Infrastructure Opportunities in South Africa

Like other countries in the region, South Africa has had to deal with the negative health and economic impact of the corona virus.As the country looks to the recovery stage, the government’s focus has been focusing growth areas in a post-Covid era. In an attempt to revive Africa’s largest economy, South Africa’s President has placed extra emphasis on the NationalDevelopment Plan pledge to achieve 10% of GDP spending on infrastructure by2030. Mirroring other global stimulus packages, the focus on infrastructure spending comes down to the long-term benefits of improved infrastructure and the immediate boost to employment and productivity that helps inject confidence. Whilst these in-country benefits are certainly noteworthy, the commitment to infrastructure spending has opened up prospects for UK infrastructure companies looking for export opportunities.

 

Sean Jordan-Kirwan, South African Country Director for the Department for UK International Trade (DIT) along with colleagues from his team discussed these new opportunities in a recent webinar event hosted by BritishExpertise International. In the event, an insightful overview was provided on the potential opportunities for British companies looking to export infrastructure services to South Africa. DIT in South Africa is currently helping companies design and submit plans for the infrastructure fund, with the South African government already having 276 projects earmarked for potential investors. Of these 276 projects, 50 are currently in the feasibility stage, with human settlement, transport, water, and sanitation projects accounting for the majority. Other areas of current and future infrastructure projects are energy, agriculture, and digital infrastructure. Unlike previous South African public sector initiatives, the procurement process is looking directly towards the private sector for the bulk of these projects.

 

In the discussion, a handful of recently successful companies were cited such as Turner & Townsend, Arup and Bombardier who have all taken full advantage of the fund. Turner & Townsend were described as an exemplary case whereby they successfully delivered an advisory programme on the roll out of a water and sanitation project. The presentation potential projects for British infrastructure companies to invest in, support and deliver.

 

Alongside being able to help design plans and navigate the application process, DIT have also put together a few helpful tips for when creating the framework for a project:

-       Successful applications build a strong narrative around the potential successes of the project. It’s important to demonstrate the positive impact that a project will have.

-       Consider the primary reasons for the creation of the investment fund: to promote inclusive local and economic development. Therefore, the design should not only include delivering a high quality and innovative service but should also ensure local engagement and participation in support of the broader aims of the SouthAfrican government.

-       It was advised to take into consideration the policy environment and its susceptibility to change. Over the last few years, the political economy of South Africa has faced various challenges and it has, at points, impacted commissioned projects.Whilst it’s unlikely that there will be any changes to the infrastructure fund for the foreseeable future, it should be taken into account when designing the project framework.

-       Clean and sustainable growth is also a focal point of the investment fund, so project proposal should focus on green solutions.

 

There are challenges to doing business in SouthAfrica and the region as a whole, but many can be mitigated and the DIT team based in South Africa re-enforced their commitment to supporting UK companies wishing to explore these opportunities with a range of support packages from UKExport Finance.

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