Page 53 - IRMSA Risk Report 2023

There is no question that the failure of public sector could prove beneficial. One cannot, however,
infrastructure presents a major risk to South African shy away from the challenges posed to South Africa
development goals. In many respects, the National in effectively dealing with the risk of failure in public
Development Plan (NDP) speaks about expanding infrastructure. Strong labour unions have the power
Public-Private Partnerships (PPPs) are essential for the building of capacity and skills in services to all parts of the country and to all its to push back on economic and privatisation reforms,
government and parastatals. PPPs offer the opportunity to provide capacity in the short
Government and parastatal term and the transfer of skills in the medium term, to areas that desperately need the citizens. The continuous failure of infrastructure, this thereby delaying the reforms significantly. Also, a
inefficiencies, arising from assistance. The result is building infrastructure that is good for the economy and assists due to vandalism, incompetence, theft and lack of lack of a coordinated response from government at
inadequate and inefficient the government in improving its achievements towards the NDP objectives. Key areas expansion, is hampering the achievements of these different levels of administration hinders effectively
management of local authority objectives. Almost every goal in the NDP is in some dealing with this risk – every layer doing its own thing
and parastatal infrastructure. that PPPs should be focusing on would be transportation and utilities such as energy way, directly or indirectly, negatively affected by the and therefore no leveraging on each other’s capacity.
Exacerbated, at a national level, and water. The existing opportunities through PPPs are to consider innovations through failing infrastructure. Take the water crisis in Gauteng for example, where
solar, wind and other areas, this to improve energy creation and the hydrologic cycle.
by slow policy implementation.
The aim is to create new businesses that will not only solve problems regarding public there has been no coordinated response from
infrastructure but boost the economy too. There are some risk-response strategies that Rand Water or municipalities. The same applies
should be implemented to effectively address to security and protection. Another challenge is
this risk going forward. These strategies should unmitigated inward migration to cities, putting
include the use of technology in safeguarding already strained infrastructure under severe pressure
The recommendations by the Zondo Commission emanating from the Judicial
Commission of Inquiry into Allegations of State Capture report, such as establishing an infrastructure and enabling a quick response. Long- with no equivalent investment in the expansion and
independent agency against corruption in public procurement, should be executed. term project pipelines that can secure investments maintenance.
Responsible individuals should be held accountable for ethical and governance from development banks, as well as the formation
failures. The National Prosecuting Authority (NPA) – which is critical to the proper of specialised agencies for infrastructure on a short- There are key indicators that can be regarded as
The continued endemic functioning of South Africa’s criminal justice system and upholding of the rule of law –
nepotism and corruption in the and the Investigating Directorate (ID), which investigates and prosecutes high-profile term basis (as opposed to entities with permanent indicative of the risks materialising, such as truck
public and private sector. arrangement) can also be considered. Affordable congestion and accidents on all major transport
and complex crimes*, need to retain independence from any other organ of state and alternatives to road transport, such as rail, must be corridors; damages to roads; rising transport and
be free to continue the good work that is being done to turn the tide on continued factored into improving the current situation, which logistics prices; increased waiting periods for
corruption. would mean that the rail network must improve. berthing of ships at most ports; ships diverting to
*Especially under the Prevention of Organised Crime Act, the Prevention and
Combatting of Corrupt Activities Act and the Public Finance Management Act. Initiatives such as ensuring that all road infrastructure alternative ports; the number of loadshedding
is designed and maintained in as efficient a occurrences and power availability; water rationing;
manner possible would have a positive impact on infrastructure theft and vandalism. The failure of
Lack of capacity and skills the economy. These initiatives would ensure the public infrastructure can be attributed to all of these.
have resulted in the slow pace The high turnover rate of accounting officers and parliamentary committees leads to smooth, delay-free and safe operation of vehicles
gaps and shortages in the continuity of public finance management. A combination
of digital transformation and of PPP to assist with resource and skills, as well as the protection of whistle-blowers on the roads, thereby maximising efficiencies and There are no public entities that necessarily deal with
cyber security vulnerabilities and strong and ethical leadership to curb fraud and corruption, will go a long way minimising delays within the supply chain. On this risk particularly well. There are many statements
within government and SOEs.
to improve the situation. Stronger debt-collection enforcement from municipalities, the other hand, concerning ports and harbours, of good intent, but we have yet to see any effective
in collaboration with National Treasury assistance where appropriate, is necessary to strategies to improve efficiencies and minimise implementation. The response from the private
Poor enforcement of the improve the current bad debt rates incurred by SOEs providing utilities to municipalities
Cybercrimes Act 19 of 2020 for further distribution. delays are necessary, especially when it comes to sector is enhanced by the ability to use third-party
and data privacy laws. ships and other modes of transport (for example: mitigation, such as insurance; private security guards;
road and rail) discharging or loading cargo. better business continuity in instances of failure; and
good communication to users.
In July 2021, Transnet became a victim of a ransomware attack, which caused the In considering the risk of failure of public infrastructure,
SOE to declare force majeure at several key container terminals, including the Ports of as well as the risk-response strategies mentioned Within the private sector, especially in the dry-
Durban, Ngqura, Gqeberha and Cape Town. The operational integrity of the country’s above, one should also seek opportunities that bulk sector, we are seeing private entities such
critical maritime infrastructure suffered a severe disruption leading to major delays at could be leveraged to form part of the risk-response as exporters providing voluntary financial and
those ports. This negatively impacted companies and the economy. In 2012, to meet strategies. Enhanced competition and supply-chain operational support to the parastatal entities, this
Lack of capacity and skills the rising threats, the South African government created a National Cybersecurity efficiencies cannot be emphasised enough. This to assist them in delivering the necessary services.
have resulted in the slow pace Policy Framework (NCPF). The policy sets out measures and standards for coordination
of digital transformation and across government bodies. It also began a process of greater regulation in terms of would result in goods getting to market quicker, in In addition, exporters and importers are in some
cyber security vulnerabilities private and public entity data management. Due to a lack of capacity and skills, many turn boosting the economy. This, of course, will work instances starting to invest in their own infrastructure
within government and SOEs. government departments and SOEs are still vulnerable to cyber-attacks. The recently efficiently with the reduction in overall transport and – for example: private sector owners of rail wagons
enacted Cybercrimes Act 19 of 2020, as well as data-privacy laws, will need to be other supply chain tariffs, as well as a consequent entering ‘Hook and Haul’ agreements with Transnet
enforced to encourage both the public and private sectors to improve their cyber- reduction on inflation drivers. Maintenance on Freight Rail, so that they can at least control the
security postures. The opportunity for the country is to establish centres of excellence, roads to reduce wear and tear will also contribute to supply and maintenance of wagons and have some
to improve technology skills that will move the public sector forwards in innovation longevity on roads. measure of influence over the supply chain.
relating to digital transformation.
More Public-Private Partnerships are essential, both The private sector is also willing to engage in PPPs to
in the rolling out of infrastructure to supplement ensure the provision of and more efficient operations
The government should look to strengthening the regulatory framework governing,
Lack of infrastructure planning and budgeting for infrastructure maintenance. It should look to improving government capability, as well as in the leveraging of necessary infrastructure. The government needs
maintenance and the vandalism the monitoring, evaluation and reporting of the maintenance of public infrastructure. of the Private Sector for the securing of infrastructure to take decisive action urgently, to turn around a
of infrastructure. Poor Potentially also using technology to monitor and protect infrastructure from being and continuity. There are some services, such failing public sector and better align with the NDP
administration and corruption vandalised. PPP has a role to play in assisting with capacity and skills, to expedite as the management of harbours, airliners and objectives, or it will continue down the slippery slope
are the causes for lack of maintenance that is critical. Tied to PPP, the government should look at ways to enhance telecoms, where government competency is limited. of lack of delivery and poor services to the citizens
maintenance. the attractiveness of infrastructure projects for private funding. The opportunity is to Outsourcing some of these services to the private of the country.
claim back South Africa’s role as a gateway to Africa for foreign investors and businesses.

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