R1-trillion infrastructure budget must drive industrialisation

As the three-year public infrastructure development budget edges closer to R1-trillion, there are concerns on whether the fiscus will be able to afford the total expenditure.

Black Business Council (BBC) – a federation of black businesses – is also questioning why the government is not using the budgeted amount to drive localisation and industrialisation.

The BBC expressed these sentiments after Finance Minister Enoch Godongwana unveiled that the state’s planned total infrastructure investment budget in the medium-term – between 2024 and 2026 – amounts to R943.8-billion.

Giving a breakdown of the public infrastructure expenditure budget, Godongwana stated that the R486.1-billion of the investments would be rolled out by state-owned enterprises and public entities, R213.8-billion by municipalities, and the remaining R224.8-billion by provincial and national government.

He added that consolidated spending on buildings and other fixed structures would increase by an average of 15.9% over the next three years.

It was further revealed in the 2024 Budget Review that there was a need to improve Transnet’s operational equipment such as port cranes, marine vessels and rail rolling stock. The capital expenditure will also focus on the rail recovery, by allocating capital for the rehabilitation of rail infrastructure and returning older locomotives to service.

The BBC’s vice-president Gregory Mofokeng said the money will assist in fixing public infrastructure that was vandalised during the Covid-19 lockdown, including rail infrastructure.

“We are seeing a lot of projects that are being pushed through Passenger Rail Association of SA and SA National Roads Agency Limited. Projects that were previously cancelled are coming back into the market,” said Mofokeng.

“Prasa suffered a lot during Covid as a lot of its infrastructure was damaged. There was also an underinvestment in the Prasa-related infrastructure.”

He declared his confidence that there was capacity to roll out R1-trillion on infrastructure development projects.

“What we are not sure about is whether or not the fiscus will be able to hold and have the necessary resources available to meet that R1-trillion investment demand that is there.

“Towards the end of last year, because of the pressures that the fiscus was under, there was a communiqué that was issued by National Treasury that the government departments should hold on further expenditure on projects. The risk for us comes from that side.

“If the fiscus is under pressure, perhaps we might not see the entire R1-trillion being made available. But if the fiscus can’t fund it, then we must then look into public-private-partnerships. That is where some of the money can come from because as a private sector we are ready to co-invest with government in this much-needed infrastructure, especially economic infrastructure, so that we could get our economy back on track,” explained Mofokeng ”.

He expressed hope the funds will allow infrastructure projects to unfold much quicker – from the time when the tender is advertised, preferred bidder is announced to when the work on the ground is allowed to start. Mofokeng said the government should use the funds to drive localisation and industrialisation of raw materials in the construction sector.

“If we are going to address the issue of this high unemployment, this would be an opportune time for the country to ask how on the back of that R1-trillion do we re-industrialise our economy. We need to take advantage of that… and make an impact in reducing the high unemployment rate in the country,” said Mofokeng.

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