Mayor’s speech at inaugural City Infrastructure Report release

02 February 2023

It is a great pleasure to share with you today the very first City of Cape Town Infrastructure Report.

Members of the media,

Members of the engineering and construction industry,

Colleagues and friends,

It is a great pleasure to share with you today the very first City of Cape Town Infrastructure Report.

This report will be a new annual feature, forming part of a broader drive by our government to be open and transparent with Capetonians about important data about the state of our city, and what the City government is doing to meet the needs of the future.

In the coming months we will release two more brand new detailed reports – the first on "value for money" in government procurement, where we will set new standards for procurement transparency; and the second on the ease of doing business in Cape Town, and how we will become the easiest place to do business on the African continent.

But those reports are coming soon. This Infrastructure Report is the first of our three new reports, and we release it first on purpose.

Now with Formula- E just around the corner in Cape Town, let's talk about acceleration.

Last year our infrastructure budget was R5,7 billion. Next year it will be R10,5 billion. In two years, it will be north of R12 billion. That means we are growing infrastructure investment by 110% in 3 years.

In Cape Town we are passionate about significantly accelerating our city's infrastructure investment pipeline.

Nothing else has consumed more time in our first year in government than this pipeline – making sure that we budget for this expansion, that our big projects are properly planned, and that we have the skilled people necessary to turn plans into projects – and actually deliver these on the ground.

Infrastructure investment is the foundation for economic growth, and it is the only basis on which to support a rapidly growing city like ours.

Our mission is to make Cape Town the "City of Hope" in South Africa.

An important part of that mission is making absolutely sure that we never allow the kind of infrastructural rot that we see elsewhere to happen here and, where our infrastructure is already under tremendous strain, that we act now to fix it.

So much of South Africa's current economic malaise can be explained by this one simple fact: we are not building things.

In fact, according to numbers from the African Development Bank, there has been no meaningful step change in infrastructure investment in South Africa since the early 1990s, with only two significant spikes on the chart – in 1997, and in the 24 months before the 2010 World Cup.

Whether it be power stations, dams, rail networks, harbour improvements, and more – the public sector in South Africa is the real source of an investment strike. We are simply not investing nearly enough in gross fixed capital formation.

In Cape Town, we will show the alternative – a government that plans for the future, that invests constantly, that cares for what we have, and that gets ahead of the urbanisation curve.

The second part of showing the City of Hope is that that we must be open about the challenges we face, and our plans for the future. That way, you – the public, the media, the engineering industry – can hold us accountable.

Spending on infrastructure projects benefits the local economy and creates jobs in the short term. In the long run, infrastructure investment increases the productivity of our economy, makes our city work more efficiently, creates opportunities, and contributes to the dignity and wellbeing of residents.

In Cape Town, it is critical that we invest in our infrastructure at a faster rate than our population is growing – to address backlogs and prepare for the future.

I have no doubt that Cape Town at double its size can be an even greater city than it is today, provided we do the right things now.

We are doing this so that, over time, we can support meaningfully faster economic growth to help more Capetonians into jobs and out of poverty.

And crucially we are doing this because we want to deliver dignity to every person, particularly our poorest residents.

Infrastructure is a technical word. But when sewers are blocking up, with elderly residents in Khayelitsha living with the consequences, that is a dignity problem borne of an infrastructure problem. When building plans have to be turned down – with all the jobs they support – that is borne of an infrastructure problem.

Put simply, we must build more, faster, all over Cape Town, and particularly in poor communities.

This first annual Infrastructure Report presents a view of our 10-year master plan for infrastructure, and how it is set to evolve.

At a high-level:

The City has a R33,7 billion capital budget over the next three years from 2022/23 – 2024/25
84% of this budget, around R28 billion, goes to bulk infrastructure – Water & Sanitation, Waste, Urban Mobility, Energy and Human Settlements.
This bulk infrastructure spending is expected to contribute R21,8 billion to Cape Town's GDP, equivalent to 3,6% of GDP. Moreover, it will have an estimated economic impact equivalent to nearly 90 000 full-time equivalent jobs

In total, the 10-year infrastructure pipeline amounts to R120 billion in capital expenditure, with over R100 billion for critical Bulk Infrastructure going into 2032.

Challenges

Before I go into some of the key highlights of our 10-year infrastructure pipeline, it is worth summarising the five major infrastructure challenges facing the City:

Firstly, water and sanitation infrastructure requires major new investment to stay ahead of population growth, including critical Waste Water Treatment Works capacity upgrades, sewer network upgrades to bring down spills and ensure a healthy environment, and the delivery of new water sources for Cape Town in the face of climate change uncertainty

Secondly, to end the load-shedding crisis over time requires a well-maintained electricity grid capable of handling major new independent power generation projects and small-scale electricity sales by residents and businesses

Third, to expand our waste management infrastructure

Fourth, to improve urban mobility by devolving control of passenger rail to the City to reverse the collapse of this critical sector, while rolling out a major expansion of our MyCiti Bus service to Khayelitsha, Philippi and Mitchells Plain, and delivering on roads, upgrades and congestion relief projects

Finally, to rapidly enable more affordable housing in Cape Town, mainly to be delivered by the private sector to meet rapid growth in housing demand

10-year infrastructure plans

We are determined to rise to these challenges, and to make the right decisions now to enable our long-term vision of a City of Hope for all.

I will now briefly share the encouraging progress we are making in each of the five infrastructure sectors covered by the Report.

Water and Sanitation

In the Water and Sanitation sector, we are executing major capacity upgrades at Potsdam, Zandvliet, Athlone, and Macassar, as well as refurbishing the Bellville wastewater works. Over R3bn is approved over the current three-year budget cycle for these critical projects to unlock development and support growth in key parts of the metro.

We are also massively investing in sewer network upgrades, including:

R860m for major upgrades to the Cape Flats, Milnerton, Philippi, and Gordon's Bay bulk sewers

Quadrupling sewer pipe replacement from 25km to 100km per year, worth R755m over three years
A seven-fold increase in budgets for sewer pump station upgrades, from R70 million in 2022, ramping up to R400 million in 2024, and R500 million in 2025. We have already installed early warning telemetric alarm systems at all sewer pump stations to help detect faults.

This is thanks to a combination of early-warning alarms, pump station upgrades, rapid response teams, proactive sewer pipe replacement, and jetting to clear blockages.

To up Cape Town's water security and protect us from future droughts, the City is investing around R5bn to introduce 300 mega-litres per day of new water by 2030.

The Table Mountain Group Aquifer has already delivered its first new water, and the first groundwater to be injected into the supply network from the Cape Flats Aquifer is expected towards the middle of this year.

The City will continue to reduce water wastage through programmes such as leak detection, pressure management, and doubling annual water pipe replacement targets.

Energy

Moving onto the energy sector, Cape Town is aiming to end load-shedding over time through various means, including:

buying power on the open market, with a three-phase power procurement for four stages of load-shedding within three years

paying businesses and residents to sell power back to the City
incentives for voluntary energy savings under a new Power Heroes programme
municipal generation projects such as Steenbras Hydro power, solar PV, and gas turbines

Between now and 2028, Cape Town will spend around R1bn a year on electricity infrastructure.

Electricity generation makes up the second largest spending item in planned refurbishment and replacement projects over the course of this pipeline. These projects address the refurbishment needs at the Steenbras Hydro Pumped-Storage Plant and the possible expansion of that facility.

The City is further looking to add 70MW of solar PV generation to its portfolio, spread across the Atlantis, Athlone and Paardevlei projects.

We will also continue to build on Cape Town's high 97,7% degree of electrification to households in the metropolitan area.

Urban Mobility

In the Urban Mobility sector, the failure of rail over the last decade has led to the majority of Cape Town's daily commuters now using private transport ( at 58%), followed by minibus taxis (at 22%), formal bus services (at 9%), non-motorised transport (at 9%), and rail at only 2%.

Rail collapse is a key reason why only 11% of the city's population has full transport flexibility, a measure of how many members of the Cape Town population have access to at least three relatively frequent public transport modes within a 500 metre radius.

It is therefore of highest importance that we devolve passenger rail to the City and back this with the necessary budgets and private sector investment to resurrect this critical infrastructure.

Some R6,4 bn is approved for public transport and roads infrastructure over three years, with over R600m in the current financial year going to the major MyCiti south-east expansion that will link Khayelitsha and Mitchells Plain to Claremont and Wynberg.

This project is a major driver of spending until 2027.

Human Settlements

The City's human settlements budget totals R2,8bn over three years – driven largely by dwindling national grant funding.

The majority (68%) of the Human Settlements Directorate's planned capital spend over the next 10 years is committed to the provision of serviced sites in line with changing national policy, while informal settlement upgrades make up 38% of capital projects.

The future of affordable housing delivery is not going to be in the free housing space, and is not going to be delivered by the state. Instead, it will be about the enabling state.

To make any meaningful dent in housing demand in our cities, we need to reposition the state as an enabler of housing by unlocking micro-developers, social housing companies, and private sector delivery.

Micro-developers are doing incredible work right now in the upgrading of townships and informal settlements, and are delivering more units than the entire rest of the property market.

We will soon offer planning support officers in townships, with off-the-shelf pre-approved building plans for rental units. We are also spending hundreds of millions upgrading sewer infrastructure in informal settlements to cope with the densification that micro-developers drive.

At the same time, our rapid land release priority programme has moved 1 130 social housing unit approvals through Council since May last year. Many more units have now entered the construction phase, including 800 in the inner City and 2 500 along Voortrekker Road corridor and close to economic nodes.

In total, the City has 6 500 social housing rental units in the pipeline across 50 land parcels city-wide.

Over the 10 years, it is also critical that we get national government's mega-properties into the pipeline. These include Culemborg, Ysterplaat, Wingfield, Youngsfield and Acacia Park – totalling an estimated 100 000 housing opportunities.

Conclusion

Finally, it is of great encouragement to confirm our recent Adjustment Budget for 2022/23 included only a R32m write down in capital spending. At just 0,19% of the capex budget – this is the smallest in Cape Town's history.

Importantly, the write down results from technical changes in the timelines on bridging finance from national government to Urban Mobility, and is not due to poor planning or execution of infrastructure delivery.

These are the early signs of our concrete commitments taking effect on infrastructure investment, and we aim to generate powerful momentum over the coming years to deliver on our ambitious targets and the overall vision of a City of Hope for all.

I thank you

End

Published by:
City of Cape Town, Media Office