In her weekly newsletter of 17 March 2025, CEO of Business Leadership South Africa (BLSA), Busisiwe Mavuso emphasises that in finalising the budget tabled by Minister of Finance Enoch Godongwana on 12 July, the priority must be to stimulate growth through infrastructure investment.
Busisiwe Mavuso, CEO of BLSA.
She notes that in the debate over last week’s budget, a key question is how to support the urgently needed growth imperative. “Economic growth enables delivery for the people of South Africa, creating jobs and generating revenue that government can spend on services, making future budgets easier. To create that growth, we need to invest in infrastructure. In the debate over the budget that we’re now going into, that must be front and centre.”
Infrastructure can be funded in three ways: by the government, by the private sector, and by both working together in public-private partnerships (PPPs). Mavuso highlights that the private sector has for many years been the dominant investor in infrastructure, but its focus is on building the infrastructure that enables the activities of businesses, such as broadband and private electricity generation. Social infrastructure, on the other hand, from hospitals to court buildings, and government-run network infrastructure like railways and powerlines, requires government to play a role directly. “The growth of the economy fundamentally depends on this type of investment – it expands the capacity of the economy to produce more goods and services, ultimately creating work opportunities,” Mavuso writes.
Revisions to the regulations governing PPPs were published last month, and it is expected that these should make it easier for government and the private sector to work together to accelerate infrastructure investment. Mavuso highlights two main improvements. First, smaller PPPs, valued at under R2 billion, can now follow a smoother process for approvals. Second, there is an improved mechanism that enables the private sector to make unsolicited proposals, and this is key to allow new innovations and ideas to come to life.
Although these are significant improvements, implementation will still require the public sector to embrace PPPs as an effective way to get new projects off the ground. In Mavuso’s view, “The whole of government needs to elevate the option of PPPs, encouraging decision makers from councils to departmental accounting officers to use them as a path of least resistance to getting infrastructure happening.” She notes that the amendments to the regulations empower national departments to create dedicated units to support the development of PPPs, which can work with a national PPP office within Treasury. “These are very positive steps, but it will take political will from the whole of cabinet to make them more than possibilities.”
Getting growth happening
Mavuso acknowledges that the drive for growth has to contend with a world that is changing rapidly. She notes South Africa’s relationship with the United States as clearly a risk to that growth. As political issues evolve, President Cyril Ramaphosa has signalled his intention to follow diplomatic protocol and reaffirmed his commitment to strong bilateral relations with the US.
Elsewhere in the world, South Africa’s international relations are generally positive. Mavuso notes that this was confirmed with the announcement at the EU-SA summit of the €4.7 billion investment package from the European Union to support strategic projects in South Africa. Furthermore, this was the first bilateral summit between the parties to be held in seven years. It signals the importance of international relationships, which South Africa can strengthen this year through its hosting of the G20.
Despite the challenges raised by the situation with the US, Mavuso suggests there are indications that it is still open to business, but a different kind of business that fits the US agenda.
While we maintain our own priorities, Mavuso says, “we must be agile and focused on the growth imperative. We must be ready to pivot to the kind of business that is possible in the world as it is.
“I hope all our parliamentarians keep this in mind as the budget heads into parliament to be debated and processed. While the legal guardrails help to ensure public finances cannot be radically undermined during the process, our lawmakers must shepherd the process in a productive way that enables growth.”
For more information visit: www.blsa.org