Finance minister Enoch Godongwana delivering his first Medium-term budget policy speech. Photograph: Phando Jikelo/African News Agency(ANA)
Finance minister Enoch Godongwana delivering his first Medium-term budget policy speech. Photograph: Phando Jikelo/African News Agency(ANA)

The country's infrastructure spend will require participation from the private sector

By Helmo Preuss Time of article published Nov 11, 2021

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BETWEEN 1998/99 and 2017/18, the public sector spent R3 trillion on infrastructure, but in the lack of fiscal space means that in future a substantial portion of infrastructure spending will have to be provided for by the private sector.

That is why the government undertook a review of the public-private partnership regulations, which was completed in May 2021.

Its recommendations include simplifying the regulations, eliminating delays in approval and implementation, and standardising project preparation; and building capacity at all levels of government will be implemented from early 2022.

Public sector infrastructure spending increased from R48.8 billion in 1998/99 to R236.2 billion in 2017/18. In real terms, infrastructure spending grew by an annual average of 4.3%.

State-owned companies have spent R1.3 trillion on infrastructure over this period, while municipalities and provincial departments have spent R612.8 billion and R705.2 billion respectively to build schools, hospitals, clinics and other community-related infrastructure.

From 1998/99 to 2017/18, public-sector infrastructure expenditure as a share of gross domestic product averaged 5.9%. It peaked at more than 8% in the 2009/10 fiscal year when stadiums were being completed to host the 2010 Soccer World Cup.

It has subsequently eased to the 5% level as spending on social infrastructure such as schools, hospitals and sanitation has grown at a slower pace as a result of pressure on budgetary resources, including the growth in government’s wage bill and new policy commitments.

The government has prioritised creating additional electricity generation capacity.

The new Finance Minister Enoch Godongwana acknowledged that the government has spent the past 13 years trying to fix the problem at state-owned electricity utility Eskom rather than trying to create additional electricity generation capacity.

Eskom has a deadline of December 31 to complete the legal separation of its transmission division.

BUSINESS REPORT ONLINE

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