Crumbling roads, bridges a global threat

During the flood of news about politics, corruption and the struggling economy late last year, one significant event was largely overlooked – the release of South Africa’s third infrastructure report card (IRC). 
 
The dismal assessment from the South African Institute of Civil Engineers (SAICE) showed that, overall, the country’s key infrastructure – including transport, electricity, water supply, education and health – is at risk of failing.  

Poor maintenance and sometimes outright neglect have undermined the resilience of existing infrastructure, while inadequate management, planning and data collection, together with a worsening shortage of skilled engineers in the public sector are contributing factors, it said.  

The report gave SA an overall grade of D+ compared to C- when the last one was released in 2011, and warned that the water resources sector is facing a similar crisis to that of the electricity generation sector a decade ago.

Most of the shortcomings were flagged in the previous report cards in 2011 and 2006, it pointed out.  

“If you don’t do maintenance, you need to repair and we end up doing a lot of repair and rehabilitation which should not have been necessary,” says Sam Amod, a former president of SAICE and co-author of all three report cards. “It ends up costing us a lot more than necessary.”
  
Similar reports are published by engineering associations in the US, the UK and Australia, with the intention of informing and influencing the planning, funding and debate on the state of their infrastructure.  

Ironically, in some cases the assessments are largely ignored. A groundbreaking report last year from the Global Infrastructure Hub covering 50 countries showed that inadequate provision of critical infrastructure was becoming a major challenge in many parts of the world.
  
Although the topic of infrastructure may not attract bold headlines, the problem was already visible in almost every country, it noted.

“It can be seen in strained and crumbling highways, bridges and rail networks; ageing airports barely able to cater for a population that is more mobile than ever before; and failing electricity grids that paralyse entire cities,” it said.  

It estimated that the cost of providing adequate infrastructure to those 50 countries between now and 2040 would amount to $94tr, rising to $97tr if the UN Sustainable Development Goals of universal provision of clean water, sanitation and electricity were taken into account.  

But if current spending trends continued, there would be a shortfall, or funding gap, of $18tr – around 20% of the overall requirement, the analysis pointed out.  

The world’s biggest economy, the US, is worst off while the world’s second-biggest, China, accounts for nearly a third of global infrastructure needs, it added.

The US has a projected gap in infrastructure spending of $3.8tr, the biggest of any country over that period.  

The American Society of Civil Engineers is even more pessimistic.

It believes that the US economy will lose just under $4tr in GDP between 2016 and 2025 if investment gaps are not addressed. This could rise to $14tr by 2040 if ageing roads, railways and bridges decay even further, it warns.  

Deteriorating infrastructure leads to higher business costs as it makes goods more expensive to produce and travel more costly and unreliable, making productivity fall and in turn hurting economic activity.  

During his election campaign, President Donald Trump promised to tackle the problem with a plan to generate $1tr in infrastructure spending.

But more than a year later nothing has happened, with critics saying a golden opportunity was missed by not including it in a sweeping overhaul of the country’s tax codes at the end of 2017.
  
In fact, many warn that the tax bill will both use up potential funding options for repairing infrastructure and eliminate a financing option which states have used to support infrastructure projects.  

To make matters worse, Trump has sparked widespread consternation by expressing misgivings about his administration’s infrastructure plan, telling Republican leaders at a retreat on 5 January that building projects through public-private partnerships was unlikely to work.  

This was clearly news to his chief economic adviser Gary Cohn, who the following day delivered a detailed proposal on the topic which appeared to contradict Trump, according to The Washington Post.

He said the administration hoped $200bn in new federal government spending would unlock almost $1tr in private, local and state spending.

According to the Global Investment Hub’s report, there are trillions of dollars in private investment ready to be mobilised globally to fund new infrastructure if a pipeline of quality, bankable projects were available.

Its investor survey in 2016 found that 65% of existing infrastructure investors in emerging markets wanted to increase their allocations in the next three to five years, but 92% felt that there were not enough opportunities.
  
Similar opportunities could present itself in SA, with the right political leadership to overhaul the state institutions responsible for the country’s infrastructure.

This article originally appeared in the 18 January edition of finweek. Buy and download the magazine here.

Mariam Isa is a freelance journalist who came to SA in 2000 as chief financial correspondent for Reuters news agency after working in the Middle East, the UK and Sweden, covering topics ranging from war to oil, as well as politics and economics. She joined Business Day as economics editor in 2007 and left in 2014 to write on a wider range of subjects for several publications in SA and in the UK.