South Africa: Strategic Integration To Unlock Potential

Last Updated: 14 February 2014
Article by Wayne Jansen

Improved dialogue and effective implementation of the national infrastructure development plan could position South Africa's mining sector to capitalise on the next growth super cycle, say, stakeholders.

South Africa's mining sector, employing upward of half a million people and indirectly sustaining millions more, faces significant challenges.

The recent news of the Association of Mineworkers and Construction Union's (Amcu's) strike at three platinum mines, just the latest in waves of action and challenges to sustainability, underlines the need for a new path for the sector, says Wayne Jansen, KPMG's global head of mining.

There are also the issues of decreasing productivity and the continued devaluation of the rand to consider, he says. But with labour issues top of mind in the sector, the strikes are "a clear indicator that there is a need for improved dialogue in the industry," says Jansen.

"A successful mining industry in South Africa is in the interest of all stakeholders that are directly and indirectly linked to it. Yet, the industry finds itself in a difficult time, with a future that has perhaps never before been so uncertain. Charting a new path for the sector will not simply happen on its own," continues Jansen. "It requires a collaborative effort amongst all stakeholders, bound together by a common purpose."

Africa was not well positioned to benefit fully from the last economic super cycle, which began in the 1990s, ended in 2008. However the beginnings of economic recovery in the developed nations spells the potential start of the next super cycle of growth, says Jansen.

"As a continent, we are now better placed to take advantage of the renewed growth in the global economy but we must overcome some major stumbling blocks, particularly in the mining industry. Now is the time to ensure that the building blocks are in place." These building blocks include components of the national infrastructure development plan, part of the ambitious national development plan (NDP) for South Africa.

This far-reaching infrastructure development plan, incorporating 18 planned strategic integration projects (SIPs) co-ordinated and facilitated by the National Planning Commission (NPC) and the Presidential Infrastructure Co-ordination Commission (PICC) aims to put in place supporting infrastructure to position South Africa for competitiveness and growth.

Minister of economic development Ebrahim Patel has said that the plan is "aimed at reversing the spatial, social and economic distortions of the colonial and apartheid era. As well as improving living standards, it aims to create economic opportunities in underdeveloped areas through improved roads, rail, ports and broadband, as well as water and energy infrastructure.

In his department's annual report for 2012/2013, the minister said: "In the financial year ending March 2013, the estimated (unaudited) spending on infrastructure across the state was more than R200-billion.

"If current trends continue, the administration is expected to have spent about R1-trillion by the end of its term of office in 2014, doubling the achievement of the previous administration and 2.3 times higher than spending in real terms at any five year period in more than 40 years.

"Construction of infrastructure under the plan monitored by the PICC sustained about 180 000 direct jobs in the past financial year. Eighteen strategic integrated projects have been developed which integrate more than 150 individual infrastructure projects clusters into a coherent package. The SIPs cover social and economic infrastructure across all nine provinces, with an emphasis on poorer regions. They include catalytic projects that can fast-track development and growth. Work is being aligned with key cross-cutting areas, especially human settlement planning, skills development and local procurement."

With three of the SIPs directly impacting the mining sector, stakeholders are cautiously optimistic that the plan, together with a will to collaborate more closely across the sector, will position South Africa to benefit from the next super cycle. However, prioritisation, integration, effective management and realistic funding models will be crucial, they note.

This article first appeared in the Mail & Guardian supplement, 31 January 2013

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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