South Africa's big building plans stall

Tue Feb 12, 2013 4:28am EST
 
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By Agnieszka Flak and Xola Potelwa

JOHANNESBURG (Reuters) - When President Jacob Zuma said last year South Africa would spend $95 billion on roads, ports and railways before 2015, domestic construction firms such as Sanyati should have been celebrating.

But the company's bosses were too busy trying to stave off bankruptcy because they said the government had failed to pay $6 million for an earlier contract to build and repair roads.

The government says Sanyati, which folded with the loss of 2,500 jobs, was also to blame for entering illegal building contracts with a provincial administration.

Whatever the reason, its collapse exposes the myriad problems South Africa faces in trying to roll out a multi-billion dollar infrastructure plan - from bad planning and skills shortages to contract problems and corruption.

"We would like to see the government put their money where their mouth is," said Norman Milne, president of the South African Federation of Civil Engineering Contractors. "We shouldn't fool ourselves thinking that this will just flow."

No one doubts that the plans are what South Africa, a key exporter of commodities, needs.

Last year, Zuma said the government would spend $450 billion over 15 years - including $95 billion in the first three - to give Africa's biggest economy a much-needed shot in the arm.

Ratings agency Moody's has said infrastructure constraints are a key reason why the resource-rich country missed out on the global commodity boom over the last decade.   Continued...

 
Workers construct a road near Nkandla in South Africa's rural Kwa-Zulu Natal province, in this August 2, 2012 file photo. REUTERS/Rogan Ward