Publications
- Public spend on infrastructure has been constrained due to weak economic growth and financial support provided to state-owned enterprises.
- But public-private partnerships can improve financing prospects for infrastructure, says Finance Minister Enoch Godongwana.
- Spending on road infrastructure will grow at an average annual rate of 13% over the next three years.
Government will be "accelerating" infrastructure investment to boost the economy, Finance Minister Enoch Godongwana said.
The minister on Wednesday tabled the national budget in Parliament.
Godongwana unpacked plans to improve financing prospects for infrastructure through the public-private partnerships (PPP) framework.
"We aim to create a centre-of-excellence for PPPs and other blended finance projects. This centre of excellence will be established with direct Treasury oversight.
"It will be a direct interface with private financial institutions for investments in critical government infrastructure programmes," Godongwana said.
Treasury will also work with other national departments and the Eastern Cape and Northern Cape in piloting a "revised approach" to infrastructure delivery. "This approach will include innovative financing and delivery mechanisms, as announced by the [President Cyril Ramaphosa] in the State of the Nation Address," said Godongwana.
At the medium-term budget policy statement later this year, Godongwana plans to table amendments through the 2022 Division of Revenue Amendment Bill. These will enable provinces to pledge their infrastructure grants in order to leverage more finance and fast-track the rollout of infrastructure, he said.
The minister also spoke on catalytic and blended finance projects - which are designed to crowd in private investment for bulk infrastructure. A provisional allocation of R17.5 billion has been set aside over the medium term for these catalytic projects.
"As we upgrade roads, bridges, water and sewer, transport, school infrastructure and hospitals and clinics, the aim is to unlock higher levels of employment for those involved in the projects," he said.
A third of 62 strategic integrated projects that were gazetted in 2020 are either under construction or completed.
"The remaining projects, which are in the early stages of development, are receiving additional project preparation support," the review read.
The Infrastructure Fund along with Infrastructure South Africa (ISA) coordinate the country's infrastructure investment plan and work to raise funding for it, from outside the fiscus. Government has committed R100 billion to the fund over 10 years, and the aim is to attract further private investment.
Six projects - with an investment value of R96 billion - are currently being prepared by the fund and ISA. They are for infrastructure such as student housing, social housing, telecommunications, water and sanitation, and transport.
During a briefing on Tuesday, Public Works and Infrastructure Minister Patricia de Lille said that Treasury's Budget Facility for Infrastructure (BFI) has caused delays in implementing infrastructure projects. De Lille explained a new approach for approving blended finance for infrastructure projects, would allow for strategic infrastructure projects to bypass the BFI process.
But during a media briefing, Godongwana said there was no such agreement. "We are operating with them. It is mischievous to say they will bypass us, they are dreaming," he added.
The Budget Review indicates that government's ability to invest in new infrastructure has been limited by weak growth, rising spending pressures and the financial support provided to SOEs.
Public spend
The Budget Review shows that over the medium term, public-sector infrastructure spend is estimated at R812.5 billion.
Spending on road infrastructure is expected to grow at an annual average of 13% over the next three years.
Road infrastructure is the largest programme accounted for in government's economic regulation and infrastructure budget item. Spend on road infrastructure will grow from R50.4 billion in 2021/22 to R72.7 billion in 2024/25. This allocation to the South African National Roads Agency (Sanral) will go towards maintaining 22 000km of roads across the country, the Budget Review Indicated. Provinces also plan to maintain their 11 217km of roads through the provincial roads maintenance grant.
Spend to fund new water projects, maintaining existing water infrastructure and national water resource management will grow from R27.5 billion in 2021/22 to R47.4 billion in 2024/25.
The Independent Communications Authority of South Africa has been allocated an additional R300 million to strengthen its regulatory capabilities.
During his speech, Godongwana indicated that amendments to Regulation 28 of the Pensions Funds Act, which allow for greater investment in infrastructure by retirement funds will be gazetted in March.
