S.A determined to address infrastructural deficit: Nene


South Africa’s Finance Minister Nhlanhla Nene is determined to address the country’s infrastructure gap as this is expected to contribute positively towards achieving the National Development Plan (NDP) goals.

In his Medium Term Budget Policy Statement, Nene said the country would invest over 542 billion rand in public infrastructure and housing.

The statement noted that among other; 130 billion rand would be spent in roads and public transport; 60 billion in public housing; 11 billion rand in tertiary education capital projects and 20 billion rand to extend the electricity grid to poor households.

The extension of electricity grip to poor households’ follows government’s investment into the disgraced power utility Eskom.

Nene’s statement notes that government stabilised Eskom’s financial position with a 23 billion rand equity investment financed from the sale of Vodacom shares.

Treasury said it was working with the Department of Energy to consider the costs, benefits and risks of building additional nuclear power stations which should add into the country’s energy mix.

“Over the medium term, 200 million rand will be allocated to support preparatory work for nuclear procurement.”

“In addition, infrastructure plans by large state-owned companies exceed 400 billion rand over the next three years,” added Nene’s MTBPS.

The statement also reveals that the government intends to use two billion rand from its sale of Vodacom shares for South Africa’s initial capital contribution to the New Development Bank.

“The purpose of the New Development Bank is to mobilise resources for infrastructure and sustainable development projects in BRICS (Brazil, Russia, India, China, and South Africa) and other developing countries,” said the statement.

However, investment in infrastructure could be hampered by the wage agreement that has created a budget shortfall.

The public-sector wage agreement led to a compensation budget shortfall of 12.2 billion rand in the current fiscal year, 20.6 billion rand in 2016/17 and 31.1 billion rand in 2017/18.

Nene allays the fears saying some of these costs do not need to be funded.

“Moderate declines in employment levels have created space to absorb costs in some departments’ budgets. In other cases, compensation budgets are overestimated due to weaknesses in budget management.”