Government allocates R3bn for SA Connect digital push

The government continues to push for investment in digital infrastructure, allocating more than R3bn for its own projects, while working to increase private participation, currently estimated at about R50bn in the next three years.

On Wednesday, finance minister Enoch Godongwana delivered his budget speech for 2026, saying, “The use of data and AI has become critical for the future development of economies worldwide. As such, data infrastructure should be considered as critical as electricity, ports and transport networks.

“This year we will be exploring options to help data centres and related infrastructure to expand these investments in South Africa and solidify our role as a regional hub for these technologies.”

This builds on the state of the nation address (Sona) earlier in February, in which President Cyril Ramaphosa said the government was working to push for more digital infrastructure investment, including foreign investment, as part of the funding mix.

“We are attracting major investment in digital infrastructure, with 55 data centres already built and more than R50bn of investment expected over the next three years,” Ramaphosa said.

Data centres — which are typically specialised facilities that manage IT infrastructure including servers, storage devices and network equipment — and related digital structures have become increasingly attractive investment targets for asset managers. Such businesses tend to be backed by long-term customer contracts, which also ensure stable and predictable revenue and cash flow.

The Treasury estimates that over the medium term, growth in fixed investment will average 3.2%, as lower interest rates improve financing conditions and public-sector projects in energy, water and transport move into construction.

“Private investment is expected to regain momentum from 2027 but is anticipated to remain concentrated in renewable energy, embedded generation and digital infrastructure,” the government finance unit said in its budget review for the year.

The department said investing in transport and logistics networks, energy systems and digital infrastructure “lowers the cost of doing business, raises productivity and improves access to markets”.

While working to attract private investment into the space, the government has been investing in its own projects to add to national digital infrastructure. Much of this is geared towards increasing access to the internet and lowering communication costs for people in the country.

The government expects the second phase of its South Africa Connect (SA Connect Phase 2) project to be completed in 2025/26, supported by a R3bn allocation from state coffers.

SA Connect is now more than a decade in the making, with billions having already been poured in. It aims to connect 5.6-million sites to high-speed internet by 2025/26 and was approved in 2013.

The initiative is aiming to deploy about 1,180km of fibre infrastructure to expand broadband coverage through community Wi‑Fi hotspots, prioritising unserved and underserved communities and government facilities.

Rural areas have low network coverage levels as telecom operators have avoided investing there because of the expense. Providers would rather invest in towns and cities with big populations that are major consumers of communications services.

To resolve the disparity, the government plans to use public sector resources to close connectivity gaps. By connecting government entities through the State Information Technology Agency (Sita), Sentech and Broadband Infraco, it can build rural networks.

However, as with many well-intentioned government plans, execution has been limited. Budget constraints and other issues have delayed the programme. Split into two phases, the scope of the first segment was greatly reduced, cutting the goal of connecting 6,135 government facilities down to 970.

The government now says Sita “will extend connectivity” at 6,343 government facilities.