PRIVATE SECTOR FINANCING FOR INFRASTRUCTURE DEVELOPMENT IN SOUTH AFRICA

POLICY BRIEF

The South African government is undertaking a massive infrastructure drive in an effort to revive growth and increase employment. This comes at a time when the country is facing a deep economic crisis that has progressively worsened over the past few years, greatly exacerbated by the COVID-19 pandemic.

The infrastructure drive also comes after years of weak infrastructure investments, and a widening infrastructure deficit. This is particularly relevant in communities where socioeconomic conditions are characterised by over-crowding, deep levels of poverty and inadequate access to basic public services, such as water and sanitation.

The government’s plan is to mobilise up to R1 trillion in financing from the private sector through an Infrastructure Fund over the next 10 years. This is being done in the context of government’s efforts to reach a budget surplus within the next five years, justified by substantially increased debt levels. The associated austerity measures have rationalised the need to source finance from outside the fiscus to meet socioeconomic goals. It is envisaged that this Fund will finance large infrastructure projects that will incentivise, or leverage, private finance by de-risking infrastructure investments.

This project was supported by the Friedrich-Ebert-Stiftung.

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