The Civil Engineering Contractor June 2018 | Page 30

INSIGHT
Private investment
By Andre Wepener
Governments both local and international are gaining private sector buy-in to invest
in and provide funding for projects in South Africa and across sub-Saharan Africa, on
condition that these prospects are suitably designed to attract funding.
I
nfrastructure has been described
as the backbone of a country. In
South Africa, the development of
infrastructure has been identified in
the National Development Plan (NDP)
as a key component in achieving the
goals of economic growth, job creation,
and improving the quality of life of its
citizens.
Infrastructure projects are, by
definition, capital intensive and
are typically funded either directly
by government or by a form of
partnership between the public and
private sectors. The initial capital
cost is followed by ongoing operating
and maintenance costs, and regular
maintenance is essential to ensure that
the full benefit of the asset is enjoyed
over its useful life. There has been a
backlog in maintenance expenditure
in some sectors in South Africa;
for example, some road and water
infrastructure have deteriorated to the
point that it is beyond repair and must
be rebuilt at a substantial cost.
There is strong demand from
the private sector, both local and
international, to invest in and provide
funding for projects in South Africa
and across the rest of sub-Saharan
Africa, provided these opportunities
are appropriately structured to
attract funding. In contrast to some
other sectors, infrastructure attracts
investors who are seeking long-term,
28 - CEC June 2018
low-risk, stable investments, with
moderate and predictable returns.
Investors and lenders in an
infrastructure project are essentiall