South Africa boasts one of the most transparent and efficient infrastructure planning and prioritization processes on the continent. The use of more structured feasibility studies for projects and the articulation of a national vision and plan have done much to help the country start to overcome many of their most critical infrastructure challenges.
However, the country continues to face a number of challenges in implementing large infrastructure projects. Project planning and execution capacity continues to lag behind demand at the institutional level and slow approval processes keep many projects stuck in the pipeline for extended periods of time. Lengthy and onerous government tender processes do not help.
These implementation challenges are a reminder that – unless great care is taken – the implementation of more robust and transparent planning, prioritization and business case processes can often do more to complicate and lengthen the process of bringing a major project to market than to shorten them. Governments must therefore strive to ensure that such processes are developed to be as efficient as possible, supported by sufficient capacity in the planning and prioritization departments to move projects forward.
At the same time, we have seen vested interests influence and delay projects either directly or through procurement challenges. The escalating cost of construction and monopoly pricing are also creating major challenges to the delivery of large projects across sectors.
Going forward, South Africa’s government will need to focus on creating a more transparent and consistent process for project prioritization. Economic benefits need to be more comprehensively assessed and compared; project financial viability and asset sustainability need to be more candidly assessed; and industrialization and economic benefits need to be more carefully balanced to ensure fiscal efficiency and sustainability.
Clearly, South Africa’s government is moving in the right direction, albeit somewhat necessitated by financial constraints within the tax system and challenges accessing financing. At the same time, municipalities and provincial authorities are starting to apply more critical criteria in project selection and seem open to the need for project prioritization. While some of these changes are happening on a more informal basis, most expect more formal changes to follow soon.
The greatest challenge facing the government, however, will be creating more alignment between policy objectives and budgets. Without significant change, policies and priorities will become increasingly unachievable, and affordable only on a limited or piecemeal basis.
To learn more, read our full report (PDF 2.5 MB) on economic prioritization, including case studies from South Africa and other markets.