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To Reshape South Africa`s Economy, Infrastructure must be Prioritised by Government and Private Sector

South Africa`s urban population is growing at a rate of 0.4% per annum and it is projected that by 2050, nearly 80% of the population will be residing in urban areas. This implies that the country will need to significantly improve its social and economic urban infrastructure to accommodate the fast-migrating population.

At present, urban areas such as metros and secondary cities are struggling with infrastructure capacity. For an example, health facilities are unable to cope with high demand and this has been compounded by the advent of coronavirus in 2020. Similarly, higher learning institutions are unable to absorb all students seeking learning opportunities.

It is clear that infrastructure backlog is impacting economic growth. This was first highlighted by the National Development Plan and recently, President Cyril Ramaphosa, in his SONA speech, has estimated that the country has over R1 trillion infrastructure portfolio that needs to be funded and implemented. In the same vein, the President announced about the creation of R100 billion infrastructure fund.

Apart from social infrastructure such as hospitals, clinics, schools and housing, the country is battling to expand and maintain the economic infrastructure such as roads, electricity, water, processing facilities and markets infrastructure. The infrastructure problem is more acute in rural areas, which have been largely overlooked in the past 26 years due to funding constrain and skills shortages coupled with maladministration at municipal levels.

Amongst the sectors that have been identified to re-imagine the industrialisation and development of the economy, is agriculture. Bulk of agricultural operations are in rural areas including the former homelands. Just like the case in developing countries, a principal determining factor of economic growth and development is infrastructural development such as transportation, ICT network, energy, water, technology, and market infrastructures.

The spill over effects of investing in production facilities, economic networks and communication infrastructure is improving competitiveness of enterprises such as agri-businesses and creation of jobs. South African is a developing country with 60 million population and 34% of it are currently unemployed according to the latest Statistics South Africa (StatsSA, 2020). To drive infrastructure led economic growth and development, South Africa can learn few lessons from countries like China and other Asian giants that have positioned infrastructure as an engine of economic prosperity.

In 1978 China was listed amongst the poorest countries in the world, but today it is the fastest-growing country in the globe for the last few decades and accounts for nearly one-fifth of the world population.  The rural economic reform that happened in the late 1970s was a catalyst to increase gross domestic capital in China.

This led to increases in rural productivity and a large surplus labour force to enter the manufacturing and service sectors. Higher economic growth and increases in competitiveness have been underpinned by a massive development of physical infrastructure in villages stimulating economic sectors such as agriculture, tourism, and textile.

The magic card for China is a focus on infrastructure development led by state institutions in partnerships with private sector players. In recent years, the Chinese economy has been well placed with high domestic savings, stable international trade, and surplus in the external sector. By doing that it become a leading country globally in industries such as textures and automatic.

It is not an investment per say that has been driving the current boom, but the investment in infrastructural development, which was around an average of 8.5 percent GDP between 1993 to 2011 has played an important role. 

Even here in South Africa, we can learn from the great that collaboration of different players fuels the country`s positive growth and fight congestion that are happening in towns. Because Provinces such as KZN, Limpopo, and Eastern Cape currently possesses more than 2 million hectares of untapped land. That land needs government and private industry to work together in developing such areas with proper infrastructure.

Then more opportunities the nation can attest since at presently those areas have a poor drainage system and limited dams. For instance, every time the nation experiences heavy rainfall numerous floods are reported across the country due to the shortage of dams. Thus, results bring devastating news to the country`s economy since roads, railways, buildings, and energy are negatively affected by the flood that would be prevented if all things are in place.

In a nutshell, developing infrastructure in rural areas has the potential to contribute to job creation and economic growth after thus reducing overcrowding of urban areas.

Thabiso Mdletshe is an agriculturist who writes in his own personal capacity. The article was specifically written and published for Mzansi Agriculture Talk. The views expressed here are those of the author and not of or by Mzansi Agriculture Talk.

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