The Budget Review 2023 reveals that the government, through public-sector infrastructure spending, will invest an estimated R903bn over the next three years, to expand the country’s energy generation capacity, develop the transportation network and upgrade water and sanitation services.
“Infrastructure investment has consistently been touted by the government as the most effective strategy to rejuvenate the South African economy and contribute towards alleviating unemployment. The R263bn capital investment earmarked for the upcoming financial year, and subsequent spending estimates, is encouraging news for the industry,” believes GVK-Siya Zama CFO, John de Sousa.
While greater infrastructure spending is imperative, ensuring that funds invested effectively produce value for money in real terms is what will sway and boost investor confidence, along with longer-term reforms.
“Public sector projects are often hamstrung by a litany of inefficiencies. Public-private vehicles offer a remedy, however, the regulatory framework and procurement mindset that guide these partnerships needs further development, reform and innovation,” continues De Sousa.
Wilted growth and possible greylisting
South Africa’s growth outlook has wilted under intensified load shedding. In response, the government has announced a temporary expansion of its existing renewable energy tax incentive to help businesses get through this difficult period.
“Addressing legislative and structural deficiencies, along with improving corruption case prosecution rates, must be prioritised as we can ill-afford for the country to be perceived as a higher investment risk,” concludes De Sousa.
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