The government has reiterated an often-made pledge to build infrastructure, with Finance Minister Enoch Godongwana saying the adjusted fiscal framework in the Medium-Term Budget Policy Statement (MTBPS) had made provision for recovery and rebuilding following massive flood damage in April.
The government, over successive National Budget annual presentations, has promised growth in infrastructure spending as a way to boost economic growth, but construction and engineering companies and financiers, over many years now, have reported no change from the trend of declining state infrastructure investment.
Hence, Business Unity South Africa (Busa) said yesterday, in response to the MBPS, that while they welcomed the increase in infrastructure budgets, “there must be a total focus on identifying a limited number of infrastructure projects that are economically and socially impactful and the ability to implement urgently must be demonstrated”.
“There have been a number of fresh allocations to SOEs (state-owned enterprises), some of which have been announced. What does seem to be good news is the fair amount of infrastructure spending planned, which, in turn, will assist with stimulating the economy,” said Mazars South Africa tax partner Bernard Sacks.
Godongwana said government organs had plans to spend R145.8 billion in infrastructure over the Medium-Term Expenditure Framework (MTEF). On the April floods, R1bn had already been granted through two disaster relief grants, and the 2022/23 Adjustments Budget provided additional funding of R6.1bn to further support rebuilding, while further resources would be considered over the MTEF.
He said over the medium term, government-consolidated spending on building new and rehabilitating existing infrastructure would increase from R66.7bn in 2022/23 to R112.5bn in 2025/26. This included roads, bridges, storm-water systems and public buildings.
“This makes spending on capital assets the fastest-growing item by economic classification. By delivering on public sector investments, we will crowd in private investment, improve public service provision and address backlogs, thus igniting a virtuous cycle of higher investment, growth and employment potential,” the National Treasury said.
The Treasury also said it was committed to improving state capacity, project planning and preparation, procurement practices, and contract management.
Godongwana said the government’s fiscal position was stronger, lifted by better than expected revenues and expenditure discipline, and there was increased funding for safety and security, fighting corruption and “delivering infrastructure”.
The National Treasury forecast gross fixed capital formation to grow 4% this year, from only 0.2% last year, while in 2020 the figure had receded 14.6%, and by 2.1% in 2019. Investment remains well below pre-pandemic levels.
A net R52.4bn increase in non-interest expenditure in 2023/24 and R58.5bn in 2024/25, compared with the 2022 Budget, would include R11.3bn for infrastructure investment, including rehabilitating damaged municipal infrastructure and refurbishing provincial roads.
Projects recommended through the Budget Facility for Infrastructure at the national and provincial level amounted to R4.8bn in 2023/24, R5.8bn in 2024/25 and R6.4bn in 2025/26. Of the R145.8bn to be spent by public entities on infrastructure over the MTEF period, R85.3bn would be spent in the transport sector and R33.3bn in the water sector.
The Development Bank of Southern Africa, Infrastructure South Africa and the Government Technical Advisory Centre were scaling up efforts to build a viable project pipeline. These efforts were being strengthened by providing resources for project preparation, he said.
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