Charlotte Mathews

Resources Editor

CAPE TOWN — Encouraging infrastructure growth in developing countries would stimulate global demand for commodities and promote the growth of a prosperous consuming middle class, Walter Mead, US foreign policy senior fellow at the Council on Foreign Relations, said yesterday.

He told delegates to the four day Mining Indaba, which attracts about 4 000 from around the world, that infrastructure projects such as those SA was embarking on were the most hopeful path for the world to recover from economic crisis.

The economic crises of the past 350 years were caused by “stupid bankers” lending incautiously in prosperous times, he said. But this latest crisis could be more serious because of structural changes in the world economy arising from implementation of information technology on financial markets and the rise of Asian economies.

China’s industrialisation was far greater than Europe’s due to the number of people involved and the rapidity of growth. It was unlikely that fiscal stimulus measures would pull the world out of this crisis, although they would help, Mead said. Export oriented economies had to stimulate domestic consumption.

Minerals and Energy Minister Buyelwa Sonjica, who opened the conference, described SA’s investment in road and power infrastructure.

About 38 000km of national and provincial roads would be upgraded in three phases at a cost of R22bn. In the first phase, R15bn would be spent on upgrading existing freeways. In the second, R7bn would be spent on developing new roads from 2010 to 2020. The third phase would be one of long-term freeway development.

Mpumalanga coal haulage roads, which carry 800 or 900 trucks a day, would be rehabilitated for R3bn-R3,5bn. Eskom had contributed R550m for design and maintenance of priority sections of the road network. The minerals and energy department had asked for R1bn to help in building road infrastructure around the two new power stations. Port and airport infrastructure would be upgraded. To keep pace with SA’s expected economic growth, it was working towards adding 40 000MW of electricity capacity.

Sonjica said measures in place would ensure there was no electricity shortage by 2018.

The effect of the global economic crisis on the minerals sector was short term and companies could make plans to respond quickly to another commodities boom, she said.

Anglo American SA head Kuseni Dlamini said World Bank projections were that Africa would grow 3,4% this year compared with the 5% of the previous four years, but it was still faster than the global average. Growth next year was projected at 4,9%.

“I believe the current downturn gives Africa the opportunity to position itself as the next frontier of growth and prosperity,” he said.

Africa’s population recently topped 1-billion. It had 90% of the world’s platinum resources, two-thirds of its diamonds and 40% of global gold reserves. It was in a better position to manage economic crises as it had strengthened its financial institutions and political governance and resolved some of the long-standing conflicts.

Source: Business Day