Mboweni confirms R100bn allocation to infrastructure spending

Over 10 years, with R18bn over the medium term.
The construction sector has contracted for the past eight quarters. Image: Shutterstock

Government has confirmed in its Medium-Term Budget Policy Statement (MTBPS) its commitment of R100 billion over 10 years to the Infrastructure Fund, of which R18 billion is over the medium term.

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The MTBPS said this blended finance fund will complement the government’s plans for economic recovery, which were developed in conjunction with its social partners in business, labour and civil society and designed to crowd in private-sector finance and expertise to support infrastructure delivery.

The allocation to the Infrastructure Fund follows the government in July unveiling 50 Strategic Infrastructure Projects (SIP) and 12 special projects involving a total investment of R340 billion, as the first tranche of a massive infrastructure expenditure programme to drive the post Covid-19 economic recovery effort.

Six sectors

It said at the time these initial SIP projects are expected to create an estimated 275 700 jobs in six sectors: water and sanitation, energy, transport, digital infrastructure, agriculture and agro-processing and human settlements.

Dr Kgosientso Ramokgopa, Head of the Investment and Infrastructure Office in the Presidency, said these “are projects that are shovel ready, so in the next three months we will be able to go into the ground … and ensure that we are able to stop the haemorrhaging of jobs in the economy”.

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The MTBPS said in the short term, the economic recovery plan will focus on building infrastructure, expanding electricity generation, allocating digital spectrum, supporting rapid industrialisation, and creating “mass employment”.

It said the government will at the same time roll out structural reforms, such as modernising network industries, reducing barriers to entry, and increasing regional integration and trade.

“The National Treasury estimates that, in combination, these reforms can raise growth to over 3% over the next 10 years and create more than one million jobs.”

‘Detailed implementation schedule’

The MTBPS said the plan is accompanied by a detailed implementation schedule that will be overseen by a council chaired by the president and will be supported by a leadership team that coordinates reporting and identifies areas where more effective partnerships are required.

The government’s focus on public infrastructure investment follows a sharp drop in this form of investment in recent years, which was mostly driven by declines in spending by state-owned companies.

Between 2016/17 and 2019/20, total public infrastructure spending fell from R250 billion to R183 billion, or from 5.7% to 4% of GDP, the MTBPS said.

It reported that the real gross value added in the construction sector fell 19.2% in the first half of 2020 relative to the corresponding period in 2019, adding that the sector has contracted for the past eight quarters.

Challenges

“The lockdown resulted in a near-complete shutdown of the construction sector, which employs over one million people.

“Employment fell by 10.8% in the first half of 2020 compared with the same period in 2019.

“Uncertainty, low investment and electricity supply interruptions are expected to hamper recovery over the medium term,” it said.

Consolidated expenditure by function in the MTBPS revealed that economic development at 4.6% and community development at 4.3% are the fastest growing functions.

It said this is mainly due to above-inflation growth in road infrastructure and expanded access to basic services in line with the economic recovery plan.

The MTBPS said it appears that government is overpaying for goods and services in several high-spending procurement areas, including infrastructure and information and communications technology.

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Numbers can be funny. R100billion / 10 years / 275 000 jobs = R3030/worker monthly. That is if all the money goes to wages only. Somebody upstairs does not know how to use simple calculations. This is not job creation, this is less than the minimum wage?
R100 billion just sounds so impressive.

NO government! Forget about it! The opposite….CUT spending!

Allow the freeing up of private sector, cut red tape to do business, scrap all labour laws in one fell swoop (one can hire & fire), govt to interfere LESS with business/private sector and society. Ensure there’s a business friendly attitude amongst all citizens…the motto should be “business first” (not “what I can get from the state”).

Just ensure law and order.

Business & investor confidence will return.

The economy will grow so large, there would not be enough people to fill SA’s job market in the coming decade. And then you can lower tax as well, etc. Leading to more investor confidence.

Possible for a political party that has their roots as a terrorist organisation? Not so sure. (…oh, and stop calling mates ‘comrades’…it’s bad taste in a western sense!) Maybe govt does not possess a western value system, but tribal?

Ag please… Next year Mboweni & Kie will say there is nothing left as they had to bail out Eskom and all the other useless SOE’s!

cANCer must fall!

Good news if it was coming from a competent reliable regime.
First thing that goes through my mind is how much the cadres will skim and the low skills level ala Medupi power station which is already falling apart and still incomplete
Also instead of wasting billions on useless Sassa recipients make it attractive for these no hopers to be sterilized and solve future generations of unemployed who will not work and keep bleeding the taxpayer

End of comments.

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