PALI LEHOHLA | The infrastructure illusion: why South Africa’s ‘build’ is breaking the bank

Deindustrialisation because the markets so dictated was a dummy sold and bought by South Africa at the dawn of democracy.

The World Bank’s tears overflow for their 30-year misguided advice to countries. The milk has sadly been spilt. Now the yellow plant machinery South Africa prided itself on has disappeared and with it the engineering competence and capability. Our head start has been overtaken by China, which was nowhere near South Africa in the 1980s.

Let’s consider our attempt at jerking up our gross fixed capital formation (GFCF) as our lever of growth faces headwinds.

You cannot build a future with a technical hammer that costs twice its weight in sovereign dignity. To analyse South Africa’s infrastructure-led growth strategy, we must move beyond the political ribbon-cutting and into the longitudinal ICP (International Comparison Programme) Africa data. Specifically, we must audit the GFCF — the heartbeat of investment — through the lens of the price level index (PLI).

The dilemma is stark: South Africa is attempting to “build” its way out of a crisis using a fiscal instrument that is structurally blunt. When we compare our PLI for machinery and equipment with our continental peers, Egypt and Nigeria, a vulture-like vortex of high costs appears.

In the regressive National Development Plan (NDP), the goal was to push GFCF to 30% of GDP. Yet, as we sit in April 2026, we remain trapped in a material terminus. Why? The ICP raw data provides the numerical conscience.

GFCF is the physical manifestation of plant, machinery and equipment. For South Africa, this is the foundational marrow of our growth. However, the PLI — which measures the price of a specific basket of goods in one country relative to another — shows that South Africa is paying a “sophistication tax” that Egypt and Nigeria have managed to bypass.

If it costs South Africa 140 units of effort to buy the same plant that Egypt buys for 90 units, our ‘infrastructure-led growth’ is actually an infrastructure-led debt-trap. We are running a race with lead weights in our pockets.

Our PLI for capital goods is consistently higher than the continental average. This means that for every kilometre of rail or every megawatt of the Grand Inga–GCR Energy bridge, South Africa spends significantly more in real PPP (purchasing power parity) terms than its northern competitors. As we build infrastructure, we import inflation at the point of a welding torch.

Let’s do a comparative audit. When we look at Nigeria and Egypt, the ICP data reveals a disturbing divergence.

• The Egypt model: through aggressive localisation and currency-adjusted procurement, its PLI for construction and plant equipment remains lower, allowing for a higher volume of infrastructure per dollar spent.
• The Nigeria pivot: despite its logistical friction, its informal and emerging MSME foundries are beginning to “bend the cost curve” by integrating lower-cost inputs from the Global South.
• The South Africa friction: we are locked into a Section K (digital) and Section M (technical) specification that assumes a “first world” cost structure. Our PLI is bloated by high administered prices, rigid procurement processes and an over-reliance on imported technology that does not factor in our local 120-minute golden window of labour availability.

If it costs South Africa 140 units of effort to buy the same plant that Egypt buys for 90 units, our “infrastructure-led growth” is actually an infrastructure-led debt-trap. We are running a race with lead weights in our pockets.

To fix the GFCF, we must first fix the metadata of procurement:

• Procurement audit: we must move from “lowest bidder” to “lowest PLI impact”.
• The Section K/M foundry: we cannot reach the UNSC 2030 rebalance if we are merely consumers of plant equipment. The Kagiso and Diepkloof experts must move from maintaining pipes to manufacturing the smart-pumps and HDPE conduits themselves.

Restitution is about owning the means of measurement. By localising the production of “fixed capital”, we lower our PLI and move from a low of dependency to a high of industrial sovereignty.

Our strategy at the G20 must be to demand an ICP-adjusted infrastructure credit. We must argue that the high PLI of capital equipment in the South is a form of economic friction enforced by the North. We must use our two permanent seats at the UNSC to veto trade regimes that penalise the foundational marrow of African industrialisation.

Growth that breaks the bank is an auction. South Africa’s infrastructure-led dream is being strangled by a PLI that we do not control. The ICP raw data is the technical hammer we must use to smash the vortex of high-cost procurement. We are in a classical posture “tussen die boom en die bas [neither here nor there]”.

We must build, but we must build as successor planners, not as statistical ghosts of a dying global supply chain. We must lower the cost of the plant by owning the foundry. Only then will Thabo’s journey from Rustenburg Street to the world stage be paved with the gold of our own industry, rather than the debt of another’s machinery.

Dr Pali Lehohla is a professor of practice at the University of Johannesburg, a research associate at Oxford University, and a distinguished alumni of the University of Ghana. He is the former statistician-general of South Africa