Budget: South Africa to invest over R1 trillion in infrastructure over three years
Of the R1.03 trillion to be allocated to public infrastructure, Finance Minister Enoch Godongwana said a total of R402 billion goes towards major allocations to roads, R219.2 billion to energy, as well as R33.7 billion to water and sanitation.
Image: Armand Hough / Independent Newspapers
More than R1 trillion will be spent on infrastructure investment on roads, rail, energy, and water over the next three years.
Delivering his Budget speech, Finance Minister Enoch Godongwana said the 2025 budget demonstrated their resolve to change the composition of spending from consumption to investment.
Godongwana said allocations towards capital payments remained the fastest-growing area of spending by economic classification.
'Public infrastructure spending over three years will exceed the R1 trillion mark. This spending will focus on maintaining and repairing existing infrastructure, building new infrastructure and acquiring equipment and machinery,' he said.
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The infrastructure spend will focus on transport and logistics, energy and water and sanitation.
The budget document said of the R1.03 trillion to be allocated to public infrastructure, a total of R402 billion goes towards major allocations to roads, R219.2 billion energy, as well as R33.7 billion on water and sanitation.
According to Godongwana, of the R402 billion for transport and logistics, R93.1 billion is for the South African National Roads Agency to keep the 24,000 kilometre national roadwork in active maintenance and rehabilitation.
A total of R53.1 billion was for the maintenance and refurbishment of provincial roads.
'These investments will maintain our extensive road network in good condition allowing easy access and movement of freight and people within the country and beyond,' he said.
Godongwana also said R66.3 billion is allocated to the Passenger Rail Agency of South Africa (Prasa), with R18.2 billion meant for the rolling stock fleet renewal programme and R12.3 billion is provisionally allocated for the renewal of the signaling system.
'The spending will sustain progress in rebuilding the infrastructure to provide affordable commuter rail services. This will enable Prasa to increase passenger trips from 60 million in 2024/25 to 186m by the end of the Medium Term Expenditure Framework.'
The Minister said the energy sector will invest R219.2 billion on strengthening the electricity supply network, from generation to transmission and distribution.
The water and sanitation sector will spend R156.3 billion on expanding water resource and service infrastructure including dams, bulk infrastructure to service mines and factories.
Godongwana told MPs that the National Treasury continued to implement reform that will facilitate greater private sector participation in public infrastructure.
He said the new regulations for public-private partnerships (PPPs) were gazetted earlier this year and will take effect in June.
'The National Treasury has developed enabling guidelines and frameworks to support the new regulations,' said Godongwana, adding that the guidelines and framework will be published in the coming weeks.
The budget documents said a single structure overseen by the National Treasury will be established during 2025/26 to coordinate state participation in project preparation and planning, public-private partnerships (PPPs), funding and credit guarantees.
'It will consolidate two units currently in the Government Technical Advisory Centre that coordinate PPPs and capital appraisals with the Infrastructure Fund in the Development Bank of Southern Africa.'
It also said PPP regulations have been streamlined, reducing approval requirements for projects below R2 billion from June 2025.
'A clear framework is being established to receive and process unsolicited PPP proposals or bids from the private sector. Revised manuals and guidelines on PPPs are being produced and will be made available to the public.'
The document said state-owned companies, public entities, and municipalities will fund 72.7 per cent, which total R748.5 billion of total public-sector capital investment from their budgets.
'For the 2025 Budget cycle, the Budget Facility for Infrastructure has approved nine projects with a total value of R55.5 billion, of which R15.3 billion will be funded by the Facility, supporting critical areas such as hospital infrastructure, transport and logistics and water.'
It added that the 2025 Budget introduces a performance-based conditional grant for certain trading service entities that provide basic services, such as municipal water.
'This will incentivise financial and operational reforms to improve their functioning and sustainability.'
mayibongwe.maqhina@inl.co.za
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