Big money for infrastructure projects may tempt looters

A measure which helped pull the United States out of the ruinous Great Depression in the ’30s was the “New Deal” programme of President Franklin D Roosevelt.

Its key pillars were relief, reform and recovery. In essence, this seems to be what our government is proposing as a way out of an equally serious economic disaster for South Africa because of the coronavirus pandemic.

Next week, President Cyril Ramaphosa is expected to announce a range of infrastructure projects in water and sanitation, energy and digital infrastructure. The programme is the biggest drive yet by government to attract private investment into infrastructure.

Asset managers in the private sector have been told by government that it is looking at investments of at least R1.5 trillion.

The move to court private investments comes at a time when the government’s coffers are, to all intents and purposes, empty. This was the situation before the coronavirus emergency, which has placed huge new burdens on the fiscus. The government is also facing increased lending costs, because the country’s investment grade has fallen to “junk” status in the eyes of most ratings agencies.

The flip side to this plan is that it ties in neatly with the ANC’s already-stated intention to impose a policy of “prescribed assets” for pension funds, limiting where they may invest pensioners’ money and, effectively, forcing them to invest into state infrastructure projects or into state-owned enterprises.

It seems plausible that if the private asset managers for pension and other funds do not get behind the infrastructure investment drive voluntarily, they may well have no option in the end.

The biggest worry is that, with huge numbers like this and the ANC’s track record in looting the state, the thieves will not be able to pass up such a golden opportunity.

And then we will become a truly “failed state”.

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