By Roelof van den Berg, CEO of the Gap Infrastructure Corporation (GIC)
South Africa’s most important economic driver, infrastructure development, is quickly approaching its golden age. Government again made its commitment to prioritising infrastructure development clear during Minister of Finance Enoch Godongwana’s third National Budget Speech of the year. In it, he earmarked over R1 trillion over the medium-term to infrastructure, while reaffirming that other changes are planned that will help stimulate the sector.
The private sector is in support of government’s vision for the future of infrastructure and service delivery in the country, but clarification would be welcome regarding how, when, and to what extent certain policy changes will be implemented in practice.
For example, the standards governing bids assessments, contractor selection, and funding allocation will ultimately determine how well and how quickly roads are repaired, rail lines are modernised, and water networks are expanded to the benefit of communities across South Africa.
Critically, Godongwana reaffirmed a pledge that substantial changes will be made regarding how projects are selected, financed, and delivered – as already established earlier this year in previous budget speeches that mentioned reforms to public-private partnership (PPP) agreements and budget-allocation structures.
Promisingly, the new PPP regulations were gazetted on 07 February and will take effect on 01 June 2025. These aim to streamline bid processes, permit unsolicited bids, tighten fiscal-risk assessments, and allow departments to set up sector-specific PPP units that will draw in private operators and improve balance-sheet capacity.
A clear outline of how those units will appraise risk and sequence funding would enable contractors to mirror those standards from day one. The Gap Infrastructure Corporation (GIC) therefore recommends an early technical briefing, preferably before the first bids are advertised, to ensure private proposals are calibrated to the same measures government intends to apply.
National Treasury will also roll out new reforms to standardise project planning and execution across provinces and local authorities, backed by data-driven internal audits meant to weed out under-performing or duplicative programmes.
By streamlining project pipelines and improving internal coordination, Treasury is creating room for faster rollouts and more efficient use of resources. These efforts will help ensure that funds are directed toward high-impact projects that are implementation-ready, enabling contractors to mobilise more quickly. At the same time, improving workforce management and wage allocation will support the development of skilled, reliable teams - empowering private partners to deliver on a broader scale.
Finally, while the R1 trillion medium-term allocation to infrastructure development is substantial, it’s only a portion of what the country will need to make this initiative truly successful. Government cannot carry the full burden, and the private sector must bridge the gap with external funding. Investors are willing to step in, but only when procurement rules are clear and predictable, and risk allocation is well-defined. Fortunately, this is being addressed as well.
Treasury’s Budget Facility for Infrastructure (BFI) reform initiative, which has been in effect since 2016, has been effective in standardising and regulating the planning, appraisal, and execution processes of large-scale infrastructure projects. Government has now reconfigured BFI to consider proposals on a quarterly rather than an annual basis, and with four bid windows per year, contractors can align their project timelines more flexibly while avoiding lengthy delays in securing approvals or financial backing.
Additionally, government plans to issue its first sovereign infrastructure bond in the 2025/2026 period. This aims to attract substantial private-sector capital, and provide contractors with access to more predictable and diversified funding sources, potentially leading to more consistent project pipelines and reduced delays due to funding uncertainties.
Taken together, these measures substantially alter the playing field for infrastructure contractors. Government’s support in this regard will ensure that private companies have a far better understanding of expectations, obligations, funding allocations, contractor rights, and consequences of non-compliance. Projects will also benefit from streamlined processes, more coherent timelines, and less red tape hindering progress.
Overall, the latest Budget Speech, seen together with other communications and signs of concrete policy action, thus poses reason for optimism for the sector and, in turn, the entire country’s future.