SA plans R357bn infrastructure fund, ANC says

Focusing on ‘network industries’ such as rail and ports, energy, broadband connectivity, water, sanitation and human settlements.
Will push for 'massive infrastructure spending within labour-intensive sectors' says ANC treasurer-general Paul Mashatile. Image: Shutterstock

South Africa plans to announce a $20.5 billion (R357 billion) infrastructure programme after talks with the private sector and multilateral lenders as part of its attempt to recover from the coronavirus epidemic.

The programme will focus on “network industries such as rail and ports, energy, broadband connectivity, water, sanitation and human settlements,” Paul Mashatile, treasurer-general of the ANC, said in a speech to London’s Chatham House.

“About 1.8 million jobs will be lost during this period, mostly among the youth,” Mashatile said. “This is why we will have to push for massive infrastructure spending within labor-intensive sectors.”

South Africa has announced a R500 billion ($29 billion) stimulus programme to help the recovery of an economy the National Treasury forecasts may contract as much as 16% this year. The country may need $100 billion to recover from the coronavirus outbreak, Mashatile said.

“Government is already in discussion with international partners such as the International Monetary Fund [IMF], the World Bank, the New Development Bank and the African Development Bank to raise $27 billion as part of our immediate response to the pandemic,” he said.

That figure is significantly higher than Treasury’s estimate of about $5 billion it expects to get from international finance institutions.

“Government, through the Department of National Treasury, is exploring all funding avenues to finance all Covid-19 related programmes and measures aimed at addressing the pandemic,” Treasury said in a response to questions. “The funding avenues will not be limited locally, but will include exploring all global partners. Funding transactions will be announced officially once concluded.”

South Africa has in the past opposed borrowing money from the IMF and World Bank, saying such lending programs could compromise sovereignty.

© 2020 Bloomberg LP

COMMENTS   23

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

You must be signed in to comment.

SIGN IN SIGN UP

”On the Rand, anything can happen and it usually does’’

I have said it a couple of times in 2020 here – The USD/ZAR weakened to this point (it’s the weakest point a couple of months ago) – as a result of massive bond, etc outflows – and Importers getting spoofed and covering 100 % of their import requirements, etc. The exporters stayed out of the market and just kept the USD proceeds in their CFC Accounts – Leads and lags.
There will be Billions of US $ of foreign currency inflow again, with more and more countries around the globe dropping rates to zero and below – the funds worldwide will eventually be less ”risk-averse’’ – especially if the likes of The IMF, The World Bank, and the New Development bank start committing these types of loans to SA.

First World country yield is ‘’stuffed – they will have no choice and forced to start chasing the emerging market yields again – it has happened so many times before!
Exporters will start selling their proceeds into the market again and Importers will also sell their longer-term forward cover taken out (dynamic hedging) – a total reversal of the leads and lags are on the cards…” you buy the rumor (which the market did, and “sell the fact” – as the downgrading, etc. has run its course!
All I can say to the ‘’naysayers’’ is – the massive inflow of fund between mid – 2008 and 2011 (when USD/ZAR strengthened from 11.50 to 6.50), and between mid – 2011 and 2016 (when the USD/ZAR) strengthened from 16.80 to 13.50), will happen again.
It’s time for some sensible ‘’Delta Hedging’’ now – the offshore players won’t be waiting too long before they start positioning themselves – In fact, I think the ‘’smartest’’ money already started selling at 19.0000

This is really great info. Thank you so much!

You’ve made some excellent points, thank you!

Thanks for this ‘cccc’

Indeed, this ebb and blow was witnessed before in our lives. ZAR likely to recover in the shortterm, question is to WHAT LEVEL would you say the ZAR could strengthen against the US$? (say R15 or R16,…R14 if lucky?)
Someone with your decades of experience you should be able to call it to a cent, and precisely when in future 🙂

Respectfully, looking forward to your valued insight.

I sincerely hope that none of the listed providers of capital sanction any loans to the government until all parties who have been fingered in state capture have been prosecuted to the fullest extent of the law.

Graham:

I get where you come from but suspect that if the underwater defined benefit pension funds of the developed nations relied on likely 0.2% yields on investments in their own markets we would see governments topple. The hamster has to keep the big wheel turning.

Every few years somebody says the clowns are naked, and we assign it to an external crisis. Then the world just does it again. Rinse, repeat

This is fantastic news and should be celebrated! Instead of building fire pools for Zuma we are finally investing in Infrastructure that helps us become more efficient. God has truly blessed South Africa! We are the lucky nation. We have some of the best entrepreneurs in the world!

cANCer preparing to loot pension funds Testing the water so to speak

The problem is not that SA plans R357bn infrastructure fund. The problem is the way the ANC goes about the procurement which end up wasting money due to the BEE system and corruption.

BEE is stupid. Well said. We need to all work together as one South Africa. Infighting amongst race groups is so silly, meanwhile China steals our lunch.

More theft on the Cards….

This is the new construction mafia, BEE and cadre deployment fund, aimed at buying votes for the ANC. It will be interesting to see to what extent they will be able to fool the IMF and the World Bank in the process.

Agreed.

Have a look at who is buying the bankrupt bits and pieces of the old big five construction companies.

Dig a bit and see where they come from and who they are connected to.

This is beautiful! As Peter Schiff says: repairing the roof of my house won’t create an income. It will create temporary a job: repair my roof. But has my income changed? NO. I will still earn the same salary a month! And the person that repaired my roof does he generate an income? NO. So most of the infrastructure projects DO NOT provide an extra income for South Africans! It is just debt to give people TEMPORARILY a job! It doesn’t boost the long-term income of a country, a city, an individual. If it did, then our income would be higher after hurricanes, after storms, then we would welcome with open arms potholes, burned out trains, vandalized schools and universities and hail storms. NO. Even buying expensive trains? Transporting someone from point A to B. Does it really help the economy? NO, not much!

The only way is to EXPORT and the only businesses that can create export jobs are listed on the JSE! Support a stimulus package they specifically get and use to create new cars, next export activities, export products, new technologies, new manufacturing jobs!

If we build another bridge, repair another bridge … it does very little for the economy. Give everyone 5G for free – that might help the economy – online business development. But any infrastructure plans has to be very well planned and has to make financial sense ….!

This is the crux of the matter. Profligate spending on bricks and concrete will not be particularly helpful; but it is better than on government salaries; but still underwater unless done carefully and cleverly. Fix and improve transport systems to make production and sale more efficient and cost effective. Fix education to increase the more profitable sale of products and services. All to outside SA.

BUT, nothing will help if a mind set of working harder, cleverer and more productively than your “neighbour” is not engendered and nurtured as well as set by example from the top. Ha ha.

R200 billion for infrastructure and R175 billion for looting.

I think it`s the other way around.

All in the name of responsible and developmental investing. New fads for more fees!

The cost of creating a single job.

Whilst the rest of the world averages between R450,000 and R630,000 to create a job South Africa was around R5,000,000 which was investigated by the South African Youth Fund. Back in 2011 an article by Alex Hogg and the IDC had the figure around R250,000 per job I’m sure this has changed to about R2,000,000 given the success of BEE

Doing the maths:
Worst Case This means roughly 75,000 jobs will be created and best case is 187,500. Based on R5mil and R2mil per job
Using the 1,8m jobs, this means that the target is around R208,333 per job. Smell that its smells like B.

https://blogs.worldbank.org/jobs/how-much-does-it-cost-create-job

Wont get much for it.

Remember Medupi started at about R80 billion and is now well over R200 billion.

Bit od escalation here and there and you might end up in 20 years time with half a Medupi.

Did anybody ever watch the Soprano’s ?????? The construction industry 🙂

The number-sequence of the supposed R3-5-7 billion appears familiar (*chuckle*)

I will bet my bottom dollar that, in the end, this proposed fund’s % long-term return to investors will NOT NEARLY PERFORM to the same level as that famous (Magnum) revolver cartridge, bearing the same number-sequence!

This infrastructure fund will likely give the investor returns akin to a .22Short cartridge, or a BB cap 😉

…or even worse, a complete dead “misfire”!!

Spitting out a hot potato at dinner.

”Madam, a fool would have swallowed that”

Anonymous.

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: