South Africa’s infrastructure drive is gathering pace

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17-02-2025
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Polity
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Dear Fellow South African, 

To achieve the levels of growth our country needs to create enough jobs for its people, we need far more construction and more reliable and consistent infrastructure maintenance.

That is why infrastructure development is a strategic priority for government.

Airports, roads, railways, public transit systems, water, energy and telecoms infrastructure all play a vital role in driving economic growth. Infrastructure development has a multiplier effect, driving productivity and job creation, and improving the delivery of basic services. 

For many years, capital investment by both the public and private sectors was in decline. This was due, among other things, to a difficult economic environment, the diversion of resources through state capture, bureaucratic obstacles and low investor confidence.

Now, following various reforms and initiatives, our infrastructure drive is gathering pace.

A recent report by Nedbank found that the total value of new projects announced by both the public and private sectors last year amounted to R445 billion. This was more than double the year before and represents the largest fixed investment in infrastructure in South Africa since 2021. 

It is significant that more than 78% of the value of this infrastructure investment was from government and state-owned enterprises.

According to Statistics South Africa, capital spending by state-owned enterprises and national, provincial and local government continues to rise.

The private sector is lagging behind the state on infrastructure development spend. However private sector entities announced investment plans in 2024 with a total value of R95 billion. These included an R18 billion mixed-use development in Gauteng, a R4 billion investment by Volkswagen to upgrade its Kariega facility in the Eastern Cape and a new private university for the Western Cape. 

During the State of the Nation Address and debate, government outlined a number of infrastructure projects underway across the country. 

These include projects in water and sanitation, human settlements, renewable energy, recreational, heritage and maritime infrastructure. They also include road rehabilitation, the refurbishing of state-owned buildings to attract investors, and upgrading health facilities. 

Infrastructure SA, established under the sixth administration, leads infrastructure planning, management and delivery. The work of Infrastructure SA has enabled progress in the implementation of the designated Strategic Infrastructure Projects (SIPS) in areas such as energy, water and sanitation, student accommodation and transport. To date, 34 out of 50 SIPs are in implementation stage, to the value of R281 billion. An additional pipeline of catalytic projects to the value of R21 billion will break ground this year. 

To ensure that construction projects get going faster and are finished sooner, Infrastructure SA has launched a project preparation fund worth R180 million to prepare and package infrastructure projects across government.

Recently revised regulations for public private partnerships will help to further unlock private sector expertise and funds for infrastructure.

The challenge of the construction mafia that the industry has faced is being tackled head on by the South African Police Service. Its Economic Infrastructure Task Teams are making headway in dealing with this criminality. 

Last year, stakeholders attending the National Construction Summit on Crime-Free Sites agreed to collaborate to address construction-site disruptions. Some of the measures agreed on included enhanced security measures on sites, community engagement and the development of the emerging construction sector. 

Construction stoppages are on the decrease since these efforts commenced. 

The construction sector is a major source of employment. It accounted for the largest job increases between the second and third quarters of last year. 

As work continues apace on structural reforms to improve the business operating environment and facilitate investment, our country’s infrastructure build programme will play an increasingly prominent role. 

We will intensify our efforts to ensure that infrastructure investment by both the state and business drives economic recovery, growth and job creation.

With best regards,

 

Issued by President Cyril Ramaphosa