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International Benchmarking of South Africa

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Title: International Benchmarking of South Africa


1
International Benchmarking of South Africas
Infrastructure Performance
  • Zeljko Bogetic
  • Johann Fedderke
  • Infrastructure and Growth Workshop
  • Economic Research South Africa
  • May 29-31, 2006
  • Cape Town, South Africa

2
Outline
  • Why Benchmark Infrastructure Performance?
  • Infrastructure Benchmarking Database (Estache et
    al., WB 2005)
  • First Benchmarking Applications South Africa
    (Bogetic Fedderke 2005, 2006a), Lesotho
    (Bogetic 2006), SACU (Bogetic 2006)
  • Energy
  • Telecom
  • Water and Sanitation
  • Transport
  • Large Deviations from the Benchmarks
  • The Rural-Urban Divide
  • Conclusion and Policy Implications
  • Possible Extensions

3
Why Benchmark Infrastructure Performance?
  • Strong Association Between Infrastructure and
    real output (as well as child health, human
    capital accumulation and MGDs)
  • Evidence from South Africa
  • Decline in Inf. Invest. in South Africa
  • The Quest for Accelerated and Shared Growth in
    South AfricaASGI-SA
  • The Need to Identify Sectoral and Comparative
    Gaps in Infrastructure Performance

4
International Evidence Infrastructure and Growth
5
Evidence from South Africa
  • Aggregate time series growth model (Fedderke,
    Perkins, Luiz, 2005)
  • Output elasticity w.r.t. electricity
  • 0.1 0.2 range under robustness checks
  • 0.5 once control for institutions (Property
    Rights)

6
DECLINE IN INFRASTRUCTURE INVESTMENTS IN SOUTH
AFRICA
7
The Quest for Accelerated and Shared Growth
  • Accelerated and Shared Growth Strategy (ASGISA)
  • Scaling up infrastructurekey element of ASGISA
  • Massive scale up plans underway
  • R372-billion (about US60 billion, or 24 of 2005
    dollar GDP) spending plan over the next three
    years (from the central and local governments and
    state enterprises combined).
  • Of which
  • 50 by the central, provincial and local
    governments
  • 40 by state enterprises (ESKOM, Transnet, 2010
    World Cup)
  • 3-5 by development financial institutions
    (largely domestic, state owned)
  • 5 is to be financed by Public Private
    Partnerships (PPP).
  • South African economy accelerated to robust 5
    growth in 2005, from the 3 average of the past
    decade
  • gt Question of infrastructure requirements of
    accelerated growth (Bogetic Fedderke 2006
    Forecasting Investment Needs in SAs Electricity
    and Telecommunications Sectors WB WPS 3929
    (February)

8
Infrastructure Benchmarking Database
  • International research database (Eustache
    Goicoehea, World Bank, 2005)
  • Coverage 207 countries
  • Sectors Power, Water Sanitation, Telecom,
    Transport
  • Performance dimensions Access,
    Pricing/Affordability, Technical and Perceived
    Quality
  • Indicators Energy (7), W S (4), Telecom (14),
    Transport (12) some indicators available for
    rural and urban areas.
  • Comparators Upper Middle-Income Group (Main
    benchmark for South Africa), other income groups,
    OECD, Sub-Saharan Africa, Latin America the
    Caribbean, South Asia, East Asia Pacific,
    Middle East North Africa

9
  • BENCHMARKING
  • SOUTH AFRICA

10
Benchmarking South Africa - Energy
  • Energy Compared to the upper-middle income
    country benchmarkdespite major, recent gains,
    relatively weak performance in access, but
    favorable in terms of technical efficiency (i.e.,
    percentage of losses), pricing, and perceptions
    of service.

11
Access to Electricity Network ( of population)
12
Electric Power Transmission and Distribution
Losses ( of total output)
13
Benchmarking South Africa Water and Sanitation
  • Access to water and, especially, sanitation lags
    behind its benchmark upper middle-income group,
    essentially because of the much lower access in
    rural areas. Notable in rural sanitation.

14
Access to Improved Water Sources ( of
population)
15
Households Using Piped or Well Water as Main
Sources of Drinking Water ( of households)
16
Benchmarking South Africa ICT Overall access
seems good, but other indicators suggest less
than expected quality and major gaps in service
delivery, quality and even access in rural areas.

17
Benchmarking South Africa ICT Teledensity
(total telephone subscribers/1000 people)
18
Phone Faults (reported faults/100 mainlines)
19
Benchmarking South Africa Transport Overall
performance behind comparators. Caution (1)
idiosyncratic territorial distribution of
population and economic activity and (2)
peculiarities in the type of road network that is
appropriate for a country with semi-arid climate,
and (3) with a large proportion of its land
surface carrying low population densities.
20
Benchmarking South Africa - Transport
  • Road density in terms of population (road km/1000
    pop)

21
Paved Roads ( of total roads)
22
South Africa - Large Deviations from the
BenchmarksAreas of Underperformance
  • In electricity, Access major issue, despite gains
    in recent years, while technical efficiency for
    the served population is relatively high.
  • In sanitation, Access major issue, especially in
    rural areas. Quality indicators also indicate
    relative shortfalls. Water also, but less
    dramatic than in sanitation.
  • In information and communications technology,
    pricing of services catering the wealthier
    segments of the population and the large,
    internationally oriented enterprise
    sectorcellular calls and some international
    calls (to the U.S., for example)reflect
    generally good and competitively provided
    services, but problems in teledensity, broad band
    access, internet access in schools, and low
    efficiency of the postal system.
  • In transport--road and rail--worse performance
    than the benchmark upper middle-income countries
    caveats.

23
South Africa - Large Deviations from the
Benchmarks
24
The rural-urban divide Urban Bias
  • In electricity, access in urban areas is lower
    (84) than in upper middle-income countries
    (90), while in rural (37) areas access is above
    the benchmark (30).
  • In access to improved water, however, rural
    areas of South Africa (73) lag significantly
    behind their upper middle-income benchmark (85).
  • In access to improved sanitation, in rural areas
    of South Africa (44) lag significantly behind
    their upper middle-income benchmark (76).
  • Telephone ownership is South Africa appears to be
    better in both rural and rural areas than in the
    upper middle-income countries. Caution other
    aggregate indicators of telecom service
    performance (especially in local services)
    suggest considerable scope for improvement

25
South Africa - conclusion
  • Access remains a major issue in sanitation,
    electricity (despite recent gains) and, water
    (particularly in rural areas), and so does
    performance in local telecom services.
  • Even transport performance appears comparatively
    less strong than would be expected, though more
    in-depth analysis of comparative performance of
    transport may be warranted
  • Policy implications
  • That there remain significant needs to scale up
    infrastructure investmentsespecially in the yet
    unserved areasand improve efficiency in all
    four major infrastructure sectors if South
    Africas infrastructure performance is to catch
    up with its group of upper middle-income
    countries.
  • Areas of significant shortfalls below benchmarks
    should be scrutinized by policymakers for
    possible targeting in the ongoing scaling up and
    efficiency strengthening efforts in the context
    of ASGI-SA
  • A similar exercise for SACU countries (Bogetic
    2006b) provides some guide on the regional
    opportunities for infrastructure cooperation and
    scaling up of infrastructure beyond South
    Africas borders

26
Possible Extensions
  • Using benchmarking as an element in broader
    analyses of sector performance (e.g., electricity
    sector review for South Africa)
  • Extending the exercises to other countries in
    Africa (e.g., Lesotho, individual SACU country
    exercises (completed)
  • Use of benchmarking in regional analyses (e.g.,
    SACU (completed), SADC)
  • Combining the benchmarking of indicators of
    performance with reform indicators
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