It would be possible for South Africa to achieve both higher growth and reduce its poverty levels by 2014 if its strong public investment programme continued beyond the Medium-Term Budget Framework and if its industrial policy led to an increase in employment creation, the Development Bank of Southern Africa (DBSA) reported.The DBSA on Wednesday unveiled its biennial 'Infrastructure Barometer 2008' report, which focused on the relationship between infrastructure spend and its impact on economic growth and development.The report highlighted the progress government had made in the past two years in terms of its objective to halve unemployment and poverty by 2014, as well as what challenges remained.The report also sketched potential scenarios of what infrastructure in South Africa could look like in 2014.The DBSA group executive for research and information Ravi Naidoo commented that accelerated public investment in infrastructure could support shared economic growth and could allow government to reach its objective, but under very specific circumstances.He noted that the challenge remained as to how government would continue to overcome the deep inequalities in household infrastructure, while simultaneously dealing with the bottlenecks in core infrastructure and ensuring that the provision of infrastructure contributed to a more inclusive economy.Further, Naidoo said that the country had to reduce the amount of products imported for its infrastructure programme, which currently stood at about 40%.With infrastructure programmes generally stretched out over a number of years, he said that there would be enough time for South Africa to develop local competitive suppliers for some of the products it imported.Further, in terms of the maintenance of infrastructure, Naidoo asserted that government could create jobs through infrastructure programmes allowing communities to, for example, maintain roads in certain areas of the country.Meanwhile, Naidoo said that the country faced the risk of higher tariffs increasing inflationary pressures in light of the current global financial markets leading to an increase in the cost of raising capital.He suggested that South Africa had to develop innovative financing plans with a clear understanding of who would pay for the infrastructure and who would benefit.SOCIAL UPLIFTMENTMeanwhile, the DBSA project manager for the report Marie Kirsten said that shared economic growth also would have to include the investment of social assets, such as schools and health clinics, to improve living standards and productivity.She noted that government's infrastructure programme thus should also include investment in the more socially related sectors of health, education, water and sanitation and local government, and not only in the more economically related sectors of transport, energy and information and communication technology (ICT) sectors.Kirsten said that the ICT sector had probably made the most progress in the past two years, followed by local government service provision and then transport.The percentage of households with access to water had increased to 88,7% in 2007, compared with 79,8% in 1996, while those with sanitation services increased to 89,6% in 2007, compared with 82,5% in 1996.In 2007, 80,1% of households had access to electricity, compared with 57,3% in 1996, while 61,6% of households had access to refuse removal by 2007, compared with 53,4% in 1996.More than 72% of households had cellphones by 2007, compared with 31,9% in 2001.Households with land line telephones, on the other hand, declined to 18,5% in 2007, compared with 23,8% in 2001.However, the DBSA said that more investment was required in all these sectors.Further, the water and education sectors were highlighted as two of the sectors that required the most investment and work.The DBSA said that investment in water infrastructure should be put at the centre of infrastructure development in the country and that the establishment of a national agency to manage the infrastructure and distribution projects would form an important part of this development.The researchers noted that the draft National Water Resource Infrastructure Agency Bill had been published and submitted to Parliament, but that the process to pass the Bill likely would be a lengthy one.Further, raw water pricing, issues of the maintenance and better operation of water infrastructure, municipal tariffs that were too low to meet all running costs and a shortage of technical capacity within municipalities to ensure the quality and reliability of water, were issues that had to be dealt with.Meanwhile, the researchers said that it was important for the country to invest in education infrastructure now, despite the global slowdown, otherwise there would be even less skilled people available when economies picked up again.The DBSA commented that school buildings alone were not enough, noting that the backlog in schools was very real with about two-thirds of secondary schools without laboratories and more than 60% of schools without libraries.
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Wednesday, November 19, 2008
Sustained public investment required to boost growth, ease poverty – DBSA
Sustained public investment required to boost growth, ease poverty – DBSA
It would be possible for South Africa to achieve both higher growth and reduce its poverty levels by 2014 if its strong public investment programme continued beyond the Medium-Term Budget Framework and if its industrial policy led to an increase in employment creation, the Development Bank of Southern Africa (DBSA) reported.The DBSA on Wednesday unveiled its biennial 'Infrastructure Barometer 2008' report, which focused on the relationship between infrastructure spend and its impact on economic growth and development.The report highlighted the progress government had made in the past two years in terms of its objective to halve unemployment and poverty by 2014, as well as what challenges remained.The report also sketched potential scenarios of what infrastructure in South Africa could look like in 2014.The DBSA group executive for research and information Ravi Naidoo commented that accelerated public investment in infrastructure could support shared economic growth and could allow government to reach its objective, but under very specific circumstances.He noted that the challenge remained as to how government would continue to overcome the deep inequalities in household infrastructure, while simultaneously dealing with the bottlenecks in core infrastructure and ensuring that the provision of infrastructure contributed to a more inclusive economy.Further, Naidoo said that the country had to reduce the amount of products imported for its infrastructure programme, which currently stood at about 40%.With infrastructure programmes generally stretched out over a number of years, he said that there would be enough time for South Africa to develop local competitive suppliers for some of the products it imported.Further, in terms of the maintenance of infrastructure, Naidoo asserted that government could create jobs through infrastructure programmes allowing communities to, for example, maintain roads in certain areas of the country.Meanwhile, Naidoo said that the country faced the risk of higher tariffs increasing inflationary pressures in light of the current global financial markets leading to an increase in the cost of raising capital.He suggested that South Africa had to develop innovative financing plans with a clear understanding of who would pay for the infrastructure and who would benefit.SOCIAL UPLIFTMENTMeanwhile, the DBSA project manager for the report Marie Kirsten said that shared economic growth also would have to include the investment of social assets, such as schools and health clinics, to improve living standards and productivity.She noted that government's infrastructure programme thus should also include investment in the more socially related sectors of health, education, water and sanitation and local government, and not only in the more economically related sectors of transport, energy and information and communication technology (ICT) sectors.Kirsten said that the ICT sector had probably made the most progress in the past two years, followed by local government service provision and then transport.The percentage of households with access to water had increased to 88,7% in 2007, compared with 79,8% in 1996, while those with sanitation services increased to 89,6% in 2007, compared with 82,5% in 1996.In 2007, 80,1% of households had access to electricity, compared with 57,3% in 1996, while 61,6% of households had access to refuse removal by 2007, compared with 53,4% in 1996.More than 72% of households had cellphones by 2007, compared with 31,9% in 2001.Households with land line telephones, on the other hand, declined to 18,5% in 2007, compared with 23,8% in 2001.However, the DBSA said that more investment was required in all these sectors.Further, the water and education sectors were highlighted as two of the sectors that required the most investment and work.The DBSA said that investment in water infrastructure should be put at the centre of infrastructure development in the country and that the establishment of a national agency to manage the infrastructure and distribution projects would form an important part of this development.The researchers noted that the draft National Water Resource Infrastructure Agency Bill had been published and submitted to Parliament, but that the process to pass the Bill likely would be a lengthy one.Further, raw water pricing, issues of the maintenance and better operation of water infrastructure, municipal tariffs that were too low to meet all running costs and a shortage of technical capacity within municipalities to ensure the quality and reliability of water, were issues that had to be dealt with.Meanwhile, the researchers said that it was important for the country to invest in education infrastructure now, despite the global slowdown, otherwise there would be even less skilled people available when economies picked up again.The DBSA commented that school buildings alone were not enough, noting that the backlog in schools was very real with about two-thirds of secondary schools without laboratories and more than 60% of schools without libraries.
It would be possible for South Africa to achieve both higher growth and reduce its poverty levels by 2014 if its strong public investment programme continued beyond the Medium-Term Budget Framework and if its industrial policy led to an increase in employment creation, the Development Bank of Southern Africa (DBSA) reported.The DBSA on Wednesday unveiled its biennial 'Infrastructure Barometer 2008' report, which focused on the relationship between infrastructure spend and its impact on economic growth and development.The report highlighted the progress government had made in the past two years in terms of its objective to halve unemployment and poverty by 2014, as well as what challenges remained.The report also sketched potential scenarios of what infrastructure in South Africa could look like in 2014.The DBSA group executive for research and information Ravi Naidoo commented that accelerated public investment in infrastructure could support shared economic growth and could allow government to reach its objective, but under very specific circumstances.He noted that the challenge remained as to how government would continue to overcome the deep inequalities in household infrastructure, while simultaneously dealing with the bottlenecks in core infrastructure and ensuring that the provision of infrastructure contributed to a more inclusive economy.Further, Naidoo said that the country had to reduce the amount of products imported for its infrastructure programme, which currently stood at about 40%.With infrastructure programmes generally stretched out over a number of years, he said that there would be enough time for South Africa to develop local competitive suppliers for some of the products it imported.Further, in terms of the maintenance of infrastructure, Naidoo asserted that government could create jobs through infrastructure programmes allowing communities to, for example, maintain roads in certain areas of the country.Meanwhile, Naidoo said that the country faced the risk of higher tariffs increasing inflationary pressures in light of the current global financial markets leading to an increase in the cost of raising capital.He suggested that South Africa had to develop innovative financing plans with a clear understanding of who would pay for the infrastructure and who would benefit.SOCIAL UPLIFTMENTMeanwhile, the DBSA project manager for the report Marie Kirsten said that shared economic growth also would have to include the investment of social assets, such as schools and health clinics, to improve living standards and productivity.She noted that government's infrastructure programme thus should also include investment in the more socially related sectors of health, education, water and sanitation and local government, and not only in the more economically related sectors of transport, energy and information and communication technology (ICT) sectors.Kirsten said that the ICT sector had probably made the most progress in the past two years, followed by local government service provision and then transport.The percentage of households with access to water had increased to 88,7% in 2007, compared with 79,8% in 1996, while those with sanitation services increased to 89,6% in 2007, compared with 82,5% in 1996.In 2007, 80,1% of households had access to electricity, compared with 57,3% in 1996, while 61,6% of households had access to refuse removal by 2007, compared with 53,4% in 1996.More than 72% of households had cellphones by 2007, compared with 31,9% in 2001.Households with land line telephones, on the other hand, declined to 18,5% in 2007, compared with 23,8% in 2001.However, the DBSA said that more investment was required in all these sectors.Further, the water and education sectors were highlighted as two of the sectors that required the most investment and work.The DBSA said that investment in water infrastructure should be put at the centre of infrastructure development in the country and that the establishment of a national agency to manage the infrastructure and distribution projects would form an important part of this development.The researchers noted that the draft National Water Resource Infrastructure Agency Bill had been published and submitted to Parliament, but that the process to pass the Bill likely would be a lengthy one.Further, raw water pricing, issues of the maintenance and better operation of water infrastructure, municipal tariffs that were too low to meet all running costs and a shortage of technical capacity within municipalities to ensure the quality and reliability of water, were issues that had to be dealt with.Meanwhile, the researchers said that it was important for the country to invest in education infrastructure now, despite the global slowdown, otherwise there would be even less skilled people available when economies picked up again.The DBSA commented that school buildings alone were not enough, noting that the backlog in schools was very real with about two-thirds of secondary schools without laboratories and more than 60% of schools without libraries.