Sizwe sama Yende
South Africa needs a financial injection of R1.6 trillion from government and R3.2 trillion from the private sector by 2030 in order to achieve its infrastructure goals.
President Cyril Ramaphosa told private and government representatives at the 2024 Sustainable Infrastructure Development Symposium in Cape Town on March 19 that these investments were needed as an addition to bold initiatives that had already been undertaken to deliver infrastructure at the required scale and pace.
The symposium brough together stakeholders, experts and decision-makers to explore partnerships between the public and private sectors as well as pivot infrastructure investment opportunities in South Africa.
Finance minister, Enoch Godongwana, recently indicated that private sector partnerships were required to fill a R441 billion gap in infrastructure financing for 55 projects.
According to 2022 research by Trade and Industrial Policies Strategies, massive infrastructure backlogs in former homelands resulted in migration to cities. Gauteng has seen its population increasing from 19% in 1994 to 26% in 2021.
Ramaphosa said that infrastructure was an enormous economic multiplier that provided dividends for an economy long after the infrastructure had been built.
He said that his government was working on reforms to develop sustainable infrastructure, lift business confidence and encourage investment.
“These reforms include the amendment of the Division of Revenue Act to enable provincial governments to use their infrastructure grants and budget allocations to crowd-in private sector finance for large social infrastructure programmes. These programmes focus specifically on health and education,” Ramaphosa said.
He said that one of the areas that his government had focused on was the unblocking of multiple government authorisations, permits, licences and exemptions.
To date, Ramaphosa said, Infrastructure South Africa had unblocked a total of R25 billion worth of projects in the renewable energy space using the Infrastructure Development Act to fast-track government authorisations.
The President said that amendments to the Public-Private-Partnership regulations, which have been published for public comments, were also part of broader reforms to mobilise and pool public and private sector resources for infrastructure.
Ramaphosa said that the reforms would enable government to diversify infrastructure financing through innovative solutions.
BLENDED FINANCE PROJECTS
Since the Infrastructure Fund became operational, he said, it had seen a steady growth in the portfolio of blended finance projects that use relatively small fiscal allocations to de-risk public infrastructure projects and raise finance in debt capital markets.
“It is significant that blended finance projects, which leverage private sector financing, are also growing steadily. In this calendar year, eleven such projects, with a total investment value of R45 billion, are expected to reach financial close,” Ramaphosa said.
Ramaphosa announced that the country’s Strategic Integrated Projects had grown from R340 billion in July 2020 to R540 billion.
“Eighteen projects, valued at around R10 billion, have been completed, covering human settlements, roads, water and sanitation. The value of projects currently in construction is over R230 billion,” he said.
Ramaphosa said that projects worth nearly R170 billion were currently in procurement.
South Africa was positioning itself to be a leader in green hydrogen and working towards a sustainable future driven by innovation, he said.
“Among the Strategic Integrated Projects, the energy portfolio has the biggest project pipeline, covering transmission, gas, renewables and green hydrogen. The project pipeline comprises more than 100 projects amounting to R240 billion,” Ramaphosa said.
“The green hydrogen programme, estimated at R300 billion and comprised of 14 projects, is an important part of the country’s just transition,” he added.
REGIONAL DEVELOPMENT
Ramaphosa said that the infrastructural development ambitions were not only limited to South Africa alone because the development and integration of the African continent required a massive investment in infrastructure, including regional infrastructure.
“We have built broad political consensus on the need for infrastructure integration, but despite this, progress on implementing regional and continent-wide infrastructure has been slow,” he said.
“Compared to other regions of the world, Sub-Saharan Africa has the longest export times, the highest export costs and onerous border compliance requirements. Transport costs along Southern African Development Community corridors are among the highest in the world, with border posts imposing significant costs and time delays.”