SA plans to trawl its coffers for R200bn to fund public works projects, public works & infrastructure minister Dean Macpherson says, hoping to demonstrate the government’s ability to deliver returns to the private sector to chip in with five times as much to revamp transport, water and logistics systems.
“The plan we presented is a fundamentally new shift in policy and co-ordination. We want Infrastructure SA (ISA) to be used not only as a catalyst for closing the infrastructure investment gap but also co-ordinate public and private sector efforts on big infrastructure projects,” Macpherson told Business Day.
The minister’s comments come as SA rolls out a bunch of reforms to get more public sector participation in the public works programme, underscoring SA’s fiscal constraints while aligning with President Cyril Ramaphosa’s repeated promises to make private sector-led spending the linchpin of the economic recovery.
The idea is to launch infrastructure projects in four unidentified municipalities with a track record of clean audits, or complete and transparent financial records, to showcase the government’s ability to complete projects on time and within budget, a crucial incentive to attract private sector investment.
“We are going to prove to the private sector that the government can be trusted to deliver on time and on budget on infrastructure projects through working with at first four functional municipalities who do not have bad audit outcomes as a pilot project for future investment,” Macpherson said.
He floated the idea of reallocating R100bn in local government grants to support infrastructure projects in next month’s budget and scrape the Treasury’s barrel for a similar amount. This money would be used to attract even more private investments, five times what the government would put on the table, resulting in R1.2-trillion in investment firepower.
“We are going to be using existing municipal grants,” Macpherson said. “The financing of local government does need to change. We need to find R200bn, and for every R1 the public sector invests, we can use that to leverage R5 from the private sector.”
Infrastructure SA, established in 2020 as a single point of entry for infrastructure investment in Ramaphosa’s office, would be the central force in attracting investment and ensuring timely and budget project delivery.
SA’s push for more capital spending from the private sector underscores its fiscal constraints. Public debt has been a mounting concern, with the debt-to-GDP ratio estimated to stabilise at 75.5% in the 2025/26 fiscal year. Budget deficits have added pressure to the already tight fiscal space.
‘Clock is ticking’
While Macpherson emphasised “the clock is ticking” and that the government has to move quickly to get the economy working better and to change the lived experience of citizens, the bun fights over which department gets what allocation from the Treasury is expected to heat up ahead of finance minister Enoch Godongwana’s budget speech.
What Macpherson said is in line with what both trade, industry & competition minister Parks Tau and Godongwana told Business Day in interviews last week.
A lack of maintenance of water infrastructure has been amplified through water leaks that appear to go unrepaired for weeks and months. Much of SA’s investment in renewable energy is also not yet on the grid due to a lack of transmission lines. SA’s port and rail industry furthermore needs to undergo fundamental change as it is seen as the lungs of the economy, and has been underperforming for more than a decade.
Business Day reported on Monday that Standard Bank expects R700bn in public-private investment over the next three years in SA.
Ramaphosa met big business on Thursday to confront bottlenecks at SA’s ports.
During Ramaphosa’s meeting of 150 leading CEOs late last year, a pledge was signed between the government and business in SA to do everything possible to try to get the country to achieve 3% economic growth by the end of 2025.
The Bureau for Economic Research has said to reach this target an investment of R2-trillion in new electricity and cheaper Eskom tariffs are necessary over the next decade, with a R200bn investment in rail and ports and R2.3bn for water infrastructure over the next five years.
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