Standox October

The cost to eradicate South Africa’s road maintenance backlog has more than doubled to R416.6 billion from about  R197 billion in 2013. This is one of the conclusions reached in research conducted by Matthew Townshend, a transport economist and economics PhD student at the University of Cape Town. He presented his findings at the Southern African Transport Conference in Pretoria.

Townshend says that the magnitude of the backlog means it will be immensely difficult to eradicate. “At best, we can perhaps address [the backlog] over the long term, especially given SA’s current low growth trajectory and National Treasury’s commitment to fiscal consolidation,” he says.

He adds that a high degree of prioritisation is required within the road network maintenance space and that possible alternative funding sources to finance the backlog within a five-year period have been explored.

The maintenance backlog would take up the entire R400 billion budget for the new economic stimulus plan presented by President Cyril Ramaphosa, says Townshend. It would also equate to an extra four percentage points on the value-added tax (VAT) rate, or an additional R3 a litre to the national fuel levy.

He says the opportunity cost in redirecting the entire economic stimulus plan would be extremely high, while the idea of increasing the VAT rate to 19% is not realistic, given how difficult it was from a political economy perspective to get the recent one percentage point hike approved. Townshend believes the welfare cost of an extra R3 per litre added to the national fuel levy seems “relatively palatable in relation to the other options.”