per year. African governments currently fund around 40% of the $80 billion invested yearly, leaving a substantial shortfall. At the 12th European House-Ambrosetti CEO Dialogue on Southern Africa, held alongside the G20, discussions emphasized infrastructure as a driver for economic growth. South Africa's National Treasury Director General, Duncan Pieterse, highlighted infrastructure's role in enabling higher growth and development, noting that 70% of fixed investment comes from the private sector. To alleviate fiscal risks, the government is exploring mechanisms to shift debt burdens to companies providing project insurance, building on successes like road concessions while involving state-owned enterprises. In collaboration with the World Bank, a new insurance-style company is being established to assume financial risks for major projects, starting with power-line expansions to bolster the grid, with potential expansion to other areas. Additionally, the Treasury plans to issue special infrastructure bonds with ring-fenced funds for development. Other speakers, including Development Bank of Southern Africa CEO Boitumelo Mosako, underscored the continent's vast infrastructure needs and a South African pipeline exceeding 100 projects, urging bold and deliberate action. Transnet Chairman Andile Sangqu discussed ongoing logistics reforms, including a rail program opening the network to multiple operators alongside Transnet, to enhance capacity and competition while preserving roles for state entities.