SA outlines plan for R2.3trn building boom

With a potential 1.8 million jobs created.
Image: Shutterstock

South Africa’s government unveiled a plan to galvanise R2.3 trillion in new infrastructure investment over the next decade that could create more than 1.8 million jobs and revive an economy battered by the coronavirus pandemic.

Gross domestic product is expected to contract at least 7% this year and the advent of the disease has made the need for the investment all the more urgent, President Cyril Ramaphosa told a conference in Pretoria, where the plan was released. It’s won backing from development finance institutions and ground needs to be broken as soon as possible, he said.

“We have placed infrastructure at the centRE of the stimulus our economy needs to achieve a sustainable recovery,” Ramaphosa said. “In the long run, infrastructure investment increases the capacity of the economy, reducing the cost of transport and the capacity and reliability of key services like electricity and municipal services.”

The government imposed one of the world’s most severe lockdowns in late March to slow the spread of the coronavirus. The curbs that shuttered most businesses have since been eased, but bankruptcies and job losses have continued unabated, while confirmed infections have surged past the 100 000 mark. Ramaphosa previously announced a R500 billion package to shore up the economy, but has said that won’t be enough to reignite economic growth.

Currently 276 housing, energy, transport, water and other projects are under consideration, and funding has already been secured for 55 of them, according to a copy of the plan.

Public Works Minister Patricia de Lille said opportunities will be created to invest in green technology and confirmed that the government was considering introducing green infrastructure bonds.

The New Development Bank, which was established by the governments of Brazil, Russia, India, China and South Africa, will make funding available and is keen to invest in green infrastructure bonds, according to Leslie Maasdorp, one of the lender’s vice presidents. The bank has registered a bond sale plan with the Johannesburg Stock Exchange that will raise as much as R10 billion, with the first phase to be completed within six to nine months, he said.

Officials from the World Bank, Development Bank of South Africa and African Development Bank also pledged support for the infrastructure drive.

Projects under consideration include:

  • 71 housing projects with a projected investment value of R1.4 trillion that could create 370 000 jobs
  • 25 energy projects that could generate R270 billion in investment and support 260 000 jobs
  • 33 agriculture projects worth R28.5 billion that could create an 93 300 jobs
  • 65 transport projects worth R294 billion that could support 298 000 jobs
  • 42 water and sanitation projects, with a projected investment value of R170 billion that could create 96 000 jobs.
  • Seven digital infrastructure project, which could generate R108 billion’s worth of investment and support 707 000 jobs.

© 2020 Bloomberg L.P.

COMMENTS   25

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

R2.3 Trillion … in the waiting to be looted.
Mind my negativity … but let me try to be positive.

Lol. I have permanently surrendered to cynicism. Just safer for my sanity

With the destructive patronage Procurement policies still in place, I would not call this a boom for the economy just yet.

The procurement of the border fence at Beit Bridge went well. A nice big gap to drive a bakkie through – symbolism for how all this money will leave the country!?

True. But it also shows a bigger problem that we have.

TheANC seems to glorify all things informal while wasting money and it gets shown up with Covid-19.

They want to be seen to help the poor but have done nothing for 26 years about the informal sector that never pays tax and never contributes to UIF (including the taxi industry), Now those informal sectors start rioting when they don’t get the monetary relief they dictated to Govt that they want.

Then you have the illegal immigrants that number between 5 to 10 million and don’t pay tax or UIF and now health care has to be provded to them at great cost. Not dealt with for 26 years but very much part of the ANC’s patronage system. For example the police use them for perpetual top up for not repatriation.

The more than a quarter century of corruption is comming back to bite them.

Wahahahaaaa. Peter Pan and Tinkerbell

Trieljon is the name of the game now.

You cant just talk smart and think you come across as smart. Being smart has evaded our man here no matter the fancy 4th industrial revolution gadgets etc. Whahaaahaaa. I ask you 4th industrial revolution.

Just think about it for a minute???

All the talk and no new dawn anywhere in sight??? Its going backwards man. Best to get the guy to keep quiet.

He makes a whole country look ??? well a bit without any potential. Even “The Continent” should be worried. You obviously want the rest of the world to take you seriously??

Eish!!! man.

Didn’t JZ do this 10 years ago?
Except most of the money got stolen and we are saddled with junk rating.

And how is R1.4 trillion housing projects going to benefit the economy (besides the demand created by the construction)? So much money got stolen over RDP houses and they want to throw more money into the black hole?

With the current electricity generation capacity, the economy just can’t grow. No energy = no productivity
Just tossing the 1.4 trillion to wipe off Eskom debt, reduce electricity fee and double power supply would do so much more than this useless plan.

What concerns me more is how they are funding this initiative. Is it via a fascist system where they tax the minorities and redistribute to the majority? Free Services to the majority, electricity, water, roads, healthcare. In that case its just a massive disincentive to work, save and invest and a large incentive to emigrate or live of a welfare state.

More problematic if they borrow those funds from external investors, the infrastructure will take a decade or more to come on line but the interest will be repayable annually. This will act as a leakage on growth over the next ten years and will erode the value of the rand. My view is the rand will strengthen at times when the government imports this external funding and then blow out as it pays the interest. Long term real value of the rand should be north of R25/$, with short term dips/”risk on” fluctuations timed to coincide with the capital importation. Entrepreneurs will spend more time timing these fluctuations rather than rebuilding the economy and creating jobs.

I think they are planning to use everyone’s pension money to fund this. What a great way to obtain more money to loot.

I desperately, desperately want to be positive about this, as infrastructure is the crux of a prosperous economy but the track record of a severe combination of kleptocracy and incompetence is strong amongst our politico’s. Clem Sunter style – less than 20% chance of success.

Infrastructure spend on its own is an expense. ( And they want to spend a lot of money.)
If it is not followed up with spend on productive goods that you can sell and get an income you will end up with a very expensive white elephant.

JA Ja Whatever. We have been hearing this communist rubbish for decades now.
ANC will never have the solution, they are the problem.
Their policies of Racial Employment Equity and BEE have destroyed the economy, all in the pursuit of votes.
Just as Marx, Lenin, Putin, Mugabe, et al practised.
Goodbye ANC, you have proven yourselves to be counter productive and the next elections will confirm this.

Sorry to break this to you brucegat, but the majority of the electorate actually believe was they are told. Or else! And they will vote as told. Or else! All that might change is that more EFF candidates gain traction and we have the two prongs of communism spinning the same old yarns to the same majority with the same result – always looking to the coming Utopia in Mzanzi. It would be like trying to turn the Titanic in Durban harbour trying to change the common mindset. Not going to happen. Sorry.

Quick calc , thats like 1.3 million cost per worker , whats the norm

Do you see how things have snuck up to the trillions; I can’t even count that many zeroes. Oops, here we go…

Mostly glass half empty comments. If I can get one of those decent paying jobs, I’m in!

R20 000 a month is fine with me.

This infrastructure spend idea to save the economy will fail for one very simple reason: . Fundamentally you cannot spend your way out of debt and economic recession. Recessions are created in the first place due to excess spending and greed building up and leveraging the economic engine. Now you want to issue trillions in bonds to fund more spending and greed. This will, in the long term, lead only to one place: hyperinflation and failure. Sure in the short-term you can simulate a recovery and cause economic “growth” but it’s all a facade. Fake, unsustainable economic growth at the cost of future generations.

If South Africa was your normal free-market capitalist country where property rights were respected and law and order prevailed, then infrastructure spending would reap great rewards and add value, even when financed with offshore borrowing.
Under a socialist regime, such as we currently have, the opposite is true. This grandiose infrastructure project will syphon purchasing power from local taxpayers to support the lifestyle of pensioners in foreign countries as part of an effort to bribe them to pay unemployable locals to swing a pickax and push a wheelbarrow. This is the destruction of local capital on en epic scale. This redistribution of wealth from property owners to the unemployed supporters of the ANC will be financed by local taxpayers via foreign pension funds. The taxpayer will be paying the interest and principal on the loan that is used to employ ANC supporters.

Local taxes are insufficient to fund the socialist redistributive government schemes, so, somehow they believe that if they add the additional interest payment of borrowing offshore, the local taxpayer will now by some miracle be able to afford it. This is how foreign entities, and not local WMC, exploit the locals who are begging to be exploited. The nation is begging to be enslaved, to become the serfs of European and American pensioners. Nobody can prevent people with the slave menatlity from turning themselves into slaves. This is the new financial colonialisation of Africa, and this time around, the locals beg to be colonialised. They even boast about it. They see it as a breakthrough, a solution. a triumph.

Ohh yes an a Graduate Urban Planner can’t even land a job in the public sector. Jokes jokes and more jokes.

If the money can be found, this will certainly help on the short term. Unfortunately, 25 years of involvement in infrastructure projects has taught me that they do not create lasting employment. People employed on the project have a job for 3 to 6 months and then they are unemployed again. After so many years of labour intensive public works programs, we still have this massive unemployment. We should start investing in projects that create lasting employment, e.g. manufacturing, where people can work for a lifetime. We have the raw materials, we have many people that can be trained. It is time to shift our focus.

Oooo, that’s hilarious. Remember the one about rooting out corruption! Blah, blah blah – the waffle drizzles on and on. He was obviously given that “job creation” wand JZ used to wave around and he’s now playing with this new toy to try and distract from reality. How many jobs was the grand Zuma supposed to create again? Can’t keep up with the fairy tales anymore. No good news to be had from facts unfortunately, so more yarns are spun. To be expected I suppose.

The country does not need more talk shops, it needs action and results.

The new Expropriation Act will make investors just delirious for infrastructure investments in SA. Basic logic, absent since 1652.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: