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THE ROLE OF INFRASTRUCTURE
IN THE ECONOMY OF EC PROVINCE
Presented by Nomhle Chinese Tys
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Infrastructure is the prerequisite for the development of any
economy. Transport, telecommunications, energy, water,
health, housing, and educational facilities have become part
and parcel of human existence.
It is difficult to imagine a modern world without these facilities.
These are vital to the household life as well as to the
economic activity.
Infrastructure plays a crucial role in promoting economic growth and
thereby contributes to the reduction of economic disparity, poverty
and deprivations in a country.
Greater access of the poor to education and health services, water
and sanitation, road network and electricity is needed to bring
equitable development and social empowerment.
It is an important pre-condition for sustainable economic and social
development.
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 Infrastructural investments in transport (roads,
railways, ports and civil aviation), power, irrigation,
watersheds, hydroelectric works, scientific research
and training, markets and warehousing,
communications , education, health and family welfare
play a strategic but indirect role in the development
process, but makes a significant contribution towards
growth by increasing the factor productivity of land,
labour and capital in the production process,
especially safe drinking water and sanitation, basic
educational facilities strongly influence to the quality of
life of the people.
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INTRODUCTION
There is a precise link between infrastructure and
development.
Infrastructure investment directly affects the economic
development.
Therefore, the only way to build up a country’s productive
potential and raise per capita income is to expand the
capacity for producing goods, this need not refer simply to
the provision of plant and machinery, but also to roads,
railways, power lines, water pipes, schools, hospitals,
houses and even “incentive” consumer goods such as
consumer durables, all of which can contribute to
increased productivity and higher living standards.
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Regions need to have good basic facilities like health,
education, transport, communication, water, sanitation,
energy, housing, etc.
This will attract more investments especially the small
and marginal entrepreneur starts their production
activities.
Good transportation, low cost of electricity, availability of
skilled labour facilities always have negative effects on the
cost of production, positive effects on production as well
as profit levels.
Inadequate infrastructure and services become the burden
for infrastructure suppliers, and led to the low efficiency of
output.
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INFRASTRUCTURE DEVELOPMENT AND
ECONOMIC GROWTH: LINKAGES
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Provision and maintenance of adequate infrastructure
facilities are absolutely necessary if rapid economic
growth is to be achieved and sustained.
The availability of infrastructure like power,
telecommunication and transport is absolutely vital for
accelerated development and modernization of a
country.
“The link between infrastructure and development is not a
once for all affair, it is a continuous process and
progress in development
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Has to be preceded, accompanied and followed by
progress in infrastructure, if are to fulfil our declared
objectives of self accelerating process of economic
development.”
An infrastructural facility both economic and social
constitutes the core of development strategy and efforts.
Efficient and affordable infrastructural services are key bone
to the higher productivity and output growth.
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Energy, transportation, electricity, telecommunication,
availability of skilled workforce, technical and general
education, health facilities, agricultural and rural
infrastructure like rural roads, irrigation facilities,
fertilizers and pesticides, credit facilities, availability
markets all the social and economic infrastructure
services are made positive and strong impacts on output
growth of as well as eliminates the poor performance the
different sectors of the economy.
The linkage between infrastructure and economic growth
is multiple and complex, because not only does it affect
production and consumption directly, but it also creates
many direct and indirect externalities, and involves large
flows of expenditure thereby creating additional
employment.
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The poor suffer not only from low incomes but also from
inadequate access to public services essential to their
health and productivity.
As many of these services, such as sanitation and water
supply, cannot be privately purchased, an expanded public
program for wider distribution of services must be an
important element of strategies to alleviate poverty.
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The linkage between infrastructure and economic growth
is multiple and complex, because not only does it affect
production and consumption directly, but it also creates
many direct and indirect externalities, and involves large
flows of expenditure thereby creating additional
employment.
The poor suffer not only from low incomes but also from
inadequate access to public services essential to their
health and productivity.
As many of these services, such as sanitation and water
supply, cannot be privately purchased, an expanded public
program for wider distribution of services must be an
important element of strategies to alleviate poverty.
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Channels through which investment in
infrastructure can contribute to growth
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Reducing transaction costs and facilitating trade flows
within and across borders;
Enabling economic actors individuals, firms, governments
to respond to new types of demand in different places;
Lowering the costs of inputs for entrepreneurs, or
making existing businesses more profitable;
Creating employment, including in public works (both as
social protection and as a counter-cyclical policy in times
of recession);
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Enhancing human capital, for example by improving
access to schools and health centers; and
Improving environmental conditions, which link to
improved livelihood
Better health and reduced vulnerability of the poor
Therefore, infrastructure development contributes to
investment and growth through increase in productivity
and efficiency as it links between resources to factories,
people to jobs and products to markets.
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Figure 1 – How Infrastructure Contributes
to Growth
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Government has adopted the 9 point plan to
implement the economic targets of the MTSF
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Resolving the energy challenge.
Revitalizing agriculture and the agro-processing value
chain.
Advancing beneficiation or adding value to our mineral
wealth.
More effective implementation of a higher impact Industrial
Policy Action Plan.
Encouraging private sector investment.
Moderating workplace conflict.
Unlocking the potential of SMMEs, cooperatives, township
and rural enterprises.
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Government has adopted the 9 point plan to
implement the economic targets of the MTSF
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State reform and boosting the role of state owned
companies, ICT infrastructure or broadband roll out, water,
sanitation and transport infrastructure
Operation Phakisa aimed growing the ocean economy and
other sectors.
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Xonxa Dam Transfer Scheme &
Bulk Water Supply
Changing the lives of the people of Lukhanji LM through
infrastructure development.
A Client committed to delivering on a promise of economic
and socio-economic development.
“Real” Investment
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Estimated Construction Cost : R320 million
Estimated Project Investment in local SMME Contractors &
suppliers : R 41 million (24%, excl. pipes & M&E equipment)
Investment in local labour to date : R8.640 million
Accommodation
Food
New investment and businesses
Transport
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“Real” Project Scope
 Lukhanji LM (EC134) – STATS SA Census 2011
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190,724 people directly impacted through the project
54,029 households
Xonxa Village = 1870 households impacted through this project
Xonxa hinterland covered through various other smaller projects
91% previously disadvantaged
75.4% of households – indigent / poor
57% unemployed
The successful implementation of this bulk infrastructure project will
have an immediate impact on the Lukhanji LM, the indigent
demographic, service delivery and backlog eradication.
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“Real” Project Scope
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Alleviation of housing and basic service delivery backlogs urgently
needed
Emergency and Health Services affected.
Schools and Clinics affected
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Deteriorating borehole water quality affecting health and social
structures in Lesseyton, Maccubeni basin and hinterland driving
demand for bulk potable water supply to poor/indigent communities
facing = health risks and social challenges
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Economic growth and employment targets need to be met. NO /
poor infrastructure development and economic investment within
CHDM due to water supply shortfall. Augmentation of the water
supply and mitigation of the current and future water supply shortfall
urgently required to revive sustainable growth.
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SIPs and Project Pipeline
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Mega Projects: 5 to 10 years
Planning and preparation
Local economy
Local suppliers
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E.g. Setting up plants
Downstream opportunities
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THANK YOU!
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