The Infrastructure Projects Transforming South African Landscape

A construction warning sign in Johannesburg. Photo by Waldo Swiegers /Photographer: Waldo Swiegers/Blo

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(Bloomberg) — South African President Cyril Ramaphosa’s plans to turn the country into a giant construction site are gathering pace, with the government ramping up spending on roads, power plants, dams and ports. 

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The annual budget released in Cape Town on Wednesday allocates 1.07 trillion rand ($68 billion) toward the buildout over the next three fiscal years. State companies are projected to spend 445.5 billion rand, provincial administrations 217.8 billion rand and municipalities 205.7 billion rand, the Budget Review shows. 

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Inadequate infrastructure has been a binding constraint on growth in Africa’s largest economy. The country endured rolling power outages for more than a decade before they eased last year because the state electricity company couldn’t keep pace with demand, while port and rail logjams have crimped exports. 

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Johannesburg and other cities have meanwhile been dogged by water shortages because municipal utilities have failed to maintain reservoirs, pipelines and pumping stations or build sufficient new ones. 

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These are the among the planned developments that are set to transform the South African landscape and fix frayed infrastructure:

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Transport and logistics

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Three-year budget allocation: 417.6 billion rand 

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The focus is on upgrading road infrastructure and restoring the country’s passenger and freight-rail networks. Transnet SOC Ltd., the state port and rail operator, plans to spend 76.6 billion on making the logistics system more reliable and efficient, an investment that’s expected to draw in private capital and boost the iron ore, manganese, coal, chrome and automotive industries.

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The Passenger Rail Agency of South Africa will prioritize improving its rail signaling and telecommunications infrastructure and invest in new trains to improve services.   

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The South African National Roads Agency Ltd. will invest in new roads and improve existing ones, while provincial authorities have been allocated funds to rehabilitate and reseal roads. 

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Energy

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Three-year budget allocation: 213.6 billion rand 

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Generation capacity is being expanded, battery storage is being increased and the transmission network is being strengthened to improve security of supply and draw in private investment, according to the National Treasury. 

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Agreements have been signed with independent power producers to deliver almost 10 gigawatts of renewable-energy generation and battery-energy-storage capacity, and a further 1 gigawatt of peaking-power capacity. The bulk of those projects are already operational and others are being built. The procurement of 2 gigawatts of new gas-fired generation capacity is under way, with bid submissions set to close in late May.