South Africa’s cash strapped state-owned companies, including Transnet, Rand Water and the South African National Roads Agency will meet investors in Dubai next week to discuss opportunities for Gulf states to put money into local infrastructure.
The government has set an ambitious goal, under the National Development Plan, to raise infrastructure investment from less than 20% of GDP to at least 30% by 2030.
This translates to more than R4.8 trillion in spending during this decade, which would require a substantial private capital, Standard Bank, the convener of the annual summit said.
This year’s theme is “Unlocking Infrastructure Capital for Africa — Resilience through Reforms”.
“At least R3.2 trillion of this infrastructure investment will need to come from domestic and foreign investment partnerships,” Standard Bank said.
The meeting seeks to connect state-owned companies (SOCs) with investors, sovereign wealth funds, and corporates in the Gulf region to accelerate infrastructure development and trade between Africa and the Middle East.
Next week’s three-day summit will bring together over 100 delegates, including South African officials from the treasury, Transnet, Rand Water, Development Bank of Southern Africa, Industrial Development Corporation, Government Employees Pension Fund, Sanral, Steinweg Bridge, Trans-Caledon Tunnel Authority and Land Bank, as well as Gulf-based investors.
The summit will explore opportunities ranging from the port expansions to grid transmission upgrades requiring over R350 billion in funding, and the R900 billion water infrastructure programme set for delivery by 2030, said Luvuyo Masinda, chief executive of corporate and investment banking at Standard Bank.
Over the 2025 medium-term expenditure framework period — a three-year budget planning cycle used by the government to set spending estimates — South Africa’s public sector infrastructure spending is estimated to reach R1.03 trillion, the Government Technical Advisory Centre’s latest bi-annual infrastructure trends report said.
Transport, energy and water will constitute 75.5% of total medium term spending, while about 40% will be by state-owned companies, 21% by provinces, 20% by local government, and 13% by public entities. Public-private partnerships only represent 2.8% of overall spending estimates, the centre said.
State-owned companies have grappled with financial and structural problems which have led to a breakdown in operations, and have been a dampener on South Africa’s economic growth.
Freight and logistics company Transnet has faced a myriad of issues — ranging from financial mismanagement to decay of its rail networks and ports — which required government bailouts and cash injections.
Ratings agency Fitch said this month that it expects South Africa’s “contingent liabilities to continue to rise, given state freight transport and logistics company Transnet’s reliance on guarantees from the sovereign”.
It added that while the logistics sector is slowly recovering, “Transnet remains hampered by maintenance backlogs, rolling stock shortages, theft, vandalism and years of mismanagement.”.
Summit aims to unlock long-term partnerships to fund energy, water and transport development by 2030
