The Infrastructure Fund (IF), which was established to promote investment in infrastructure as part of the country’s economic recovery, will receive R24bn over the next three years from the National Treasury to add to funding from the private sector.
Unlike previous years in which the government’s infrastructure projects were bogged down by financial delays, the IF’s head, Mohale Rakgate, said the funds received from the government have enabled the fund, which is managed by the Development Bank of Southern Africa, to speedily begin to implement the construction of projects.
A broadband rollout will be allocated most of the total funds at R53bn, while the upgrades of the Lepelle Northern Water’s Olifantspoort and Ebenezer water supply schemes in Limpopo have been allocated R4.5bn.
The much-delayed upgrade of the Mokolo-Crocodile River Water Augmentation Project Phase, which provides water supplies to Eskom’s Medupi power station, has been allocated R12.4bn.
“In the past year we have been made to get to a point where the projects can be exposed to the market … the market being the external financiers as well as developers who would be keen to partner with government in the implementation of the projects,” Rakgate said on Wednesday.
Private players
Infrastructure investment has been a priority for the government as part of rebuilding the economy, which has been pulled down by the pandemic, shedding more than 1-million jobs in the past year.
The plan has been supported by various social partners including businesses that have highlighted the need for the government to include private players to ensure the country’s growth and reform agenda is accelerated.
The infrastructure fund manages a pipeline of more than R80bn consisting of the seed funding for the infrastructure projects, and galvanises private investors.
The fund aims to raise R1-trillion over the next 10 years, consisting of R900bn from private funding and R100bn in seed funding from the government, according to Rakgate.
It already has eight shovel-ready projects, including bulk infrastructure, student accommodation, social housing and broadband rollout, that will be initially funded from the capital provided by the government.
Trust gap
Speaking at a media briefing at the second Sustainable Infrastructure Development Symposium on Wednesday, Rakgate said the Treasury has committed to provide the fund with R24bn over the next three years, beginning with R4bn in the current 2020/2021 financial year.
“We are excited about that because there is always this trust gap that we make commitments and we don’t follow up,” he said.
In July 2020, the government gazetted more than 50 projects in areas including water and sanitation, energy, and transport. The gazetting of the projects coincided with a 60% plunge in gross fixed capital formation (an indicator of investment) and the shedding of 2.2-million jobs in the country.
The government is expected to launch an additional 55 infrastructure projects to the market in a bid to galvanise funding.
Minister of public works & infrastructure Patricia de Lille said the projects are from various sectors and are valued at about R595bn, with a funding gap of about R441bn.
“The projects were pitched to the market at last year’s [symposium] where we were able to raise R340bn in funding commitments from the private sector, which helped to take the pressure off the struggling fiscus,” she said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.