Infrastructure investment will be ‘fly wheel’ to grow economy

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Infrastructure investment will be ‘fly wheel’ to grow economy

Finance Minister Tito Mboweni.

Finance Minister Tito Mboweni.

Gallo Images/Phill Magakoe)

  • Finance Minister Tito Mboweni has said infrastructure investment is needed to grow the economy post-Covid-19.
  • The government has committed R100 billion over 10 years towards an infrastructure fund.
  • Mboweni says together with the Development Bank of Southern Africa, the government has identified projects that will be funded through the budget facility for infrastructure.

Finance Minister Tito Mboweni has said building a “bridge to a post-lockdown” future will need investment in infrastructure.

While Mboweni painted a grim picture of South Africa’s finances in his special adjustment budget tabled in Parliament on Wednesday, he said the government would be required to build high-quality bridges, roads, railways, ports, and other infrastructure.  

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“Infrastructure will be the fly wheel by which we grow the economy. Just as we have toiled together to manage the pandemic, let us harness this same unity of purpose and build the infrastructure our nation needs. Our efforts to reduce consumption expenditure will also change the composition of spending in the direction of investment.”

Hours before he delivered his speech, News24 reported the government and state-owned entities have over the past four years underspent by more than R140 billion on infrastructure.

This was revealed during Parliament’s Portfolio Committee on Public Works and Infrastructure on Wednesday, where Public Works and Infrastructure Minister Patricia de Lille presented her department’s infrastructure investment plan post-Covid-19.

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Infrastructure projects 

President Cyril Ramaphosa earlier this week hosted the Sustainable Infrastructure Development Symposium, drawing in sector specialists as well as technical and financial structuring experts.

At the symposium, he announced the country was looking to embark on 276 infrastructure projects at a cost of more than R2 trillion.

Mboweni said considering these initiatives, the government had already committed R100 billion over 10 years towards the infrastructure fund. 

“Together with the Development Bank of Southern Africa, we have identified projects that will be funded through the budget facility for infrastructure. We have recently released a paper on sustainable finance, and we are working closely with the private sector to green our economy.   

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Private sector 

“But our enormous investment needs cannot be delivered by government alone. The private sector accounts for most of the investment spending in the economy. We must reduce long-term interest rates to allow business and households to drive faster economic growth,” he added.

The director-general of the National Treasury, Dondo Mogajane, said during a post-budget media briefing: “The R100 billion for infrastructure is there. Based on the discussions at the symposium, we will make resources available. The R100 billion is there. The infrastructure fund will be up and running. We have had various engagements. We will be ready to fund and offer forms of guarantees that are needed.”