Published on : Feb 17, 2017
ALBANY, NY, Feb 17, 2017: The report provides essential insights into the infrastructure sector in South Africa. It does so by meticulously analyzing the regulatory and financing landscapes, current infrastructure, and the major projects in the construction pipeline.
Infrastructure systems and economies are largely interdependent. While infrastructure can boost connectivity, create jobs, enhance productivity, and trigger trade activities, economic growth can enable higher investments and funding for infrastructure. The rapid industrialization and improving economic conditions are thus escalating infrastructural development in South Africa. According to the findings of the report, the South Africa market for infrastructure construction is estimated to reach a valuation of US$24.3 bn by end of 2020 from US$16.1 bn in 2015.
Infrastructure planning and prioritization are rising up the agenda for governments, investors, and developers in South Africa. In 2011, the Presidential Infrastructure Coordinating Committee (PICC) was set up to ensure systematic selection, planning, and monitoring of major public infrastructure projects and with the ultimate objective to achieve the country’s growth, development, and employment targets. Those projects that don’t fall under PICC are planned and prioritized by State-Owned Enterprises (SOEs) and government departments such as the Department of Transport, the Department of Water, and the Department of Energy.
The World Economic Forum Global Competitiveness Report 2015–2016 ranked South Africa as 59th out of 140 countries in terms of the overall quality of its infrastructure and had the leading position among other major African countries.
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Despite the transparent and efficient infrastructure planning and prioritization processes of South Africa, the country continues to face numerous challenges in executing large infrastructure plans. One of the key challenges is the lengthy and onerous government tender processes that create a jam of projects in the pipeline for extended periods of time. The rising costs of construction and monopoly pricing are also creating a dent in the delivery of large projects across various sectors.
For a lucid analysis, the report classifies the market on the basis of sectors. These segments are railways, roads, electricity and power, communication infrastructure, water and sewerage, airports and other infrastructure. Each segment is analyzed based on ongoing construction, project pipeline, key contractors, and key consultants. The electricity and power sector accounted for the lion’s share in terms of revenue, with a net project value of US$90.2 bn. This is closely trailed by railway with a pipeline of US$11.1 bn. The total project values of the roads, water and sewerage, and airports and other infrastructures segments were US$6.5 bn, US$5.9 bn, and US$4.1 bn.
The finance minister of South Africa Pravin Gordhan announced in the Medium-Term Budget Statement (MTBS) 2016 that in line with the National Development Plan (NDP), the government would continue to pour funds into economic infrastructure. Over the period of 2016 – 2019, the government will spend a total of US$71.6 bn in constructing and modernizing infrastructure, US$24.2 bn in transport and logistics, US$17.6 bn in energy, and US$9.9 bn in water and sanitation.
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