Despite the rhetoric in the New Growth Path about shifting South Africa’s future economic growth trajectory from the prevailing consumption-led bias to one based on productive activities, South Africa’s mining, manufacturing and agriculture sectors remain in crisis.

The sharp 6% decline in manufacturing output in July and the 5.1% fall in mining output in the same month were far worse than expected. No doubt, antagonistic industrial relations during the period under- mined the figures. But the manufacturing statistics, in particular, simply served to amplify what is really a secular decline in the sector, which is arguably approaching a deindustrialisation tipping point.

The mining statistics, meanwhile, reinforce the message that there is something fundamentally wrong with confidence levels in a sector that should, by all accounts, be expanding into an upcycle. Moreover, South Africa’s other key productive sector, agriculture, remains on the back foot, notwithstanding the prospect of higher demand and prices.

The National Planning Commission’s Diagnostic Overview shows that mining and agriculture, which are also the most intensive in low-skilled employment, have been steadily shedding jobs. Between 1970 and 1995, these sectors shed 1.4-million workers, or 46% of their workforce. This trend continued after 1995, when these two sectors shed a further 30% of their workers.

“South Africa has lost out on the recent commodity boom, which was the largest such development in half a century. Mining exports have not grown as fast as in countries such as Australia, Brazil or Chile, even though South Africa has greater mineral resources than most of them,” the report noted, acknowledging that uncertainty surrounding the mineral rights conversion process has been a key factor.

Dropping the Ball
But the other critical constraint relates to infrastructure, or the lack thereof. Here again, much lip service has been paid but there has been a real failure to sustain the construction momentum generated in the run-up to the 2010 FIFA World Cup.

Disturbingly, government dropped the ball despite having good information on and analyses emphasising the importance of sustaining expenditure as a counterweight to a slowing economy.

Indeed, it became apparent fairly early on that South Africa was not going to escape the fallout from the ‘Great Recession’, which led government business and labour in early 2009 to draft a ‘Framework for South Africa’s Response to the International Economic Crisis’.

Correctly, that document set much store by the role that could be played by South Africa’s infrastructure programmes in providing a growth and jobs stimulus in light of an impending recession. Appropriately, the framework stressed that the programmes “must be maintained” and “implemented on an expedited basis where possible”.

However, the advice was not heeded and, instead of an infrastructure-led stimulus, the country has descended into a construction sector recession.

For evidence, one need look no further than that collapse in the share prices of JSE-listed construction groups such as Murray & Roberts, Aveng, Group Five, and Wilson Bayly-Holmes Ovcon, the contraction in margins and the fact that most of these companies are looking abroad to replenish their order books.

Public-sector spending on infrastructure is expected to average only 8,4% of gross domestic product (GDP) between 2011/12 and 2013/14.

Arresting the Decline?
In a bid to arrest this decline, South Africa’s newly established Presidential Infrastructure Coordinating Commission, which is chaired by President Jacob Zuma, held its inaugural meeting in Pretoria earlier this month.

The focus for the new structure, which was conceived at the midyear Cabinet lekgotla, is to accelerate investment in social and economic infrastructure by elevating the matter to the level of the President.

Details remain sketchy, but it has been confirmed that a management committee, chaired by Rural Development and Land Reform Minister Gugile Nkwinti, will support the body. This committee will receive technocratic support from a secretariat composed of government officials.

Besides Nkwinti, the committee also included eight other Ministers, including Minister in The Presidency responsible for the National Planning Commission Trevor Manuel, Finance Minister Pravin Gordhan, Economic Development Minister Ebrahim Patel, Energy Minister Dipuo Peters, Public Works Minister Gwen Mahlangu Nkabinde, acting Cooperative Governance and Traditional Affairs Minister Nathi Mthethwa and Public Enterprises Minister Malusi Gigaba. The provincial Premiers are represented by North West Premier Thandi Modise and the metropolitan council mayors by a South African Local Government Association representative.

CEOs from infrastructure-focused State-owned enterprises (SoEs), such as Eskom and Transnet, will also be consulted when the need arises, while interaction with the private sector on possible public–private partnerships is also likely.

A commitment has been made to compile a list of priority economic and social projects within two months. Therefore, the commission, which would normally meet four times a year, will convene again in the coming two months to firm up on the priority projects and associated action plans.

Another priority for the committee is to review the legislative and regulatory frameworks surrounding public capital programmes, as well as where these might be causing unintended delays to delivery.

The social infrastructure identified for attention related to housing, schools, water, sanitation and health backlogs in informal settlements, rural towns and large cities, while the economic infrastructure priorities relate to roads, ports, rail, power and communications.

The overarching aim is to deal decisively with the current lack of coordination and integrated planning surrounding key infrastructure projects, as well as poor or delayed project execution. But it also reaffirms the importance government ascribes to infrastructure development as a critical tool in stimulating growth, bolstering local supply industries and growing employment.

Further, it is tacit acknowledgement that the promise of infrastructure investment has, thus far, failed to live up to expectations and that a new lever is required to focus on accelerating the planning of priority projects.

Indeed, by elevating infrastructure to the level of the President, Cabinet hopes that hurdles in the way of key projects, including possible megaprojects, such as the nuclear build programme, could be cleared expeditiously and that the decline in expenditure trends can arrested.

It is understood that the commission could eventually seek to develop a ten-year rolling pipeline of priority projects, which would be updated yearly. It could also eventually ensure systematic selection, planning and monitoring of large projects.

Can It Deliver?
The real question, though, is whether such a commission will truly prove to be effective in delivering on its objectives.

The downsides are obvious. It adds yet another meeting to the schedules of Ministers and bureaucrats, who are already suffering from meeting fatigue and paralysed by consultation processes.

It puts in place yet another institution in a government awash with Ministries and structures with overlapping mandates. The economic terrain is particularly crowded and there is still some confusion as to the various roles of the National Planning Commission, the National Treasury, the Economic Development Department and the Department of Trade and Industry.

There is also a genuine threat that this new commission could actually undermine the objective of accelerated and integrated planning, as no SoE or government department will dare move ahead with a project unless it has been given the commission’s explicit sanction.

On the other hand, there is a tendency in South Africa for centralised activities to gain greater political and financial traction. In fact, when the commission was unveiled, Minister in The Presidency Responsible for Performance Monitoring and Evaluation Collins Chabane likened the structure to the high-level structure established to coordinate government projects in the run-up to the successful 2010 FIFA World Cup.

In addition, there are examples in other countries of government seeking to clear the way for job-generating infrastructure developments.

In fact, in his recent address to the US Congress on his ‘American Jobs Act’, President Barack Obama listed some priority projects of his own, highlighting a bridge that needs repairing between Ohio and Kentucky, a public transit project in Houston and the repair and modernisation of some 35 000 schools. The plan envisages that $140-billion be set aside for such projects, which Obama portrayed as being critical to maintaining US competitiveness.

In the UK, meanwhile, the government has approved a fast-track planning process for major projects, such as railways, large wind farms, nuclear power stations, reservoirs, harbours, airports and sewage treatment works.

It has decided that ‘‘nationally significant’’ projects should be taken up by the Infra-structure Planning Commission (IPC), set up in 2009 to refine planning processes that some believe to be a hurdle to development.

However, unlike the South Africa com-mission, the IPC, which is in the process of being restructured, is an independent body made up of professionals, including engineers, architects, town planners, environmental planners, economists, bankers and individuals with experience in the public service.

In other words, the UK model is far less politically driven and more inclusive of individuals with true project planning and execution experience.

It is quite possible that the effectiveness of the South African commission will hinge on the ability of the management committee and secretariat to draw on such individuals and expertise. Failure to do so could again result in plans that look good on paper, but fall dismally short in actual execution.