Govt seeks funds for R350 billion infrastructure plan as Covid-19 job losses loom

South Africa is seeking investments from multilateral lenders, commercial banks and pension funds in what a senior ANC official says will be a $20.5 billion (roughly R350 billion at current exchange rates) infrastructure program.

The program will focus on "network industries such as rail and ports, energy, broadband connectivity, water, sanitation and human settlements," Paul Mashatile, treasurer-general of the ANC, said in a speech to London’s Chatham House on Wednesday.

The government will pitch projects to potential funders on Thursday and Friday, and a symposium will be held on June 23 to discuss the program, the presidency said.

"We have now generated a project pipeline," Kgosiento Ramokgopa, head of the investment and infrastructure office in the presidency, said in an interview on PowerFM. "We are not looking at getting money from the fiscus."

Treasury has announced a R500 billion support program for an economy that the central bank forecasts will contract 7% this year as a result of the coronavirus outbreak and a lockdown to curb its spread. However less than half of the package is new money, and with the budget deficit projected to exceed 10% of gross domestic product this year, the government will have to tap external funding sources to spur economic growth even though it would drive up debt.

The country may need $100 billion to recover, Mashatile said.

"About 1.8 million jobs will be lost during this period, mostly among the youth," he said. "This is why we will have to push for massive infrastructure spending within labour-intensive sectors."

Ramokgopa said the program will create a "huge number" of jobs. He didn’t give details of which funders have been approached and what projects are under consideration. The cabinet discussed them on Wednesday, he said.

“"Government is already in discussion with international partners such as the International Monetary Fund, the World Bank, the New Development Bank and the African Development Bank to raise $27 billion as part of our immediate response to the pandemic," Mashatile said.

Funding Avenues

That figure is significantly higher than the National Treasury’s estimate of about R100 billion it expects to get from international finance institutions.

"Government, through the Department of National Treasury, is exploring all funding avenues to finance all Covid-19 related programs and measures aimed at addressing the pandemic,” the Treasury said in a response to questions. "The funding avenues will not be limited locally, but will include exploring all global partners. Funding transactions will be announced officially once concluded."

South Africa has in the past shied away from borrowing money from the IMF and World Bank, saying such lending programs could compromise its sovereignty.

Mashatile said in an interview that he expects the projects to be announced within a week.