A couple of references in recent reports about South Africa’s infrastructure decay and allusions to an infrastructure deficit reminded me of regular visits to Minneapolis, in the US state of Minnesota. For several reasons, that city holds a special place in my heart, if only because of the exciting ice hockey programmes for children and, well, because it is just a great state.

In August 2007, a bridge in Minneapolis collapsed. About 150,000 vehicles cross the bridge over the Mississippi every day. The bridge collapsed during the Minneapolis evening rush hour, killing 13 people, and injuring about 140.

My initial response was the horror of death and injury, but then, like most people, I turned to the long-term causes of the collapse. Two immediate things were worth considering.

Firstly, while there were maintenance and inspection failures, Minnesota’s roads, especially those in Minneapolis, face a serious combination of weather-related decay, with extreme cold in winter and sweltering heat in summer, with almost non-stop traffic.

Secondly, the collapse was evidence that the US was experiencing widespread infrastructure decay, as well as urban decay for that matter, with an attendant deficit.

In 2021, citing the American Society of Civil Engineers (ASCE), the presidency in the US recorded more than 45,000 bridges and one in five miles (1.6 in 8km) of roads that were “in poor condition”. In that country, public investment in infrastructure as a share of gross domestic product (GDP) had fallen by more than 40% since the 1960s. The ASCE reported, also that year, that the total infrastructure investment gap had gone from $2.1-trillion over 10 years to $2.59-trillion.

In the contexts of the lack of trust in government, mismanagement, maladministration, rent-seeking (and Moeletsi Mbeki’s “five deadly sins”), it becomes difficult to situate South Africa’s investment deficit in a global context when one is expected to repeat and reproduce the governance failures of the past three decades without any deeper, more nuanced historical considerations.

It becomes a quite perverse reproduction of Giambattista Vico’s observation that history is no more than the universalisation of an idea in people’s thoughts (South Africa is either dead or dying) that should be made universally true (by repetition), and then consummated in reality. Nonetheless, there certainly is enough sound to keep us dancing on South Africa’s grave…

Without minimising the failings of 30 years of ANC governance, I situate this essay, and try to answer the question, why there is such a huge infrastructure deficit in the world — with China being the notable exception — and what we can do in South Africa.

Let’s remind ourselves again of the South African situation, as reported by colleagues at Daily Maverick. The Gauteng road network is in desperate need of restoration, which will be costly. According to Sanral, 85% of Gauteng’s roads are beyond their design life cycle and need significant maintenance investments.

Finance Minister Enoch Godongwana greenlighted a plan that involves the national government taking over responsibility for 70% of Sanral’s debt that the state-owned enterprise (SOE) has clocked up through the expansion and maintenance of Gauteng roads. To do this, Godongwana allocated an initial R23.7-billion taxpayer-funded bailout to pay Sanral’s debt and interest costs.

A parsimonious explanation lays the blame for all of this at the door of the ruling alliance. There is a lot of truth in that. There is, however, a more historical context that may be discussed. Or if you refuse to consider a range of contingent factors that do not sit easily with your ideological view, you can simply ignore the rest of this essay…

Capitalism’s lack of investment in an uncertain future

A general (global) overview about an investment deficit, provided by the World Bank, paints a gloomy picture. Globally, 675 million people are without electricity; 2.3 billion lack safe drinking water; 3.6 billion lack safe sanitation; 1 billion live more than 2km from an all-season road, and 450 million live beyond the range of a broadband signal.

According to the bank, meeting these challenges would cost $1.5-trillion every year through 2030, an estimated 4.5% of the GDP of low- and middle-income countries. My sense is that if, as a liberal capitalist, you believe in the future, you will invest in the future and not simply stockpile cash by avoiding re-investing.

Two years ago the Wall Street Journal reported that venture capitalists sat on massive cash stockpiles that are growing. Earlier this year, it was reported that investors stockpiled a record $6.1-trillion in money market funds for several reasons, one of which is “waiting to invest”.

In South Africa, too, the private sector has sat on stockpiles of cash for the better part of a decade. (See here and here). It does not help that the politics of revenge and rapaciousness have taken root in the country (as discussed here, and here).

The global picture is complex. It includes the fact that people invest money to make money. One of the strands that runs through the data seems to be uncertainty about the future. I reach the same conclusion about a lack of investment in youth unemployment. Surely if you believe that the youth are the future you would invest in the youth. This applies as much to the government as it does to the private sector. It is no different with infrastructure investment and development.

Closing the ideological gaps of perception

There is too large an ideological gap (of perceptions) between state and private drivers of infrastructure development. Surely states lacking capital (like South Africa), should look at private sector investment in especially road and rail infrastructure — especially if the country hopes to meet the Sustainable Development Goals (SDG). Printing money is not always a solution.

Countries in sub-Saharan Africa need to invest 7.1% of GDP annually in SDG-related infrastructure. According to the World Bank, these countries have only been investing around half of this level, 3.5% of GDP. For most of the past decade or so governments in sub-Saharan Africa carried the majority (an estimated 90%) of infrastructure financing from their own resources or external borrowing, with only a small residual (about 10%) by the private sector.

There is every possibility, the World Bank states, that the capacity of governments in the region to finance infrastructure in the next decade would shrink. Average public debt over GDP was estimated at 71% in 2021 (up from 43% in 2013), increasing debt service obligations at the expense of other expenditures — including investment infrastructure — and reducing countries’ attractiveness for creditors given heightened debt distress risks.

And recovery from Covid, including for governments to mobilise domestic resources, will take time.

As Zivanemoyo Chinzara, Sebastien Dessuss and Sephan Dreyhaupt wrote on the World Bank blog, “clearly, given the limited fiscal latitude, the substantial infrastructure needs in Africa cannot be met unless there is sizeable response from private sector financing, to which all eyes are now turning. But how much private sector infrastructure financing can countries in the region realistically attract, and how can it be attracted?”

If the next government can overcome the naturalised animosity and distrust of the private sector, there may be a chance to rescue South Africa’s crumbling architecture. There is a multi-dimensional global crisis underway across the world.

In sub-Saharan Africa, government budgets simply cannot cover the scope and depth of the problems that beset countries. This is where private capital can be mobilised, but it would take courage, vision and imagination for a future that is better than the past. DM