South Africa’s government unveiled a plan to galvanise R2.3 trillion in new infrastructure investment over the next decade that could create more than 1.8 million jobs and revive an economy battered by the coronavirus pandemic.
Gross domestic product is expected to contract at least 7% this year and the advent of the disease has made the need for the investment all the more urgent, President Cyril Ramaphosa told a conference in Pretoria, where the plan was released. It’s won backing from development finance institutions and ground needs to be broken as soon as possible, he said.
“We have placed infrastructure at the centRE of the stimulus our economy needs to achieve a sustainable recovery,” Ramaphosa said. “In the long run, infrastructure investment increases the capacity of the economy, reducing the cost of transport and the capacity and reliability of key services like electricity and municipal services.”
The government imposed one of the world’s most severe lockdowns in late March to slow the spread of the coronavirus. The curbs that shuttered most businesses have since been eased, but bankruptcies and job losses have continued unabated, while confirmed infections have surged past the 100 000 mark. Ramaphosa previously announced a R500 billion package to shore up the economy, but has said that won’t be enough to reignite economic growth.
Currently 276 housing, energy, transport, water and other projects are under consideration, and funding has already been secured for 55 of them, according to a copy of the plan.
Public Works Minister Patricia de Lille said opportunities will be created to invest in green technology and confirmed that the government was considering introducing green infrastructure bonds.
The New Development Bank, which was established by the governments of Brazil, Russia, India, China and South Africa, will make funding available and is keen to invest in green infrastructure bonds, according to Leslie Maasdorp, one of the lender’s vice presidents. The bank has registered a bond sale plan with the Johannesburg Stock Exchange that will raise as much as R10 billion, with the first phase to be completed within six to nine months, he said.
Officials from the World Bank, Development Bank of South Africa and African Development Bank also pledged support for the infrastructure drive.
Projects under consideration include:
- 71 housing projects with a projected investment value of R1.4 trillion that could create 370 000 jobs
- 25 energy projects that could generate R270 billion in investment and support 260 000 jobs
- 33 agriculture projects worth R28.5 billion that could create an 93 300 jobs
- 65 transport projects worth R294 billion that could support 298 000 jobs
- 42 water and sanitation projects, with a projected investment value of R170 billion that could create 96 000 jobs.
- Seven digital infrastructure project, which could generate R108 billion’s worth of investment and support 707 000 jobs.