South Africa Announces Over $54 Billion Investment in Public Infrastructure
South Africa will invest over 1 trillion rand (about 54.5 billion USD) in public infrastructure within the next three years to boost economic growth, as announced by Finance Minister Enoch Godongwana. Key allocations include funding for transport, energy, and water sectors, alongside a proposed VAT increase to support government revenue amidst stagnating GDP growth.
South Africa has recently announced a significant three-year investment plan, surpassing 1 trillion rand (approximately 54.5 billion U.S. dollars), dedicated to enhancing public infrastructure aimed at stimulating economic growth. The announcement was made by Finance Minister Enoch Godongwana during the 2025 budget review presented in Cape Town, where he reaffirmed infrastructure as a fundamental component of the nation’s growth strategy.
The financing objectives have been clearly defined, allocating major resources to three primary sectors: 402 billion rand for transport and logistics, 219.2 billion rand for energy infrastructure, and 156.3 billion rand for water and sanitation. In detail, Godongwana reported that the South African National Roads Agency will invest 100 billion rand over the medium term on national road maintenance and that the Passenger Rail Agency is set to receive 19.2 billion rand for essential signaling improvements.
The economic context in South Africa is critical, as the nation has faced stagnation, with GDP growth averaging under 2 percent over the last decade and only a modest 0.6 percent growth in 2024. Forecasts indicate that GDP growth is expected to average 1.8 percent from 2025 to 2027. Godongwana projected that consolidated government expenditure, excluding interest payments, will rise from 2.4 trillion rand in the 2024/25 financial year to 2.83 trillion rand by 2027/28.
To address financial pressures, the government anticipates achieving a primary budget surplus of 0.5 percent of GDP in 2024/25, increasing to 0.9 percent in 2025/26, while also managing government debt to stabilize at 76.2 percent of GDP by 2025/26. However, the proposed value-added tax (VAT) increase by 0.5 percentage points for the two fiscal years following will elevate the VAT to 16 percent by 2026/27, with anticipated revenue generation of 28 billion rand in 2025/26 and 14.5 billion rand in 2026/27.
Godongwana emphasized that, despite the discontent associated with raising taxes, the approach was deliberate. He stated that various alternatives were reviewed, and the decision to elevate the VAT was deemed essential to meet the increasing service delivery demands in sectors such as health and education, thereby striking a balance between economic growth ambitions and urgent developmental needs.
The South African government has committed to a substantial three-year infrastructure spending plan exceeding 1 trillion rand to revitalize economic growth. The strategy focuses on critical sectors including transport, energy, and water, as well as confronting the current economic stagnation. Further, the proposed VAT increase aims to bolster government revenue in response to pressing public service needs, underscoring a delicate balance between fiscal demands and growth facilitation.
Original Source: english.news.cn
