Why Infrastructure Funding is a Key Pillar for South Africa’s Economic Growth
We take a closer look at the importance of infrastructure funding in South Africa and how GIC is contributing to the industry. Infrastructure funding is critical for South Africa’s development and growth because it creates employment opportunities, attracts foreign investment, and enhances access to goods, services, and housing. It can also help bridge the inequality gap in rural and underdeveloped regions by improving the quality of life and addressing the root of poverty and crime. Below, we delve into some challenges faced by the sector and the steps being taken to address them.
Infrastructure Funding in 2023 and Key Takeaways from the 2023 SONA
The infrastructure industry in South Africa experienced a significant decline over the last three years, shrinking by 25%, according to Trading Economics, a statistics aggregator. In the second quarter of 2019, the industry was worth almost R140 billion, but by the same quarter of 2022, it had reduced to R105 billion. This industry contraction was due to several issues, such as market instability, which made it difficult to predict demand for construction projects, and rapidly changing input costs, making it hard to budget and plan for expenses. There has also been a shortage of materials and skilled workers across the industry, making completing projects timeously and within budget a significant challenge. Currently, the South African government is the largest investor in infrastructure projects across the country, and announced in June of 2022 its plans to invest over R2,3 trillion in infrastructure funding over the next decade, which could create up to 1,88 million jobs. Unfortunately, due to the COVID-19 pandemic and the subsequent lockdowns, much spending was shifted to provide relief. As a result, some funds that would have gone into the sector were diverted, causing major setbacks for the industry.
Thankfully, 2023 is the year our country gets back on track, with many projects postponed in 2021 and 2022 starting up now. Infrastructure funding is being prioritised again, with several key points mentioned during the 2023 State of the Nation Address, including:
- The Infrastructure Fund and Infrastructure South Africa were established to support strategic infrastructure development in the country, and our nation’s build programme is now gaining ground through these initiatives.
- The scarcity of technical skills and project management expertise poses a significant challenge to infrastructure investment. Fortunately, Infrastructure South Africa has recognised this issue and has taken steps to address it. The organisation has been granted an impressive R600 million in infrastructure funding for project preparation, focusing on undeveloped and under-resourced areas.
- This investment is already bearing fruits, and by the first month of 2023, ongoing construction projects valued at R232 billion were underway, with completed projects valued at nearly R4 billion.
GIC’s Pledge to Advancing and Securing the Future of the Industry
GIC is a trusted industry leader in infrastructure development, delivering cutting-edge solutions that seamlessly integrate into any environment. The resounding success of our corporation in meeting and surpassing our objectives is a testament to our unrelenting commitment to our clients and the communities we serve. The transformative impact of our work has positively changed the lives of countless South Africans and remains a source of great pride and fulfilment for us. Would you like to know more about our projects and initiatives? Speak to us today.