Financing Municipal Infrastructure How do we bridge the funding gap?

Physical infrastructure is a critical enabler of faster, inclusive and sustainable economic growth. Infrastructure development is integral to overcoming poverty and inequality, particularly in the face or rapidly rising urbanization in South Africa. The experience of other developing countries shows that capital investment equivalent to about 25 per cent of GDP is generally needed for a substantial rise in per capita income. Government is investing on a large-scale to provide water, transport, electricity, telecommunications, housing and other infrastructure.

Yet at the same time the maintenance of infrastructure requires considerable improvement. The South African Institute of Civil Engineers periodically assesses the state of infrastructure in the country. The last three assessments have found that municipal infrastructure is deteriorating in many places. Bulk water facilities, particularly in small towns and rural areas, sanitation in many municipalities and provincial and rural roads are particular areas of concern. The major airports and national roads are in good repair, while freight rail and port infrastructure are satisfactory. The Institute has identified the lack of adequate funding of maintenance for the existing asset base and new assets as a critical issue. Research by the South African Cities Network on the state of infrastructure financing in municipalities finds that metros have an infrastructure funding gap of between 10% and 38% of their capital expenditure, and that unless this funding gap is closed, metros will not be able to meet their core mandates over the medium to long term.

This dialogue will begin with a panel discussion comprising financiers and sector specialists who will set the scene by discussing the financing of infrastructure in South Africa from their various perspectives: financiers and developers in search of investment opportunities, and planners and engineers tasked with creating and maintaining the infrastructure over the course of its working life.

As always, the Dialogue’s goal is to use shared information and facilitated discussion to achieve: an improved climate for policy and decision-making; strengthened cooperation within the infrastructure sector; and specifically, ideas that participants may be able to take forward or apply through their respective areas of responsibility and influence.

The Infrastructure Dialogues are hosted jointly by the Development Bank of Southern Africa, the South African Cities Network, the National Business Initiative, the Planning Monitoring and Evaluation Department in the Presidency, and the Department of Economic Development, with the Engineering News as Media Sponsor. This will be the 49th Dialogue held since 2009.

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