Funding SA’s infrastructure gap

South Africa's economic recovery plan hinges on robust infrastructure development, yet the funding allocated to the sector is still lacking, hindering substantial growth and poverty reduction. The country's latest infrastructure blueprint calls for a staggering investment of 2.3 trillion rand, highlighting a substantial funding shortfall of around half a trillion rand. To delve into strategies for attracting private sector investments, Conway Williams, the Head of Credit at Prescient Investment Management, sat down with CNBC Africa to discuss their current exposure to the infrastructure pipeline and the challenges facing the industry. At Priscient, significant investments have been made in the renewable energy sector, with a dedicated fund of nearly 2 billion rand spanning across 18 projects under the renewable energy program. The returns from these investments have been promising, demonstrating that impactful contributions to the economy can be made without compromising financial gains. Williams emphasized that their initiatives have facilitated electrification for approximately 50,000 households, while also enhancing water and sanitation services and promoting green energy. Apart from specialized infrastructure ventures, Priscient also extends support to development finance institutions and other state-owned enterprises, with investments totaling around 10 billion rand. This broad spectrum of infrastructure investments reflects Priscient's commitment to driving economic progress and improving livelihoods. Despite the substantial appetite for further investments, regulatory and policy ambiguities have been impeding the momentum. Williams stressed the crucial need for regulatory clarity, coherent policies, and frameworks conducive to prudent asset management. Over the years, the industry has advocated for streamlined processes, coordinated investment efforts, and a receptive attitude towards private sector inputs in policy-making. Positive strides have been observed, including the establishment of a singular entry point for engagements and enhanced dialogue between the public and private sectors. Noteworthy developments such as proposed revisions to regulatory requirements, like Reg 28, signify a step in the right direction, reflecting the government's responsiveness to industry concerns. While the asset management industry in South Africa boasts substantial capital reserves, estimated at 4.4 trillion rand as per the Association for Savings in South Africa, the current allocation towards infrastructure projects remains disproportionate. The call for regulatory and policy certainty resonates deeply within the investment community, highlighting the imperative for a stable and transparent investment environment. Clarity on regulations ensures investor confidence, facilitates risk assessment, and enables informed decision-making processes. Additionally, tailored policies tailored to specific infrastructure sectors are crucial to addressing the diverse needs of various projects. Economic infrastructure demands distinct considerations compared to social infrastructure, necessitating targeted policy interventions. The presence of the infrastructure office within the presidency signifies a centralized approach to infrastructure planning, offering a beacon of hope for enhanced investment certainty. While challenges persist, the industry acknowledges the strides made and the constructive dialogue initiated by the government. The alignment of policy and regulation with investor interests sets the stage for increased private sector participation and a more robust infrastructure landscape. In conclusion, the roadmap to addressing South Africa's infrastructure funding gap lies in fostering regulatory clarity, implementing sector-specific policies, and nurturing collaborative partnerships between the public and private sectors. As the nation strives towards economic recovery, a unified approach to infrastructure development will pave the way for sustainable growth and social prosperity.