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Development Bank funding ready to build and maintain infrastructure

By Edward West Time of article published Feb 27, 2020

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CAPE TOWN – The Development Bank of Southern Africa (DBSA) will package blended finance infrastructure megaprojects of at least R200 billion over the next three years, while the government would commit more than R10bn over the three years to the Infrastructure Fund, Finance Minister Tito Mboweni said on Wednesday.

In what is sure to be a boost for the ailing construction industry, Mboweni said that the fastest-growing component of non-interest spending in the Budget was capital spending, complemented by the R10bn Infrastructure Fund managed by the DBSA.

Mboweni said he and Co-operative Governance and Traditional Affairs Minister Nkosazana Dlamini Zuma had agreed that their officials would find ways to use the allocations made through the Municipal Infrastructure Grant to ensure that municipalities not only built new infrastructure, but also maintained what they had.

Part of the problem with municipal service delivery had been that municipal infrastructure funds largely went unspent, as municipalities often did not have the capacity to undertake the development of the infrastructure, or infrastructure money was used for other purposes, Mboweni said.

Some national government infrastructure project budgets in feasibility study, design phase or under construction included Cape Town Phase 2 CitiBus, with a total budget of R7.1bn, Durban High Court (R902.7 million), Bambisane Hospital (R700.1m), Dihlabeng Hospital (R312.3m) Giyani Water project (R2.8bn), academic hospital in Limpopo (R4bn), police accommodation and offices in North West (R756.1m), police stations in KwaZulu-Natal (R4.3bn), school infrastructure backlogs (R9bn), Sedibeng bulk sewerage (R3bn), Square Kilometre Array (R10bn), student accommodation Eastern Cape (R67m) and student accommodation and infrastructure in Gauteng (R62.5m), the Budget documents showed.

Mboweni said that the OR Tambo aerotropolis in Ekurhuleni was at an advanced stage of implementation, the King Shaka aerotropolis in eThekwini was progressing, while a similar development was planned for Cape Town. 

Meanwhile, Lanseria had also been identified as a potential smart city.

Not so good for infrastructure spending was the suspension of the integrated public transport networks, which would consequently be suspended in the Buffalo City, Mbombela and Msunduzi municipalities.

In the education sector, investment would go to new schools, replacing schools constructed with inappropriate materials and providing them with water, electricity and sanitation.

Mbweni also said that communities should step in to expose disruptive actions of “bandits” who storm construction sites or mines, harm growth and lead to job losses, so that the law could take its course.

Alexander Forbes executive chief economist Isaah Mhlanga said in a television broadcast that the government infrastructure projects would not take off in a meaningful fashion until the private sector was attracted to invest in the projects as well.

Dr Roelof Botha, an economic adviser to the Optimum Investment Group, said being able to attract the private sector to participate in infrastructure projects was “the only way” many of these projects would get off the ground.

He commended Mboweni for mentioning the disruptions currently being experienced at construction sites, and said representative organisations in construction needed to keep putting pressure on the relevant government departments to tackle this problem.

He said that the construction industry would also be boosted by the recent announcement by the SA National Road Authority of “an enormous amount” that would be spent on road maintenance and construction.

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