News24.com | Budget 2023 | R903bn infrastructure plan to improve roads, water supply and high-speed internet

Infrastructure spend has been far below what it should be.

• Public sector spending on infrastructure is estimated at R903 billion over the next three years.
• Projects in transport and logistics will account for the bulk of the spending.
• Overall investment by the public and private sectors has been below the 30% target of the National Development Plan.
• For more financial news, go to the News24 Business front page.

Public spend on infrastructure is estimated at R903 billion over the next three years, and the bulk of spend will be in the transport and logistics sector, according to the National Budget.

Finance Minister Enoch Godongwana tabled the Budget in Parliament on Wednesday, where he noted that the spending plans are mostly for strategic projects in transport and water and sanitation.

More than a third or R351.1 billion of the spend is estimated for spend on transport and logistics, this includes expenditure by the South African National Roads Agency (Sanral) to improve the road infrastructure network, according to the Budget Review document.

Sanral's focus over the medium term will be on the construction, maintenance and preservation of the national road network. "It plans to increase the length of the network in active strengthening and resurfacing contracts from 1 500km in 2022/23 to 3 000km in 2025/26," the document read. This will see capital expenditure by Sanral rise at an annual average rate of 34% over the medium term.

Sanral had been criticised by the construction industry for underperforming due to it underspending on a government grant intended for the non-toll roads, News24 previously reported.

Last year at the Medium-term Budget Policy Statement, the government gave Sanral a lifeline for its ballooning e-toll debt by announcing it would take on two-thirds of the R43 billion Sanral could not recover in revenue.

In the current financial year, Sanral received a special allocation of R23.7 billion for this purpose and also to carry out related maintenance, the Budget Review document said.

READ | Sanral shocker: After vast underspending, its new rules risk even more delays, problems

Among the other transport- and logistics-related projects lined up include Phase 2 of the Welisizwe Rural Bridges programme, which should begin in April. A total of R3.8 billion is allocated for the construction of 96 bridges annually in the Eastern Cape, KwaZulu-Natal, Mpumalanga, Limpopo, Free State and North West. These bridges are to allow individuals to safely access schools and workplaces.

For water and sanitation, R132.5 billion is planned to be spent over the next three years, mainly by water boards, Godongwana said.

Some of the shovel-ready projects lined up include repairs of the Riverton Water Supply Scheme in Sol Plaatje Municipality in Kimberly, Northern Cape.

Work on the Clanwilliam Dam project will continue. All surface works and 15% of all concrete works will be completed by the end of this year, Godongwana said.

In the Budget Review document, Treasury indicated that government would spend R121.3 billion on water infrastructure which includes R4.3 billion spend on the uMkhomazi water project. The project will increase supply to various municipalities in KwaZulu-Natal.

The document also highlights that an additional R3 billion is allocated for the Department of Communications and Digital Technologies to roll out a broadband project – ensuring high-speed internet for 5.8 million sites by 2025/26.

Expenditure below target

Over the decade between 2011 to 2021, spending on infrastructure by both the public and private sectors has been far below the 30% of GDP target of the National Development Plan. Investments have been declining since 2015.

To reach the 30% target, public-sector spending needs to grow from 3.8% of GDP (as at 2021) to 10% of GDP by 2030. Private sector investment would also need to grow from 9.3% of GDP (as at 2021) to 20% by 2030.

Treasury noted that contributors to poor public spending on infrastructure has been weak economic growth, inefficiencies by state-owned enterprises that required financial support from government and other rising spending pressures.