SINDISIWE CHIKUNGA: Government investing billions in road infrastructure

SA’s road construction industry is without a doubt one of the most critical sectors of our economy and a key anchor of the government’s infrastructure development agenda. It is an industry that is contributing significantly to ensure the country develops and maintains the arteries through which people and goods move between towns and cities.

Equally important, road construction is also the backbone that provides thousands of families with a dignified existence by virtue of the fact that fathers, mothers, youth, disabled and military veterans alike are employed in this crucial industry. 

The SA National Roads Agency (Sanral), an entity of the department of transport, is vigorously driving economic activity by executing on its mandate to expand and maintain the national road network, comprising 24,000km of the country’s total road network of 750,000km. 

Several leaders of construction companies recently tabled their financial results and commented on the effect work put out to tender by Sanral has had on their profitability and short- to medium-term futures. 

These include comments by WBHO CEO Wolfgang Neff that the company’s earnings were at their best level in a decade and paying a dividend for the first time in three years. “Given all the work from Sanral and the renewable [projects] around, the ratio between public and private work has swung to 80/20 from 56/44 in June [2023],” he reportedly said in an interview. “But the overall pipeline in this division has improved from R76bn to R91bn, so there has been a substantial increase in the potential work out there.” 

Flagship project

Neff’s sentiment was echoed by his counterpart at Raubex, Felicia Msiza, who said the company’s “diversified business model coupled with activity on Sanral projects in KwaZulu-Natal, the flagship project relating to the expansion, upgrading and improvement of the Beitbridge Border Post in Zimbabwe ... supported a strong performance.” 

Several other construction firms have made similar comments after releasing their year-end results, indicating that the investment by the government in infrastructure development has been good for their companies and the industry. 

The comments by the CEOs are particularly interesting given that the Sustainable Infrastructure Development Symposium is being opened by President Cyril Ramaphosa in Cape Town on Tuesday. Sanral, as an agency of the department of transport, is at the centre of much of the government’s investment in infrastructure. As the national roads agency it stands to reason that Sanral’s focus is roads, but it goes much further. 

For instance, a spin-off of most of the roads, tunnels and interchanges constructed under Sanral has been that it has attracted investments in other infrastructure. Examples include the Waterfall development in Gauteng and at Umhlanga in KwaZulu-Natal, as well as road infrastructure improvements in Limpopo, and all have all been followed by enormous investments and developments. Good roads attract further investment, which in turn leads to economic growth in areas around our roads. 

Sanral also ensures that a significant portion of its project spend goes back into local communities, either through the procurement of services from local small, medium and micro enterprises (SMMEs), the employment of local labour, or the provision of community development projects that leave a lasting legacy in communities. This local investment is key to Sanral’s social licence to operate. 

In his 2024 state of the nation address the president announced that in the past five years Sanral had awarded more than 1,200 projects to the value of R120bn. In fact, it is on the president’s instruction that ministers are directing government departments to drive economic growth, in this case by investing in road infrastructure. 

Sanral

The leaders of construction companies, through their latest remarks, clearly recognise the vital role Sanral plays in the development of the country’s road infrastructure and its impact in stimulating and growing our economy. It stands to reason that construction companies and communities alike are benefiting from the government’s efforts to grow the economy and create jobs, as set out in the Economic Reconstruction & Recovery Plan unveiled by the president in October 2020. 

Solid road infrastructure is essential for the sustainable economic development of our country and an efficient transport network allows us to compete effectively in today's economy, locally and globally. 

Road infrastructure is a key component of the investment climate. It reduces the cost of doing business, enables access to markets and ultimately results in improving the quality of our people’s lives. 

The billions of rand in investment that the president referred to is therefore a lever to unlock overall development in SA as it cuts across all sectors and contributes to public welfare, prosperity and wellbeing through improved services being provided to our communities. 

Sanral’s huge infrastructure projects throughout the country — the N2/N3 in KwaZulu-Natal, N2 Wild Coast Road in the Eastern Cape and the Moloto Road spanning Gauteng, Mpumalanga and Limpopo — are contributing to our government’s development goals, especially with regard to job creation, reduction in poverty levels, opportunities for training and access for SMMEs to the previously untransformed construction sector.  All of these contribute greatly to economic growth and the stimulation of other sectors of the economy. 

In January Sanral CEO Reginald Demana announced an injection of up to R28bn into the construction industry in the first half of this year, spread across all nine provinces. Sanral has made it abundantly clear through its procurement policy that this money has to be spent in a way that promotes the transformation of the construction industry and of society. The major construction companies must help smaller companies grow and ensure that communities, especially those in the rural areas, benefit from these investments in road construction and maintenance. 

Sanral’s latest investments are clearly having a positive effect in spite of a legal stand-off with some construction companies that challenged in court the roads agency’s preferential procurement policies. For the sake of progress in the industry and our economy, Sanral adopted an interim policy with which industry is familiar. At the heart of the conflict between Sanral and the construction companies seemed to be a disagreement on how much transformation needs to happen in the industry, and ultimately in society. 

Sanral has always maintained that it does not want to eliminate the major construction companies, but rather to grow them; there is enough work for the big companies to remain profitable while helping to uplift smaller companies and communities. 

The most recent comments by leaders of construction companies show that, indeed, this is the case. This is an illustration of the power of co-operation and partnership, particularly between the public and private sectors. It is time for us to work together to develop the country and its economy, to benefit all of our people. 

• Chikunga is SA transport minister.