Infrastructure quality will drive investment decisions, survey finds

Ninety per cent of senior executives canvassed for a new international survey on infrastructure have indicated that the availability and quality of infrastructure will affect where they locate and expand their business operations.

The report, entitled ‘Bridging the Global Infrastructure Gap’, was compiled by the Economist Intelligence Unit on behalf of KPMG International, and interrogated 328 executives from 21 countries, including South Africa.

The report, which was released on Wednesday, had material implications for South Africa, given its infrastructure backlogs as well as government’s stated commitment to implementing a R787-billion infrastructure plan over the next three years.

In fact, KPMG South Africa’s major projects director, Jeff Shaw, highlighted the fact that there was still concern about the future impacts of poor infrastructure on local businesses, noting the 2008 electricity supply disruptions as a case in point.

“It is essential that government initiatives to address the issues and to ensure that all aspects of infrastructure are upgraded are successful so as to attract investment and stimulate economic growth and job creation,” Shaw added.

Head of KPMG’s Global Infrastructure practice Nick Chism suggested that as governments around the globe grappled with the current economic crisis, they needed to recognise that infrastructure investments were still desperately needed to support critical business activities.

“Not only does improved infrastructure attract businesses and the employment and the tax revenue that is derived, but it’s recognised that infrastructure work can be an economic stimulus if managed correctly,” Chism averred.

That said, the majority of those surveyed (77%) asserted that the current level of infrastructure investment would be insufficient to help sustain long-term corporate growth.

Analysts estimated that $2-trillion dollars would be spent yearly on infrastructure until 2015, but executives from every region, including South Africa, expressed concern that this investment would not be adequate.

The survey, which was conducted in November and December, also found that:

- Senior executives believe infrastructure would increase in importance over the next five years;

- Business leaders believe governments should partner with the private sector to finance and administer major infrastructure projects; and

- That roads and power generation were the most urgent infrastructure needs.