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INFRASTRUCTURE: DPE industrialisation and transformation drive needs private sector support


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The Department of Public Enterprises’ budget vote, unveiled by Minister Malusi Gigaba in Parliament, requires extensive private sector participation to realise its goals of driving industrialisation and deepen skills development. This is according to Shamal Sivasanker, Industry Leader for Infrastructure and Power at professional services firm Deloitte.

Speaking from the sidelines of the budget vote, where the Minister highlighted allocation on his R236m budget vote, Sivasanker says the budget vote has a strong focus on improving skills levels and driving industrialisation and transformation, and both objectives requires extensive participation from the private sector, with a specific focus on black-owned small and medium enterprise development.

Gigaba gave an update on progress made by parastatals under his watch, led by Eskom and Transnet, on the scale of their spending programme and revealed an acceleration on infrastructure spend, but also a strong focus on empowerment. 

“Our portfolio of State-Owned Companies (SOC) has aggressively been accelerating investment to maintain aggregate demand precisely when there is a downturn globally and the private sector is too apprehensive to invest,” said Gigaba, who added that three years ago, State Owned Enterprises invested R53bn and in the next financial year, this will rise to R113 bn.

Sivasanker says the most impressive feature of the budget vote is its drive to improve synergy between SOCs to share expertise in improving infrastructure rollout. This will see Eskom, as a leading SOC that has embarked on infrastructure spending with the most advanced processes and practices in government, share its skills with other SOCs.

He notes that this co-operation will create momentum for work between the state owned companies, improve their capacity and then draw in private sector investment.

Nazeer Essop, Public Sector Industry Leader at Deloitte, says the skills commitment drive that Transnet and Eskom have under the New Growth Path is beneficial. Under this pact, the parastatals commit to train not only their own needs but also those of the wider economy. Last year alone some 21,000 learners benefitted from these training initiatives.

Gigaba highlighted the impact of SOC’s procurement spend on empowered companies. Eskom, for example, spent R103bn of R120bn, or 86%, on companies that have significant black or female shareholding. Transnet, for their part spent R58bn, or 87 % of its procurement spend on empowered suppliers up to February this year.

Essop points out that while this is a welcome development, the companies benefiting from this procurement spend now need to demonstrate what they are doing internally to transform. “They need to show how they are investing in their people, implementing corporate social investment initiatives in needy communities, creating jobs and helping the government with its enterprise development agenda,” he says.

Deloitte also welcomed Gigaba’s pledge to incorporate a climate change strategy into the shareholder compact of all SOC’s within 18 months, showing a commitment to moving towards a green economy.

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