Address by Mr Andries Nel, MP, Deputy Minister for Cooperative Governance & Traditional Affairs at the launch of the One Infrastructure Delivery Management System (IDMS) held at the Development Bank of Southern Africa (DBSA) on 1 November 2018
Mayors, MMCs, National, Provincial and Local officials, representatives of built environment professional bodies, colleagues, good afternoon.
The medium term budget policy statement made by the Minister of Finance, Tito Mboweni, last week painted a sobering and difficult picture - indeed, the best of times and the worst of times.
Importantly, however, it also provided leadership, direction, and concrete proposals, if you pardon the pun in the context of the launch of an Infrastructure Development Management System.
It elaborated on what President Cyril Ramaphosa described at the recent Presidential Investment Summit as, an economic stimulus package “with South African characteristics.”
Indeed, the economic stimulus and recovery plan announced by the President on 21 September, prioritises the following five areas:
- The implementation of growth enhancing economic reforms;
- Reprioritisation of public spending to support job creation;
- The establishment of an infrastructure fund;
- Addressing issues in education and health; and,
- Investing in municipal social infrastructure improvement.
Most of the these priorities either relate directly to infrastructure or are dependent on infrastructure for their realisation or maximum impact.
They also impact on our cities and towns, and the rural areas they are inextricably linked to, in the following ways:
(1) Reducing the cost of doing business, thereby making SA industries more competitive. This is already being implemented through the Sub-National Cost of Doing Business reforms in cities.
(2) The plan calls for the reprioritising of spending on activities that have greatest impact on economic growth. Key to this are economic activities in townships and rural areas. The revitalisation of 3 regional and 26 township industrial parks as well as the establishment of a township and rural entrepreneurship fund were also announced.
(3) Infrastructure spending continues to be a critical driver of economic activity. SA Infrastructure Fund established for the roll out, building and implementation of infrastructure projects. Over the MTEF government has committed R400 billion to leverage resources from Development Financing Institutions as well as private lenders and investors. The emphasis is on establishing partnerships, particularly with the private sector to finance and implement large infrastructure programmes and projects.
Furthermore, both the Job Summit and the Economic Stimulus plan announcements stress the need for sustainable and inclusive approaches to growth and development that are informed by collective interests and harnessing the capabilities of a range of social partners.
Infrastructure investment lies at the heart of the economic stimulus plan.
These announcements highlight the fact that efficient, effective and expanded infrastructure delivery can be a major stimulus and driver for economic growth - necessary for dealing with poverty, unemployment and inequality.
Basic service delivery relies heavily on effective planning, delivery and management of infrastructure by all spheres of government.
Infrastructure development also brings much needed stimulus and support to the economy through the vast number of positive spinoffs.
These include, growth stimulus through direct and indirect economic activity, increased employment opportunities, and an enabling business environment.
Government’s Infrastructure Plan is a key element of the stimulus package.
Key to this stimulus package is the R400 billion infrastructure plan to be implemented through the roll out of government infrastructure projects.
The positive economic spinoffs can, however, only be realised through effective and efficient implementation of these projects.
Planned “shovel-ready” projects must be delivered on time, within budget and be of the necessary design quality to have the desired economic benefits.
There are even more economic opportunities from government infrastructure expenditure.
We must ensure that economic opportunities from government infrastructure also benefits young people and women as well as SMMEs, local businesses, formal and informal.
Government infrastructure expenditure creates employment.
With the unemployment rate currently at 27.2% and youth unemployment at 53.7%, the roll out of “shovel-ready” infrastructure projects within government’s control is extremely critical.
Using a direct job creation multiplier in the construction industry of around 2,4 jobs in the formal sector per R1 million invested, the roll out of R400 billion in government infrastructure projects can create close to 1 million jobs.
This literally means immediate economic relief can be brought to thousands of families in the short to medium term.
These employment opportunities also bring skills development to the community through on the job training.
These skills can be applied elsewhere by the individuals to better themselves.
There are important global agreements that also guide our programmes.
We are committed to all 17 Sustainable Development Goals but I want to emphasise, SDG Goal 11: Make cities and human settlements inclusive, safe, resilient, and sustainable.
The New Urban Agenda was adopted at the United Nations Conference on Housing and Sustainable Urban Development (Habitat III) in Quito, Ecuador, on 20 October 2016.
The Integrated Urban Development Policy (IUDF) is South Africa’s national urban policy adopted in April 2016.
Yesterday we concluded a highly successful SA Urban Conference bringing together more than 350 participants from government, business, lanour, civil society, traditional leaders, universities and research institutions under the theme: “Activating an all of society approach to implementing the urban agenda.”
We were answering the call by President Ramaphosa for a social spatial compact to implement the IUDF in line with the NDP.
We agreed on the need to establish a National Urban Forum and to work towards a National Urban Summit.
The IUDF has nine policy leavers. Policy Lever 4 is: “Integrated Urban Infrastructure”.
The IUDF argues that infrastructure planning is about long-term life-cycles of highly complex socio-technical systems.
Large water and power generation infrastructure projects take up to 10 years to bring online, and the operational burden is considerable because of long asset lives of 50–80 years or longer.
Economic infrastructure provides the essential inputs and links for the economy to function, while social infrastructure provides the structures for the care, education and security of the population.
Infrastructure is consumed as a bundle of services, and so the planning, financing, constructing, operating and maintaining of each service needs to be done in an integrated and sustainable way.
Furthermore, development decisions can affect exposure and vulnerability to multiple hazards over time.
Measures that can be taken to reduce losses and build resilience should be considered.
How infrastructure is planned, financed and operated is a powerful instrument for steering the development of an efficient, equitable and resilient urban form and facilitating access to social and economic opportunities.
Integrated urban infrastructure that is resource efficient supports the development of efficient, equitable and resilient cities that provide access to social and economic opportunities.
This lever is essential for achieving integrated transport and mobility (IUDF Lever 2), sustainable human settlements (IUDF Lever 3), inclusive economic growth (IUDF Lever 6) and urban resilience.
If it is done right, integrated urban infrastructure results in four outcomes:
- Universal access to basic social and other services, which supports equality and inclusivity;
- Environmental benefits, through the protection of ecological resources;
- Sustained economic activity, growth and job creation; and
- Urban resilience.
What is holding us back from doing things roght and achieving these outcomes?
The IUDF identifies five obstacles:
(1) Fragmented governance of urban infrastructures;
(2) Lack of coherent local-level planning and delivery;
The IUDF argues that municipalities are required to formulate Integrated Development Plans (IDPs), Spatial Development Frameworks (SDFs) and (for larger cities) Built Environment Performance Plans (BEPPs) as well as Integrated Transport Plans (ITPs) which are intended as comprehensive, integrated infrastructure plans.
However, the boundaries are unclear for the functions and powers between spheres of government.
Cooperative governance is extremely complex, with sector-specific national policy and regulatory frameworks, and shared responsibility for regulation and funding among the three spheres of government.
Further complicating integration at a local level is planning by sectors, which is governed by national policy and regulations, managed by sector departments and often operated as a concurrent function.
The result is fragmented outcomes and unclear accountability for expenditure and decision-making.
(3) Insufficient funding for capital investment and infrastructure maintenance.
(4) Capacity constraints in capital investment.
(5) South African economy is limited by inadequate energy and infrastructure.
The IUDF argues that unless electricity constraints are addressed, the economy cannot grow at a rate of more than 3% per year. Similarly, the current transport and logistical infrastructure will be unable to support an economy that grows at more than 3.5% per annum.
The IUDF challenges us to do the following six things, amongst others, if we are to overcome these challenges:
1. Consolidate and coordinate infrastructure funding
The IUDF argues that despite the introduction of the Urban Settlements Development Grant (USDG) and recent amendments to the fiscal framework suggested through the Cities Support Programme (CSP), greater funding coherence and integration are required across sectors.
It points out that the Medium Term Strategic Framework (MTSF) for outcome for local government (Outcome 9) makes provision for a review of the infrastructure funding regime.
The Local Government Infrastructure Review needs to be assessed, to establish whether or not the available resources are being adequately consolidated and leveraged to support economic growth.
Fiscal policy should also ensure adequate spending on rehabilitating and maintaining infrastructure.
Consolidated funding for infrastructure needs to provide municipalities with sufficient resources for a growing economy.
Furthermore, the municipal responsibilities for maintaining water and energy bulk distribution systems need to be appropriately allocated and funded (IUDF Lever 9).
Cities should also be given greater autonomy in defining programmes and projects, but with specific performance indicators related to the long-term objectives encapsulated in the IUDF.
(2) Institutionalise municipal long-term infrastructure planning
Each city’s growth management strategy’s long-term vision should provide an overarching strategic framework for infrastructure planning, as a tool for coordinating sectoral plans (IUDF Lever 1).
All projects and major capital investments (national, provincial and local) need to be spatially targeted and aligned to these municipal plans.
The municipal plan should include:
- The infrastructure investments for achieving broader social, equity and environmental objectives;
- Principles of differentiation to enable targeted investments (e g economic nodes, informal settlements and poorly serviced locations);
- Resources to be assigned through the PICC SIPs and related targeted infrastructure growth investments;
- Changing demand for resources (specfically water and energy), as migration and settlement patterns evolve and diversify (see urban resilience cross-cutting issue);
- Environmental constraints;
- Financing of required infrastructure investments (capital) and operating over the life cycle, recognising that higher capital expenditure might ensure lower operating expenditure and environmental benefits); and,
- Institutional arrangements for providing, operating and maintaining infrastructure.
Robust infrastructure, which is well-conceived (according to building codes) and properly constructed and maintained, is vital to withstand the impacts of hazardous events without significant damage or loss of function.
Reducing the risk of disasters helps to protect development investments and enables societies to accumulate wealth, in spite of hazards
(3) Strengthen intergovernmental planning, roles and partnerships
Coordinating mechanisms between spheres of government and within sector departments must be used to improve collaboration and integrated planning in practice.
Established consultative forums should become transactional IGR platforms for collaborating, negotiating trade-offs and agreeing on planning priorities to obtain optimal results.
Continued effort must be made to clarify functional roles and reform procedures, to enable local government to improve infrastructure delivery, planning, funding, building and management through the infrastructure lifecycle (IUDF Lever 8).
Engagement with the private sector and communities is critical, especially when planning and monitoring social infrastructure.
Municipalities also need to build stronger relations with communities and civil society in order to foster collaborative ‘place-shaping’ decisions that improve liveability, especially within informal settlements (IUDF Lever 7).
(4) Widen sources of finance for urban infrastructure
Cities and towns need to widen their access to finance from internal resources and from investors in order to build the physical assets for more inclusive growth at the required scale and pace.
Cities and towns can raise their credit status by improving operating efficiencies and revenue collection.
Municipalities should increase the use of development charges collected from property developers to finance bulk and connector infrastructure related to property development.
New instruments are needed to match infrastructure funding and payment profiles with institutional investment needs.
Cities control the management of capital programmes and so are in a position to partner with private nance in urban development programmes.
Reaping the urban dividend underpinned by integrated urban infrastructure will be impossible without mutually beneficial partnerships between local government and the private sector (IUDF Lever 9).
(5) Invest in ICT infrastructure and literacy
Successful ICT investments should result in effective governance systems, the availability of infrastructure and technical platforms, and the bridging of digital divides.
ICT contributes to decision-making that is more informed (evidence-based urban planning), greater citizen participation in shaping urban spaces, increased accessibility for persons with disabilities, reduced infrastructural barriers, improved access to opportunities and products offered by non- government role-players, and better integration of transport systems.
Government spheres need to work together, with national government ensuring supportive national ICT policy frameworks that enable both the private sector and cities to invest in ICT infrastructure.
Furthermore, government, working with other partners, should invest in training and educating people, particularly the urban poor and excluded groups, to shift the digital divide from material access to actual use of the Internet and ICTs in order to deal with ‘second-level’ digital divide (IUDF Lever 8).
(6) Develop infrastructure as a bridge between rural and urban areas
Transportation, communication and energy infrastructure is the backbone of urban-rural development.
Good infrastructure should enhance socio-economic development by providing access to urban markets, health and education facilities, and employment opportunities.
Furthermore, road and rail infrastructure should link local farmers to food processing industries.
National and provincial governments, working with local government, should invest in the development of good transport networks (road and rail) and ensure the alignment of SIPs with other major transport investments.
Promoting access to ICT infrastructure (such as fast broadband and mobile coverage) in both urban and rural areas is also critical in improving rural- urban linkages (see rural-urban interdependency cross-cutting issue).
In order to deliver sustainable, resilient infrastructure that produces economic benefits we need to respond to the infrastructure delivery and management capabilities of our municipalities.
We know that these are highly differentiated and our solutions have to respond to these differing contexts from metros to intermediate cities, small towns and rural areas.
While we are here today to introduce the One-IDMS concept that will be customised for different contexts, we are also here to launch the methodology for metros in particular.
There is urgency in improving our management of infrastructure in other contexts as well.
Cities are an important starting point. They face significant challenges. These challenges are both related to the challenges faced by more rural municipalities, as well as “unique”.
The United Nations estimates that 71.3% of the South Africa population will live in urban areas by 2030, 80% by 2050.
This implies a significant demand for services and infrastructure in urbanising areas, many of which are struggling to cope with current unmet demand for services.
Secondly this has meant that we have focused significantly on providing new infrastructure, while neglecting maintenance, rehabilitation and renewal.
This has led to erosion of our infrastructure assets and, in many cases, asset failure.
Thirdly, our cities are dealing with complex and large scale infrastructure delivery requirements.
Without the appropriate systems for pipelining projects, cities have spent inadequately on the capital budgets, most notably on grants such as the Municipal Infrastructure Grant (MIG) and, in metros, the Urban Settlements Development Grant (USDG).
Their planning, pipelining and delivery systems need to be brought to scale.
The core capabilities of municipalities to plan for, deliver infrastructure and maintain it over its full life-cycle depends on:
- Necessary professional capabilities such as engineers and planners being available, retained and their careers developed either within municipalities or in appropriate partnership arrangements with the private sector, or even in some cases, civil society;
- Proven systems and processes of planning, delivery and asset management respective to the context, scale and complexity of the infrastructure environment;
- Enabling intergovernmental planning and support systems;
- A culture of learning and improvement.
We need to employ best practise guidelines, tools and support available throughout government, like the Infrastructure Delivery Management System (IDMS) that caters for all spheres of government and specific guidelines like the Cities Infrastructure Delivery and Management System (CIDMS) for metros.
These must assist us in ensuring that we have planned “shovel-ready” projects that will be delivered on time, within budget and be of the designed quality, in order to have the desired economic benefits intended in the stimulus package.
All of this emphasises inextricable link between the IUDF and the Back to Basics programme, in particular the work spearheaded by the Municipal Infrastructure Support Agent (MISA) and the District Support Teams it is deploying to priority dysfunctional and distressed municipalities.
Programme Director, I thank you for this opportunity.