Note: This article has been written on the basis of documents provided to the media during the 2025 Budget lock-up prior to the cancellation of the Budget Speech on February 19. The National Treasury has lifted the embargo imposed on the information, but a new Budget is now due to be tabled on March 12.

The 2025 Budget documents show that Finance Minister Enoch Godongwana planned to add an extra R46.7-billion in funding for infrastructure projects over the next three years.

In his undelivered 2025 Budget speech on February 19, Godongwana said that this would help finance the estimated R1.03-trillion that is expected to be spent on public infrastructure projects by State-owned companies (SOCs), public entities and national, provincial and local government over the next three years.

The State’s planned infrastructure expenditure includes R402-billion for road infrastructure, with R100-billion of investments being made by the South African National Roads Agency Limited. An amount of R219.2-billion will be spent on energy infrastructure, while another R156.3-billion will flow to water and sanitation infrastructure.

A total of R885.7-billion has been allocated for infrastructure development in the 2025/26 fiscal year. This will be concentrated on supporting the recovery of the Passenger Rail Agency of South Africa, improving the financial viability of trading entities, bulk infrastructure maintenance and development at the municipal level, post-disaster infrastructure recovery investments and expanding electricity transmission lines through the National Transmission Company of South Africa.

Godongwana said that priorities in this space included improving responses to disasters, increased oversight over local government, investments in public transport, affordable housing, implementation of the Integrated National Electrification Programme, supporting just energy transition measures, and continuing to invest in water, sanitation and other infrastructure through conditional grants.

Public housing built in provinces through the human settlements development grant is expected to total R49.2-billion. Although these assets are transferred to homeowners, this spending is a substantial government contribution to the built environment.

Spending on economic infrastructure, mainly by SOCs, accounts for 81.5% of the medium-term estimate. These funds are being used to expand power-generation capacity, upgrade and expand the transport network, and improve sanitation and water services.

Social services infrastructure accounts for 15.5% of the total, with the two largest sectors, health and education, contributing 4.4% and 5.5% respectively.

Over the medium term, the Department of Science, Technology and Innovation will also invest R3-billion in the construction of the MeerKAT array and efforts to secure the hosting of part of the Square Kilometre Array.

Guided by evidence and targeted public policy interventions, Godongwana said R3.8-billion a year will be allocated to provide access to cutting-edge research infrastructure.

Of the total public-sector capital investment planned over the medium term, 72.7%, or R748.5-billion, will be funded from the budgets of SOCs, public entities, and municipalities.

SOCs will invest R410.9-billion, while provincial departments will deliver R215.9-billlion worth of investments. Local governments are expected to spend R200.8-billion, with public entities contributing R136.8-billion. Only R40.1-billion will come from national departments, with another R25-billion expected to come from public-private partnerships.

Public entities would be financed by capital transfers from the fiscus, while SOCs would be financed by a combination of own revenue and borrowing, Godongwana explained.

He also noted the importance of the Budget Facility for Infrastructure, which played a central role in the capital budgeting system by recommending funding for projects that were jointly funded from other sources, including SOCs, municipal own resources and the private sector.

For the 2025 Budget cycle, the Facility has approved nine projects with a total value of R55.5-billion, of which R15.3-billion will be funded by the Facility. The approved projects address several service delivery and economic growth needs, such as hospital infrastructure, transport and logistics, and water.

The additional funding includes support for projects approved as part of the Facility along with higher investments in passenger rail transport to modernise signalling technology systems that will improve service frequency, safety and efficiency.

Godongwana’s 2025 Budget also introduced a performance-based conditional grant for certain trading service entities that provide basic services, such as municipal water. The aim of this is to reverse declining water, electricity and solid waste services in cities through R8.5-billion earmarked for the turnaround of these entities.

The expectation is that this will incentivise financial and operational reforms to improve their functioning and sustainability.

The Minister added that the government intended to publish a consultation paper on unlocking institutional funding for infrastructure. This paper would propose that certain investment vehicles be enabled to facilitate infrastructure investments and would offer a flow-through tax regime. Godongwana said further consultations on this would take place throughout the remainder of the year.