Budget 2024: Government to spend R943.8bn on infrastructure in three years

One of the largest of these projects is the second phase of the Lesotho Highlands Water Project with an estimated capital investment of R42.1 billion, expected to be completed in 2028. File photo

One of the largest of these projects is the second phase of the Lesotho Highlands Water Project with an estimated capital investment of R42.1 billion, expected to be completed in 2028. File photo

Published Feb 22, 2024


SOUTH Africa’s total capital investment of 14.2% of gross domestic product (GDP) in 2022 was well below the National Development Plan target of 30% and public sector investment would need to grow by 10% of GDP by 2030, National Treasury said yesterday.

In an update at yesterday’s Budget, the government admitted that between 2012 and 2022, public sector capital investment had only averaged 5.4% of GDP, while private sector investment averaged 10.9%.

To try and kick-start this greater spending, the government had initiated some structural reforms in infrastructure, Treasury said.

The government plans to spend R943.8 billion on infrastructure over the next three years at national, provincial and local government level. State-owned companies are currently the biggest contributors to capital investment.

Public housing is expected to amount to R43.7bn over the three years, through the human settlements development grants in the provinces.

Spending by state-owned companies amounts to 81.4% of the medium-term estimate, and these funds will be used to expand power generation capacity, upgrade and expand the transport network and improve sanitation and water services.

Social services infrastructure accounts for 15.7% of the total, with the two largest sectors, health and education, accounting for 4.3% and 6% respectively.

In the water sector, the government is prioritising 11 strategic projects, with an estimated value of R139.1bn. These projects would create up to 20 000 jobs during construction and 34 000 jobs during the operational phases.

One of the largest of these projects is the second phase of the Lesotho Highlands Water Project with an estimated capital investment of R42.1bn, expected to be completed in 2028. About R20bn has been raised by the Trans-Caledon Water Authority from various development finance institutions such as the African Development Bank and the New Development Bank.

The second phase of the Mokolo-Crocodile River Water Augmentation Project has an estimated R12.3bn investment and is expected to be completed in 2028. Negotiations on loan agreements were at an advanced stage.

Other water projects are the R25bn uMkhomazi water augmentation project, the second phase of the Olifants River water resources development project with an estimated cost of R25bn, the Mzimvubu water project with an estimated cost of R14.7bn, and the Berg River Voëlvlei augmentation scheme with an estimated investment of R1.1bn.

On energy infrastructure, the Independent Power Producer Procurement Programme had resulted in agreements for more than 8000 megawatts of new generation capacity totalling more than R270bn of investment.

Seven out of 11 preferred bidders in the Risk Mitigation Independent Power Producer Procurement Programme had signed agreements for projects totalling 578 megawatts by the end of December 2023.

The fifth window of the Renewable Energy Independent Power Producer Programme (REIPPP) had seen 25 preferred bidders with projects of 2 583 megawatts in generation capacity and potential investment of R50bn. Twelve of these projects, totalling 1 234MW, had reached commercial close by December 2023.

Six preferred bidders for the sixth window of the REIPPP, who put forward R15bn of projects for 1000 megawatts of solar, were expected to reach commercial close by June 2024.

The seventh window of the REIPP for 5000 megawatts of new generation and storage capacity was launched in December 2023.

In the Embedded Generation Investment Programme, the Minerals Council had identified more than 100 private sector projects with a total capacity of 9000 megawatts, with a value of more than R40bn.

The South African National Roads Authority had identified 11 roads projects worth about R20bn which were expected to create some 10 000 jobs during construction.

A high capacity rail freight corridor for automotive volumes was gazetted in December 2022, and this project would also facilitate the upgrading of the port of Gqeberha.

The human settlements portfolio had 17 strategic integrated projects, six integrated residential development programmes, nine social housing projects and two high-impact private sector-led developments.

Together these projects had an investment value of R143bn and would provide housing for over 150 000 people, as well as create over 285 000 jobs during development.

A further R27.8bn was allocated to the urban settlements development grant for metropolitan municipalities to implement bulk and related service projects.

The government’s Infrastructure Fund was working with project sponsors on 10 projects and anticipated attracting private financing to the value of R25.9bn.

Projects being considered by the fund include the Lanseria Wastewater Treatment Works, Ngqura Manganese Export Terminal Project, Cape Town Container Terminal Expansion Project and for the Student Housing Infrastructure Fund, the Southern Farms Human Settlement Project, First Land Mixed Use and Agri-hub, and Eskom’s Just Transition Programme to build 5800 kilometres of transmission infrastructure by 2031.