South Africa’s minister of finance presented the country’s financial year 2024-25 (FY24-25, April 2024 to March 2025) Budget in February 2024.

The budget aims to strike a balance between the urgent demands of national development and maintaining sustainable public finances.

To achieve this, the government announced several initiatives to support economic growth through reforms and public investment while stabilising public debt.

As part of the budget, the government announced that consolidated government spending will amount to R2.4tn ($127.6bn) in FY24-25, R.5tn in FY25-26, and R2.6tn in FY26-27.

By department, learning and culture has been allocated an expenditure of R480.6bn in FY24-25; this is followed by an expenditure of R387.3bn for social development, R271.9bn for health, R265.3bn for community development, and R255.4bn for economic development, among others.

The government expects the budget deficit to reach 4.9% of gross domestic product in FY23-24, 4.5% in FY24-25 and 3.7% in FY25-26; this compares to rates of 4.9%, 4.6%, and 4.2%, respectively, announced as part of the Medium-Term Budget Policy Statement in November 2023. 

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In his latest budget speech, South African Finance Minister Enoch Godongwana outlined the government’s plans to invest R943.8bn in public infrastructure over the next three years, to support the refurbishment and maintenance of existing assets and the construction of new infrastructure.

The budget includes an investment of R486.1bn by state-owned companies and public entities, R224.8bn from provincial and national governments, and R213.8bn from municipalities.

The government’s Infrastructure Investment Plan will promote projects in six key sectors – energy, water and sanitation, transport, digital infrastructure, human settlements, and agriculture and agro-processing.

As part of the latest budget, the government introduced reforms to improve infrastructure financing and delivery.

The government has prioritised public investment by upscaling the use of public-private partnerships (PPP) and new institutional arrangements to attract private funding for public infrastructure.

To increase the impact of public investment on economic growth, the government is consolidating financing, preparation, and planning arrangements for large projects in a single entity to attract private-sector investment and expertise and increase the use of PPPs to deliver infrastructure projects.

In FY24-25, the government plans to establish an infrastructure finance and implementation support agency to coordinate the planning and preparation of large projects and engage directly with private financial institutions.

Departments, public entities, and municipalities will be able to use the services of this agency to prepare, plan and execute large infrastructure projects.

The government is also supporting the production and sale of new energy vehicles, in South Africa, starting with electric vehicles (EVs).

It aims to transition the car industry from primarily producing internal combustion engine vehicles to a dual platform that includes EVs, by 2035.

To encourage the production of EVs in the country, the government will introduce an investment allowance for new investment, starting from March 2026; this will allow producers to claim 150% of qualifying investment spending on electric and hydrogen-powered vehicles in the first year of production.

GlobalData, a leading data and analytics company, expects the South African construction industry to grow by 1.3% this year, before averaging an annual growth of 3.7% from 2025 to 2028, supported by the government’s focus on infrastructure investment.

In mid-March 2024, South African President Cyril Ramaphosa reported that investment in infrastructure is central to achieving the country’s development goals, as infrastructure is an enormous economic multiplier.

He also reported that the government is estimated to need an additional R1.6tn in public sector infrastructure investment and a further R3.2tn from the private sector by 2030, to achieve the country’s infrastructure goals.

In another boost to the industry’s output, the country’s Strategic Integrated Projects has grown from R340bn in July 2020 to R540bn in mid-March 2024.

Of the total, projects worth over R230bn are under construction while projects worth nearly R170bn are currently in procurement; 11 of these projects – with a total investment value of R45bn – are expected to reach financial close in 2024.