Picture: FINANCIAL MAIL
Picture: FINANCIAL MAIL

The decision by the SA National Roads Agency (Sanral) to ramp up its investment in road infrastructure through an allocation of R70bn over the medium term will help to alleviate the decline in the important construction and engineering sectors.

We share the concerns expressed recently by Business Day that an industry that was once a key driver of employment has been in steady decline since the start of the decade (“Government Has a Crucial Part To Play In Saving the Construction Industry”, March 13). However, we also share the sense of guarded optimism that accompanied the announcement by President Cyril Ramaphosa earlier in 2019 that the government will contribute about R100bn over 10 years to the infrastructure fund and use this to leverage further investments from development finance institutions and the private sector.

Finance minister Tito Mboweni took this approach a few steps further by clearly stating that the state is shifting its priorities towards infrastructure investment, and away from the wage bill. Sanral’s budget for the next three years reflects this approach.

The perception that Sanral is primarily responsible for the collapse of the construction industry is irrational and unfounded.

For the current financial year there is an allocation of about R24.4bn for the construction of roads, rehabilitation and maintenance projects. This will grow at an average rate of 5.1% over the medium term, reaching a total of R70bn.

This escalation in spending follows an 18-month period of subdued expenditure by Sanral. We are encouraged by the fact that most issues raised by the Treasury that affected our tender processes have been resolved and that the projects already in the pipeline will contribute to an upswing in construction activities.

The perception that Sanral is primarily responsible for the collapse of the construction industry is irrational and unfounded. The reasons for the poor performances of many of the historical giants of the construction sector have been documented — and commented on — in great length by industry analysts and media such as Business Day. These includepoor management decisions, questionable investments and injudicious acquisitions and expansions, in addition to the reduction in infrastructure investment by the public and private sectors.

This is attributable to the economic slowdown SA has suffered post the 2010 World Cup heyday.

Nonresidential construction — particularly retail — and road construction kept the broader industry afloat in this time. Within the roads sector, Sanral has led the investment curve, excluding the 18 months of subdued expenditure mentioned above. Thus, Sanral has strong vested interests in the resurgence of the construction and engineering sectors. Our long-term strategy, Horizon 2030, positions Sanral as a leading player in the broader efforts to stimulate growth through infrastructure investment. 

The projects in the pipeline for the medium term focus strongly on community development across all nine provinces, in urban and rural centres. They stretch across the gamut of road engineering and construction activities, including upgrades to the primary transport corridors on the national freeway network, improvements to interchanges, bridges and storm water infrastructure, the expansion of intelligent transport systems and interventions to improve road safety.

Transformation policy

About 740 new construction projects are planned, spread across the entire 22,214km of the primary road network managed by Sanral. Communities from Rustenburg in the North West and Giyani in Limpopo to the Karoo and the Northern Cape will benefit from construction activities and the provision of safer and more accessible roads. 

Sanral’s investments in infrastructure will greatly benefit emerging enterprises and new players in the construction and engineering sectors. All tenders will be published in line with the new transformation policy at Sanral, which seeks to increase the participation of black business and the development of small, medium and micro-sized enterprises (SMMEs).

Tender requirements will also increasingly target enterprises owned by women, youth and people with disabilities. About 7,810 SMMEs will benefit from Sanral projects over the next three years, with an estimated 81,000 jobs planned to be created on road construction and maintenance projects. All Sanral construction projects will now include community development programmes and initiatives to support the transfer of skills to SMME companies.

We are confident that the increased spending by Sanral will not only lead to an upswing in construction activities but also contribute to the fundamental transformation of an industry that has been dominated by a limited group of large players.

Sanral will soon establish supplier development desks at our regional offices to provide structured assistance to suppliers including contractors, consultants and material suppliers. We will also expand the productive partnerships we have struck with big industry players in the areas of equipment supply, mentoring, material provision, business support and financial management.

We are committed to the stabilisation and growth of the broader construction sector, an industry that accounts for almost 10% of all employment in SA.

We are confident that, if supplemented by more public and private expenditure, the R70bn investment in road infrastructure over the next three years will make a tangible contribution to the broader national objectives to create jobs, transform the economy and accelerate balanced growth.

• Macozoma is Sanral CEO.