Treasury will outline the details of the infrastructure fund, announced as part of South Africa’s stimulus package, in the February 2019 Budget.

Tabling the MTBPS in Parliament on Wednesday, Finance Minister Tito Mboweni noted that the infrastructure initiative announced by Cyril Ramaphosa President would support projects with “blended” finance, combining capital from the public and private sectors and development finance institutions.

“Work to design the fund is under way, with assistance from the private sector and multilateral development banks,” treasury noted.

Investment in social and economic infrastructure

In the Medium Term Budget Policy Statement (MTBPS) government announced that increased investment in social and economic infrastructure will be a focus of economic recovery over the medium term with public sector infrastructure plans estimated at R855.2 billon over the medium term.

Of this, state-owned companies will account for R370.2 billion while general government accounts for the remaining R485 billion, mainly in the form of conditional infrastructure grants.

Finance Minister Mboweni explained that too many projects are poorly prepared for.

“A central policy objective is to promote an increase in capital investment by the private sector,” stated the policy statement, which highlighted several interventions that will be made to increase the efficiency of existing public infrastructure spending.

Addressing weaknesses in infrastructure planning

These include addressing weaknesses in infrastructure planning, government, development finance institutions and private-sector partners have begun work on a project preparation facility.

“Government will report on the progress of these deliberations in the 2019 Budget. The fund is expected to identify innovative financing mechanisms and allow for accompanying regulatory reforms,” said the MTBPS document.