Aveng calls for more spend

Aveng calls for more spend
Published: 15 September 2004

Aveng, South Africa, calls for more spend on infrastructure Trade and Industry Editor SA’s infrastructure is starting to creak, with government not yet spending enough to arrest the deterioration, says SA’s largest construction group.  Aveng CE Carl Grim said yesterday that all aspects of infrastructure were "creaking", including roads, ports and railways.  "We can’t live at current levels (of spending)." This is alarming as good infrastructure is vital to the economic well- being of the country.

The need for increased infrastructure spend has been highlighted by both President Thabo Mbeki and Finance Minister Trevor Manuel. Last year, Mbeki announced a R100bn infrastructure upgrade programme. But Grim said there was a delay in implementing infrastructure projects. Government needed to increase fixed investment to about 23% of gross domestic product, said Grim, to be in line with developing nations’ spending requirements.

Government’s current spending at 16% was far below the required level. Grim’s comments echoed remarks made by Barloworld chairman Warren Clewlow. "At levels of between 20% and 25% infrastructure is merely maintained, while below 20% it deteriorates," Clewlow said. Meanwhile, lower interest rates had stimulated construction demand in areas such as the residential sector, to the extent that there was a shortage of building materials, said Grim. Grim was commenting on the demand for cement, which had surged more than 17% in the first half of this year.  Grim said he had never before seen growth of similar proportions in the local cement industry.

However, he did not expect the rapid rise in demand for cement to be maintained, as complementary building materials were "running out". SA’s four large cement producers - PPC, Holcim, Lafarge and Natal Portland Cement - were all considering the establishment of new kilns in 2007 or 2008. PPC has led the way, announcing that it would expand production capacity by 1-million tons at a cost of at least R750m by 2008.