As govt skills falter, Infrastructure SA gets R600m boost from Treasury for projects to reach financial close

19th March 2024

By: Irma Venter

Creamer Media Senior Deputy Editor


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National Treasury has allocated Infrastructure South Africa (ISA) a budget of R600-million over three years to “prepare projects”, says ISA head Mameetse Masemola.

Addressing a media conference at Sustainable Infrastructure Development Symposium South Africa (Sidssa) 2024, held in Cape Town this week, Masemola explained that there had been a “decimation of the skills” required for State projects to reach financial close, and ultimately, procurement and construction.

However, ISA now had R200-million a year to help prepare projects that were deemed strategic, that had a potentially high gross domestic product impact, and that would contribute to South Africa’s competitiveness.

In the past four months the number of projects under preparation within ISA had reached 31.

“These were historical projects that had failed to get funding from National Treasury in terms of Treasury’s budget facility for infrastructure,” said Masemola. “We are now preparing to package these projects.”

These projects included schools infrastructure programmes in the Northern Cape and the Eastern Cape, as well as four tertiary hospitals – two in Mpumalanga and two in the Free State.

There are also projects in South Africa’s special economic zones.

“From ISA’s side we are supporting these in terms of bulk infrastructure so that we can unlock investment in the top infrastructure,” noted Masemola.

ISA’s main aim was to close the infrastructure investment gap.

Masemola noted that there was a chasm between the funding available through the fiscus and the number of projects that required investment.

“R5.7-trillion is required to close the investment gap by 2050.”

She added that ISA was pivoting its pipeline to public–private partnerships (PPPs), as expressed by the Minister of Finance.

The South African Infrastructure Fund (SAIF) was part of ISA. It was created to facilitate blended finance infrastructure projects.

SAIF chief investment officer Mohale Rakgate noted at Sidssa 2024 that this fund had been working with project owners from various sectors of the economy to identify projects that lend themselves to blended finance.

“In our context blended finance refers to projects that cannot become bankable without fiscal intervention ­­– meaning the private sector will not be attracted to build and finance these projects.

“Where we come in is to structure these projects so that we can mobilise funding from National Treasury, and, on the back of that funding, invite the private sector to participate.

“To date we have mobilised R25-billion from Treasury.

“With that we can now go out to market and mobilise R70-billion of investment to fund the projects we have. We are now ready to engage investors.”

Projects in an advanced stage of implementation included social housing projects in Newcastle and Midrand; bulk infrastructure supply for a 30 000-housing unit project in Johannesburg; water infrastructure projects in Limpopo and KwaZulu-Natal; and a project in partnership with the Department of Home Affairs to develop six ports of entry into South Africa to ensure efficiency in the movement of goods and people.


Edited by Creamer Media Reporter



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