South Africa is set to launch a R15 billion infrastructure bond to fund critical infrastructure projects, aiming to stimulate economic growth and create jobs. Finance Minister Enoch Godongwana highlighted in the Medium-Term Budget Policy Statement (MTBPS) that the government will also contribute R2 billion to capitalise a Credit Guarantee Vehicle, initially focused on expanding electricity transmission. This step is intended to support the country’s renewable energy rollout, which has been constrained by a shortage of transmission lines connecting regions such as the Northern Cape to other parts of the country. Godongwana noted that this marks a new era in Public-Private Partnerships (PPPs), enabling private investment in high-voltage transmission infrastructure.
South Africa has experienced declining infrastructure investment for over two decades, with flat capital expenditure over the past two years due to falling private sector investment offset by slowly increasing public sector spending. President Cyril Ramaphosa has repeatedly emphasized infrastructure as the key driver for faster economic growth. The government plans to shift spending from consumption to investment, with capital payments projected to grow by 7.5% over the medium term. Amendments to PPP regulations, effective June 1, 2025, are expected to unlock investment potential across government spheres and streamline approvals for smaller projects.
The Budget Facility for Infrastructure (BFI) has been reconfigured to run four bid windows annually, up from one, and has received 28 submissions, with nine projects accepted for detailed analysis. The government has also allocated R4.1 billion for disaster relief to repair infrastructure damaged by recent floods in KwaZulu-Natal, Mpumalanga, and the Eastern Cape. New guidelines on unsolicited bids and fiscal commitments provide a framework for private sector project submissions and PPP management, with municipal PPP regulations expected to be updated by 2026.
The Department of Transport plans to issue its first rail corridor request for proposal by December 2025, following interest from freight logistics stakeholders, with additional proposals scheduled for early 2026. Requests for investment in passenger rail modernization and municipal water reuse projects are also underway to create co-investment opportunities for the private sector. A new Infrastructure Finance and Implementation Support Agency will be operational by March 2026 to provide project preparation support and feed the BFI pipeline. Additionally, a pilot utility reform programme will stabilize and professionalize water and electricity services in select municipalities in Mpumalanga.
Government officials stressed the importance of using accredited delivery partners such as the Development Bank of Southern Africa (DBSA) and the Municipal Infrastructure Support Agent (MISA) to implement infrastructure projects while building municipal capacity. The long-term goal is to exceed R1 trillion in public sector infrastructure investment over the next three years. Analysts and industry observers noted that while funding allocations have increased for disaster rehabilitation, border management, judicial infrastructure, statistical services, and transport rehabilitation, additional investment from private sources is crucial, particularly in electricity and logistics, to sustain growth and improve infrastructure networks.
Stakeholders have welcomed progress highlighted in the MTBPS, including accelerated reforms, the imminent rail corridor request for proposal, and significant reductions in port vessel waiting times. These measures signal strong government intent on fiscal management and infrastructure development, considered vital for enhancing economic stability and supporting small and medium-sized enterprises.
