Government ups the ante on infrastructure

Government’s
Infrastructure Fund is set to receive a R100 billion over the next decade as
the state steps up its infrastructure programme by partnering with the private
sector.

“Government
is stepping up its infrastructure build programme by partnering with the
private sector, development finance institutions and multilateral development
banks to create an infrastructure fund,” said the 2019 Budget Review document.

This as
Finance Minister Tito Mboweni tabled his maiden Budget in Parliament on
Wednesday.

“Government
intends to commit at least R100 billion to the fund over the coming decade to
leverage private-sector and development finance funding for well-planned
capital projects. The support will take different forms, including blended
co-funding, capital subsidies, and long-term interest rate subsidies and
guarantees,” noted the document.

The
document highlighted that the fund will increase the number of blended-finance
projects to enhance oversight, improve the speed and quality of spending, and
reduce costs in public infrastructure.

“The fund
will draw on global expertise to strengthen project preparation and
implementation,” said the document.

Over the
past two decades, South Africa’s public infrastructure investments have
amounted to about R3 trillion. However the speed, quality and efficiency of
many of these projects, however, has not matched the level of investment, due
to project planning at all levels, including for long-term maintenance, proving
to be inadequate.

The
review noted that discussions are underway with the Development Bank of
Southern Africa (DBSA), the World Bank and the New Development Bank.

Over the
next three years, general government infrastructure investment plans will
amount to R526 billion.

“Work is
underway to support some existing projects and programmes with blended finance.
Government will seek out private-sector skills in the design, construction and
operation of key projects.”

As a
first step, the DBSA, in partnership with the National Treasury, will step up
infrastructure lending. Blended-finance projects ready for implementation –
including student housing projects – will be expanded, with R1 billion added in
2019/20 for this purpose.

A further
R4 billion will be added in the outer year of the fiscal framework for projects
that have complied with the requirements of the Budget Facility for
Infrastructure.

Review of
legislation

Meanwhile,
National Treasury will review existing legislation to determine how existing
processes may be able to incorporate blended-finance.

At the
tabling of the Medium Term Budget Policy Statement (MTBPS) in October, Treasury
announced that the specifics of the fund that was announced as part of South
Africa’s stimulus package, would be fleshed out in this year’s budget.

At the
time, the MTBPS stated that work to design the fund was underway, with
assistance from the private sector and multilateral development banks.

The 2019 Budget Review highlighted that the DBSA’s experience with independent power producers suggests that the blended-finance approach can be applied in wastewater treatment, broadband connectivity and public transport.https://www.sanews.gov.za/south-africa/government-ups-ante-infrastructure