Infrastructure Funding in place

Infrastructure Funding in Place

27 February 2013

Financing of R827-billion for South Africa’s infrastructure projects over the next three years, to be drawn from the fiscus and state-owned enterprises, is in place, says Finance Minister Pravin Gordhan.

Presenting his 2013 Budget Speech in Parliament in Cape Town on Wednesday, Gordhan said financing for the country’s infrastructure projects was not affected by the spending cuts in the Budget.

Schools, hospitals, clinics, dams, electricity…

The government had spent R642-billion on infrastructure over the last three years. Of the R827-billion to be spent over the next three years, R430-billion would come from the fiscus, and R400-billion would be drawn from Eskom, Transnet and other state- owned enterprises, Gordhan said.

The R430-billion from the fiscus has been allocated to build schools, hospitals, clinics, dams, lay out water and sanitation projects, expand electricity networks and supply electricity to over a million new homes, build more courtrooms and prisons and construct better bus, commuter rail and road links.

Most of the spending falls under provinces and municipalities.

Funding R400-billion from state-owned enterprises would be drawn from their respective balance sheets and from additional borrowing over the next three years, backed by guarantees from the National Treasury.

This would fund the ongoing building of power stations and the rolling out of new electricity transmission lines, as well as new rail, ports, pipelines, water-transfer schemes and various airport upgrades.

Gordhan that said though some agencies and departments had struggled to spend their full infrastructure budgets, particularly as funding levels had increased, progress was being made.

“Records show that government’s ability to spend has been steadily rising from year to year, but it is not yet fast enough,” he said.

R3.6-trillion in projects on the table

The Budget Review points out that R3.6-trillion in major infrastructure projects are in progress or under consideration.

Ongoing programmes or construction on new projects accounts for almost a quarter of the total expenditure, with most of this being spent on new power generation projects (R537-billion), transport (R151-billion), new schools (R52-billion), hospitals and clinics (R37-billion), and dams and pipelines (R35-billion).

Several private-sector projects are also contained in the government’s Strategic Infrastructure Projects, bringing the total value of projects to over R4-trillion.

South African public and private-sector capital spending increased in real terms by 4.3 percent and 4.6 percent respectively in 2011 and by 11.1 percent and 4.3 percent in the first three quarters of 2012.

However, as a percentage of GDP, capital spending has not yet recovered to the level reached in 2008, before the onset of the global financial crisis.


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