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SA's gulf in facilities between rich and... Glimmer of hope for deal in EU trade tal... Launch of national lottery postponed aga... Investment quietly flowing i... |
SA's gulf in facilities between rich and poor
A new report points out the strengths and weaknesses of the country's services, writes JANETTE BENNETT
SOUTH African business is well catered for in terms of infrastructure, but there is still a long way to go in bringing services up to scratch for households. This emerges in Infrastructure: A Foundation for Development, a landmark report released by the Development Bank of Southern Africa (DBSA) this week.
Relative to income per capita, SA is rich with facilities in telecommunications, electricity, railways and roads. The breakdown of infrastructure per sector is on a par with high-income countries - despite SA's gross domestic product (GDP) per capita being only a sixth of those countries. However, after Brazil, SA has the most skewed income distribution in the world. The poorest 50% of its people receive about 15% of total annual household income, and the poorest 10% only 1.4%. Compare this with the top 10% of households, who control 42% of income. While the poorest 20% earn under R5 700 a year, the richest 20% earn more than R76 000 a year. Women and rural dwellers are worst off: male-headed households earn double the income of female-headed households, and urban households earn double that of rural households. Schools provide a telling case: 83% of schools lack libraries, 61% are without phones, 24% do not have water, 52% lack electricity, and 12% lack toilets. The report is the first of its kind to look at SA and southern African experiences, focusing on linkages between infrastructure, growth and development, and on how policy, institutions and finance can support these. Finance Minister Trevor Manuel, speaking in a video message at the launch, said the report was an "exceedingly important" resource which "focuses the collective mind on where we've come from, where we are, and where we need to go". "We cannot rest until all South Africans enjoy access to decent housing, safe water and sanitation, reliable energy and the many other services that underpin a life of quality," Manuel said. "There is a vast apartheid-inflicted backlog to overcome, and a great many serious economic and financial problems we must tackle." The report, which will be produced annually, is targeted at policymakers, analysts, researchers and DBSA clients. The report, edited by DBSA's manager for policy, Chris Heymans, and Janine Thorne-Erasmus, says the public sector invested an average of 7.8% of GDP on infrastructure between 1960 and 1997. Of this, 1.1% went into social infrastructure such as schools, and the rest into economic infrastructure such as electricity, water, transport and communications. The 1998 World Competitiveness Report ranks SA's infrastructure as 35th out of 46 countries for its overall ability to satisfy business needs - but the sectors vary wildly. SA clocks into the top 25% of surveyed countries in transport, but came in at No 40 on the basis of telephone lines per 1 000 people. It is ranked 38th for computers per capita, 30th for its share in computer usage worldwide, 33rd for cellphones per capita, and 13th for investment in telecommunications as a percentage of GDP. On infrastructure maintenance, SA came in 30th. The country is ranked highly (3rd) in cheap electricity costs to business, but both water and international telephone access are seen as expensive.
Output for the transport and communications sector is at the same level as the average for middle-income countries. The electricity and water sectors have increased their output share to about 50% higher than comparative levels for middle-income countries and nearly double the level for high-income countries. In the report, the World Bank's Gregory Ingram and Marianne Fay observe that for its income level, SA is well-endowed with infrastructure production capacity, particularly in that which services the business community. But household access to infrastructure service is low. "This shortcoming needs attention and special effort." Performance of infrastructure is at international best-practice levels in sectors like rail. Private involvement in infrastructure is "fairly modest" by interna-tional standards. So can infrastructure provision help eradicate poverty? "It all depends on how you do it," Heymans said at the launch. "Infrastructure on its own does not mean development. It depends on how you manage it." The report elaborates: "Ill-designed infrastructure could have more costs than benefits for poor people because of inadequate targeting or adverse social, health, financial and environmental effects. Infrastructure provision can also widen the gap where access to service is expensive, or where services were not planned specifically around the needs of the poor. Delivery can also be disempowering if it turns the poor into passive recipients of services rather than central actors in their own development. "To reduce poverty, public investment must reach poor people with the right mix of services, involving them in a way that ensures sustained improvement in their quality of life."
SA is streets ahead of many developing economies where, the report says, businesses have to spend a considerable part of their often scarce capital on their own infrastructure. In Nigeria, for example, up to 50% of public electricity capacity may not be working at any given time, mostly due to inadequate maintenance. Hence many firms installed generators. In both Indonesia and Nigeria, spending on their own infrastructure accounts for more than 13% of surveyed firms' capital. As a result, small and medium-sized firms have not been able to invest significantly in plant and equipment, so expanding their businesses. Even so, the report says, SA has "a notable need to upgrade some infrastructure, rethink the applicability of some and develop other afresh". In the Southern African Development Community (SADC) context, SA is very well-off. SA occupies only 28% of the southern African surface area but possesses 65% of rail trackage and 59% of the road network. In the ports sector, Durban alone handles more than double the cargo - and it does it cheaper - of all non-SA SADC ports combined. "Greater use by South Africa of regional infrastructure facilities such as transport, hydroelectricity and water would not only serve an economic stimulus for the weaker regional states, but could also contribute to correcting the economic and trade imbalances that currently favour SA," the report says. The report places a great deal of emphasis on the environment. "Both extreme poverty, with its lack of growth and development, and prosperity and very rapid growth can affect nature's ability to sustain people and economic growth." Absolute poverty is associated with deforestation, soil erosion and water pollution. Rapid industrialisation, meanwhile, can play a major role in air and water pollution, urban congestion and the degradation of the natural habitat.
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