Stimulate SA’s economy - remove development obstacles
Updated: Mar 18
In considering the recent budget speech by Finance Minister Tito Mboweni, it seems clear that he aims to ignite South Africa’s economy and stimulate positive growth. This is more critical than ever before. It is a year since the government declared a state of disaster in a bid to combat the spread of the Covid-19 coronavirus and almost 18 months since the effects of the disease began to be felt around the world. Statistics South Africa has just confirmed that our economy contracted by a record seven percent as a result of the Covid-19 pandemic – the worst contraction in 90 years. It is not just important, but critical, that we get SA’s economy back on track.
It is well known that one of the best ways to stimulate economic growth is through the development of infrastructure. Transportation, power and water infrastructure benefit everyone in the economy as public goods, and their creation is generally a good stimulus for GDP growth. It enables development in the private sector, too. Construction activity in both public and private sectors stimulates job creation, builds skills and ultimately improves the lives of the citizens of a country.
All this is good in theory but putting it into practice is another matter. How do we take these noble aims and start translating them into reality today?
The construction industry has been plagued by difficulties for some time. Besides the delays on projects from the so-called construction mafia (which is a subject for another time), perhaps an obvious place to look is at the council approval process.
It appears that council officials continue to receive full pay whilst only working one or two days a week, purportedly because of Covid-19 restrictions. Yet, project approval submissions continue. This might be at a slightly reduced pace for now, but it will pick up if the proposed infrastructure spend takes place.
Accounts for all submissions have to be settled in full before the process begins, but approvals get bogged down in what is now an even lengthier process than before. My proposal, to begin with, is that a ten percent deposit should be paid for planning or other land use submissions, with the remaining balance being paid on approval. Whether this is actionable or not is debatable, but the reality is that the slow pace of council approvals – particularly in Johannesburg – is holding up development.
If projects were to start one or two years earlier – and they could, were it not for the delays in council approvals – developments would kick off sooner, jobs would be available more readily and the completed projects would be viable and employing more people faster. The benefits of the infrastructure and building development that are supposed to ignite the economy would be available much sooner.
The difficult reality is that although development can help stimulate economic growth, the construction sector is usually the one of the first to see the effects of any economic cycle – which means it is also quick to suffer the effects of a downturn. If we are trying to get our economy moving by stimulating development, surely it does not make sense to hamper an industry which needs to benefit from an upswing quickly. As it is, developers face massive holding costs for as long as the land they are developing cannot generate revenue. Professional teams deploy massive resources – both human and financial – to development proposals, often at risk. All this amounts to a pool of resources which, in theory, could be used efficiently elsewhere, meaning that millions and sometimes billions of Rands are effectively frozen until projects actually break ground. The industry which could do the most good for the economy the fastest is being unnecessarily hampered.
In our experience as a company, the biggest difficulty we see in getting a development off the ground is in the town planning process. Particularly in Johannesburg, where the town planning department still uses hard copy documents, and occasionally e-mails. Surely it should now be essential to have an integrated electronic system which allows for the input required from the various departments regarding water, roads, traffic and power– rather than one in which hard copy documents still get lost in filing rooms!
My biggest concern is in the rezoning process, which never seems to take less than a year in our experience. There is almost no doubt that this can be improved on – I would suggest that three months is more than sufficient.
We find that site development plan (SDP) submissions work a little more efficiently, mostly taking around three months so approve. We have seen some approvals happen faster, but this system would also benefit from being streamlined.
Building control is also reasonable, with most approvals taking a month or two, although I am sure this can be improved upon. Some municipalities are better than others at this.
This may seem like an overgeneralisation, and there are always exceptions, but as they say, perception is reality, and this is the reality that we deal with every day at the coal face.
I have engaged with the Association of Construction Project Managers (ACPM) on the matter and am aware that the South African Property Owners Association (SAPOA) and the South African Council for the Architectural Profession (SACAP) both have initiatives underway to try to address these issues with various authorities. Ideally, one would hope that the various industry representative bodies could pool their resources and expertise, and tackle this in a united fashion.
Although the overall picture of the systemic challenges that the municipal system faces in South Africa is rather depressing, we need to remain hopeful that solutions can be found. This is still a country full of potential!
It will remain to be seen how things pan out, but one thing is clear: we need to enable development and construction in this country urgently. Not to do so would be a wasted opportunity for much-needed economic stimulus.