Statement by Mr Malusi Gigaba MP, Minister of Public Enterprises, on the occasion of the State of the Nation debate in the National Assembly

19 February 2013

In the 2012 State of the nation address the President outlined the social and economic growth story of South Africa, which was about linking communities to small towns, small towns to metropolitan areas, connecting provinces as well as the movement of goods to facilitate economic transaction.

This growth story recognised that we needed to change apartheid`s development patterns skewed as they were towards a few but big cities and provinces.

In this regard, the SONA 2012 recognised public sector spending as an important response to a shrinking global economy and sluggish domestic growth.

Quite clearly, the SONA 2012 was about outlining a new vision for inclusive growth and shared wealth, based on the progress of the previous 18 years of democracy and the new socio-economic challenges we were facing as a nation in light of both the global economic recession which had constrained our growth as well as the persistent and pestilent challenges of poverty, unemployment and inequality which had continued stubbornly to dog our social transformation.

As you, Mr President, stated it, this year`s State of the Nation Address was about reporting on the progress made since the SONA 2012 and also to discuss our programme of action for 2013.

It would have been total folly to present a new vision again in 2013 on top of the vision the President presented in 2012, which has only just begun to be implemented.

But, of course, the opposition wants us to be stuck on endless visions so that they turn around and ask the question, "where is implementation!"

When you implement the vision, they turn around again and ask, "why is there no new vision!"

The infrastructure investment the President unveiled in 2012 is a moral imperative for South Africa given the multidimensional nature of our social and economic challenges.

It is pivotal to shifting gear towards intensifying the struggle for social and economic freedom as we begin to usher the second of the transition towards the National Democratic Society characterised by high levels of equality, all-round development and a better life for all.

The President`s Government has chosen a policy approach predicated on three core developmental values, that is,

  • to increase the availability and widen the distribution of wealth in South Africa,
  • to raise the social living standards through employment and enhance the material well-being which will generate national self-esteem, and
  • to expand the range of economic and social choices available for citizens.

These core values are achieved through the provision of social and economic infrastructure investment to drive economic development and growth.

In the last 12 months under the leadership of the President through the Presidential Infrastructure Coordinating Commission (PICC) has launched the intergovernmental forums of the 18 strategic infrastructure projects.

We have seen that continued investment spending by public corporations and the broader public sector has contributed positively to the economic growth and development.

The key drivers are the ongoing public sector expenditure programme, particularly the new transport infrastructure roll-out by Transnet and new power generation capacity by ESKOM.

The concrete progress that has been achieved as a result of the heightened coordination, integration and focus, to which the President referred in his Address on Thursday, has been admirable; clearly demonstrating that the vision unveiled by the President is finding resonance in concrete practice.

Yet, the challenges ahead are mammoth, not least among which is the need to secure the future funding of the infrastructure both through the fiscus and the balance sheets of State-Owned Companies as well as through unlocking domestic and foreign investments.

Just to make concrete reference to the infrastructure roll-out so as to make our people aware of the progress made: in terms of,

1. the strategic integrated project one aimed at unlocking the Northern Mineral Belt with Waterberg as the catalyst:

  • despite recent labour unrest challenges, the Medupi Power Generation Plant is 58% complete, with a total spend of R60.4bn to date, a total of 15, 837 jobs;
  • the Mokolo Crocodile Water Augmentation Project is 30% complete, with a total spend of R526.1m, 300 jobs created and most of the components of the dam have been manufactured in South Africa. The project has increased water delivery by 37% by end February 2013;
  • the De Hoop Dam and pipeline the project construction is 15% complete, with a total spend of R505m, 400 jobs created;
  • the Komati Water Scheme is at over 60% complete, with a total spend-to-date of R807m, over 300 jobs created;
  • the Majuba Heavy Haul line will commence construction this year, as the President announced last Thursday.

2. the strategic integrated project two focusing on the Durban-Free State-Gauteng Logistics and Industrial Corridor:

  • the new multi product fuel pipeline is on schedule, with the quantum of spend on this project to date being R16.9bn, with an amount of 2, 490 jobs created;
  • the procurement of rolling stock for general freight is at 73% completion, with a total spend-to-date of R2.7bn and 159 jobs created. 54% local content on the manufacturing of locomotives has been secured, which will strengthen Transnet Engineering`s manufacturing capabilities and contribute to job creation, skills development and the creation of downstream linkages;
  • a feasibility study and environmental impact assessment on the Durban Port Terminal`s Pier 1 upgrade will be completed in 2014 and R70m has to date been spent on this project;
  • the old Durban International Airport has been acquired and transferred to Transnet for the construction of the Dig-Out Port; and
  • Cornubia, the first integrated human settlement which will deliver almost 24 320 housing units, 15 000 of which will be subsidised, has seen total spend-to-date of R94m and created 554 jobs.

3. the strategic integrated project three, the South-Eastern Node Corridor Development:

  • manganese ore rail to Ngqura project intended to increase rail capacity to increase the South African export of manganese from 5 – 16 million tons has not yet commenced but is in final planning phase;
  • the manganese sinter plant in the Northern Cape rached cold-commissioning stage in 2012;
  • The Ngqura port was officially opened by the President in 2012 with further investment towards a fully-fledged trans-shipment hub; and
  • The President reported on the Umthatha Airport.

4. the strategic integrated project four focused on Unlocking the economic opportunities in North-West Province:

  • the Taung/Naledi Bulk Water is at 50% completion, with R272m spent and 45 jobs created;
  • Eskom has committed to an electrification programme of 20 000 houses;
  • the government is revitalising the hospital, clinics and school in the provinces; and
  • the S`hamba-Sonke road repair programme has seen R127m spent to-date, with R892m spent on provincial road construction and both projects are 20% complete.

5. the strategic integrated project five, which is Northern Cape Development Corridor:

  • R682m has thus far been spent on the locomotives and wagons procurement, with 38% local content and 734 jobs have been created; and
  • The Sishen-Saldanha Phase 2 Rail and Port Expansion will commence in 2014 and current spend-to-date is R140m.

6. the strategic integrated project six, the Integrated Municipal Infrastructure Projects:

  • 177 facilities have been revitalised in the Eastern Cape and the project spend-to-date is at 22%,
  • 5 facilities have been revitalised in the Free State and the total project spend-to-date is at 77%,
  • 166 facilities were revitalised in KZN and the project spend-to-date is at 64%,
  • 150 facilities were revitalised in Limpopo and the spend on the project to date 47%,
  • 37 facilities were revitalised in Mpumalanga and the project spend-to-date is at 38%,
  • 7 facilities were revitalised in the Northern Cape and the project spend-to-date is at 74%,
  • 26 facilities were revitalised in the North West and the project spend-to-date is at 33%; and
  • the S`hamba-Sonke Road Repair and Maintenance project has thus far created 32 324 jobs with a total spend-to-date of R2.5bn.

7. the strategic integrated project seven: Integrated Urban Space and Public Transport System:

  • Johannesburg Rea Vaya has created 1185 jobs with a spend to date R1.218m,
  • Cape Town MyCiti has created 635 job, with spend of R2.923m,
  • eThekwini has created 45 jobs with a spend of R397m,
  • Nelson Mandela Bay has created 735 jobs with a spend of R83m,
  • Rustenburg has created 141 jobs with a spend of R341m, and
  • Tshwane has created 49 jobs with a spend of R26m.

8. the strategic integrated project eight: Green Energy in support of the South African economy:

  • the solar water heaters` roll-out has created 813 jobs with a total spend-to-date of R1.49bn;
  • the solar park to be located in the Northern Cape with a 5000MW at an estimated cost of R150bn is undergoing feasibility study;
  • construction has commenced on a number of green energy projects and
  • the Cradock Ethanol Plant intended to produce 90m litres of ethanol from sorghum and sugar beet as a feedstock has gone beyond feasibility study and, in Quarter 2 of this year, they will go into detailed design followed by construction.

9. the strategic integrated project nine: Electricity Generation to support socio-economic development:

  • in this regard, Camden, Grootvlei and Komati have been completed and commissioned, whilst Kusile has resulted in about 11 000 jobs and is at 19% completion to-date; and Ingula is 58% complete, has resulted in 2 939 jobs and the total spend-to-date is R12.7bn.

10. the strategic integrated project fifteen: expanding access to communication technology:

  • the digital migration project is underway and 63% of the network has been deployed, with total spend-to-date being R1.27bn;
  • 798 schools and 26 Dinaledi Schools have been connected; and
  • R61m has thus far been spent on the township and rural access to broadband and on e-government, school and health connectivity, creating 100 jobs.

11. the strategic integrated projects sixteen: SKA / MeerKat:

  • to-date, a total R231m has been spent on this catalytic project, creating 177 jobs and achieving 93% local content.

The Honourable President already reported last Thursday on the progress on some of the projects and my Colleagues will further comment on progress on others.

What we have just done was to pick some examples of very detailed progress achieved in order in implementing this massive project that Inkosi Buthelezi suggested will not be implemented in his lifetime.

Actually, Shenge, it is being implemented in your lifetime, in front of your very eyes!

As part of enhancing this coordination, integration and focus, we have submitted the Infrastructure Bill to Parliament for public consultation and engagement by both Houses.

As well as the lessons that coordination, integration and focus are pivotal to infrastructure development and roll-out, two other lessons we have learned is that,

  • first, we must never cease building new infrastructure and planning future capacity so that we never have to build new capacity under pressure when the need is urgent; and
  • secondly, we must properly maintain existing infrastructure so that we can ensure that it has a longer lifespan.

Of paramount importance is that we cannot allow this massive investment programme to be impacted by the global economic slowdown or derailed by lack of funding.

We need to find ways of strengthening the balance sheets of the State-Owned Companies.

Fundamentally, a strong balance sheet should create a high level of business confidence that the investment programmes will be rolled-out regardless of global economic development.

It is this confidence that is core to re-igniting the private sector investment and private equity required to drive our economy both now and into the future.

We have made significant strides in positioning our State-Owned Companies to drive a holistic economic growth and development process through the infrastructure investment programme.

We have built significant capability both to plan ambitiously and rigorously implement those plans.

In regard to the R1bn port rebate announced by the President in 2012 in order to support and bolster the manufacturing sector in South Africa, R796m was claimed and Transnet remains committed to disburse the full R1bn discount.

We invite the private sector still to take up these incentives.

Honourable Speaker, this programme in detail of which we have reported is not simply about erecting the cranes and lowering the cost of doing business, it is more importantly about inclusive growth and shared wealth.

Compared to 2010, when the infrastructure roll-out was taking place in inner-cities, this time around we can see infrastructure roll-out even in rural areas, redistributing the wealth, income, jobs and spreading the better life to all.

As we continue the roll-out, more youth are going to be absorbed into employment and skills-development programmes across the country in order to address their very urgent plight.

In conclusion, I would like to quote what the Honourable President stated during the 2012 State of the Nation Address:

"The massive infrastructure investment in infrastructure must leave more than just power stations, rail-lines, dams and roads. It must industrialise the country, generate skills and boost much needed job creation."

In regard to skills, it is noteworthy that the skills development occupies pride of place in the infrastructure roll-out and that State-Owned Companies have been training more artisans in the past year than they have done in many decades.

This programme, Honourable President, is about getting South Africa working, growing and moving.

Joseph Stiglitz argues that:

"America`s inequality, and that of many other countries, did not arise spontaneously from abstract market forces but was shaped and enhanced by politics. Politics is the battleground for fights over how to divide nation`s economic pie. It is a battle that the 1 percent [of the wealthiest Americans] have been winning. That isn`t how it`s supposed to be in a democracy." (The Price of Inequality; p.118)

Quite clearly, all over the world, people are realising both the intricate link between the political and the economic system as well as the important fact that the political as well as economic systems need to be fair and just.

I thank you.