Johannesburg – Think-tank Institute for Economic Justice (IEJ) has lashed out at the National Treasury for “disinvesting” in the South African economy.
The IEJ particularly took issue with government’s poor investment in infrastructure.
“Despite emphasis on infrastructure as a structural constraint to growth, only R24-billion is allocated over the 2022 medium-term budget policy statement (MTBPS) period to the infrastructure fund, with the dubious aim of leveraging private sector and development finance,” said Busi Sibeko, researcher and budget policy lead at IEJ.
Sibeko added the government needed to implement a comprehensive stimulus package to stimulate demand and expand capacity in the economy and create jobs.
“The care sector, construction and manufacturing must be targeted to ease the burden of unpaid care work, promote labour intensive investment and support infrastructure for public goods.”
Minister of Finance Enoch Godongwana in the MTBPS said the economic reconstruction and recovery plan identified infrastructure development as a critical component of the country’s changing economic fortunes.
“In total, 62 priority infrastructure projects were gazetted last year. An additional 55 new projects from various sectors valued at around R595-billion, with a funding gap of around R441-billion, were recently unveiled.
“Therefore, we will need partnerships with the private sector to fill this funding gap,” Godongwana said.
The MTBPS was tabled just a day after Statistics SA laid bare challenges faced by construction firms in the country after the government last year spent almost R30-billion less in construction works.
According to the data, 148 of South Africa’s 257 municipalities cut back on capital expenditure last year.
The KwaZulu-Natal department of transport recorded the biggest decline in capital expenditure in 2020, as it scaled back on new construction projects.
On the national front, the decrease in spending by the Department of Water Affairs was a major contributor to the decline.
The South African National Roads Agency was also a major contributor to the decrease in infrastructure spending.
The entity recorded a decline of R2.1-billion as it scaled back on new construction works.
South Africa’s residential property market is booming, with sales volumes and house price appreciation showing no signs of slowing down in the wake of harsh lockdown restrictions.
“Those contractors that operate in the domestic housing market are seeing some light but the bulk of contractors do not operate in that space.
Contractors working in the building space are also not seeing much upside given the reduction in demand for office space,” says Boitumelo Thipe, business development manager at Master Builders Association North.
“The engine for any meaningful revival of the construction industry, and the economy as a whole is still government’s infrastructure rollout.”
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