SA plans $20.5bn infrastructure fund
JOHANNESBURG - South Africa plans to announce a $20.5 billion infrastructure program after talks with the private sector and multilateral lenders as part of its attempt to recover from the coronavirus epidemic.
The program will focus on “network industries such as rail and ports, energy, broadband connectivity, water, sanitation and human settlements,” Paul Mashatile, the treasurer-general of the ruling African National Congress, said in a speech to London’s Chatham House.
“About 1.8 million jobs will be lost during this period, mostly among the youth,” Mashatile said. “This is why we will have to push for massive infrastructure spending within labor-intensive sectors.”
South Africa has announced a 500 billion-rand ($29 billion) stimulus program to help the recovery of an economy the National Treasury forecasts may contract as much as 16% this year. The country may need $100 billion to recover from the coronavirus outbreak, Mashatile said.
“Government is already in discussion with international partners such as the International Monetary Fund, the World Bank, the New Development Bank and the African Development Bank to raise $27 billion as part of our immediate response to the pandemic,” he said.
That figure is significantly higher than the Treasury’s estimate of about $5 billion it expects to get from international finance institutions.
“Government, through the Department of National Treasury, is exploring all funding avenues to finance all Covid-19 related programs and measures aimed at addressing the pandemic,” the Treasury said in a response to questions. “The funding avenues will not be limited locally, but will include exploring all global partners. Funding transactions will be announced officially once concluded.”
South Africa has in the past opposed borrowing money from the IMF and World Bank, saying such lending programs could compromise sovereignty.
The infrastructure project is being spearheaded by Kgosientso Ramokgopa, an official in the president’s office, Mashatile said.
“Cabinet is meeting today to discuss this and I expect an announcement on the list of projects to be made public within the week and even maybe as soon as tomorrow,” he said.
Enoch Godongwana, the ANC’s head of economic policy, said at the same event that land reform would be a central tenant of efforts to rebuild after the pandemic.
“If you want to build houses, you need land, if you want to make more impression on the deep rural parts of the country, you need land,” he said. The government will begin by distributing state land, and secure more real estate when appropriate, he said.
The ANC first decided in 2017 to amend the constitution to make it easier to take land without paying for it, a change it said was needed to address racially skewed ownership patterns. While the party said the economy wouldn’t be harmed, the move spooked investors and farmers who feared property rights may be eroded.
A panel of lawmakers that was established last year to draft the constitutional changes was due to conclude its work by the end of May, but its mandate was extended indefinitely last week.