South Africa’s infrastructure market value increased by almost R70 billion between 2010 and 2015, and is set to skyrocket by another R113 billion by 2020. This is according to a report titled “Infrastructure Insight: South Africa” by leading market research and information service provider Ken Research.
The report provides a detailed look into South Africa’s infrastructure sector. This includes an analysis of the state of the country’s current infrastructure, the regulatory and financing landscapes, and major projects in the construction pipeline.
The report looked at all key infrastructure sectors including roads, railways, electricity and power, water and sewerage, communication, airports, and ports.
Infrastructure in numbers
Timetric’s Infrastructure Intelligence Centre laid out South Africa’s infrastructure market value (in nominal value terms) as follows:
- Market value in 2010: R152.5 billion (US$11.1 billion)
- Market value in 2015: R222.3 billion (US$16.1 billion)
- Predicted market value in 2020: R335.3 billion (US$24.3 billion)
The report said this is achievable based on the assumption that a number of major infrastructure projects will proceed as planned. This includes the construction of Upington’s 5,000MW Solar Power Park project, the Gautrain Commuter Expansion, the Gauteng Freeway Improvement: Phase II Bulk Distribution System, the Port of Ngqura Manganese Export Terminal Expansion and the Johannesburg-Durban High-Speed Rail Link.
However, the report added that there are policy and political uncertainties that will weigh on investor confidence and could result in projects being delayed.
Electricity and power sector holds biggest market value
Timetric is currently tracking 96 strategic infrastructure construction projects in South Africa, all of which are at different stages of development – from announcement to execution. These projects have a total investment value of US$117.9 billion.
The electricity and power sector has the largest share of the project pipeline, with a total project value of US$90.2 billion, followed by railway infrastructure projects with a value of US$11.1 billion. The pipeline for road infrastructure projects is valued at US$6.5 billion, and water and sewerage infrastructure stands at US$5.9 billion. Airports and other infrastructure projects have a total pipeline value of US$4.1 billion.
Global Competitiveness Report
In the World Economic Forum’s Global Competitiveness Report for 2015-2016, South Africa ranked 59 out of 140 countries in terms of its overall infrastructure quality. The country was positioned ahead of other major African countries, such as Nigeria which ranked at 133, Egypt at 114 and Algeria at 101.
SA’s R987.4 billion infrastructure spend
Last year, one of the highlights of Finance Minister Pravin Gordhan’s medium-term budget statement was that government would continue to invest in economic infrastructure in line with the National Development Plan.
For the period 2016-2019, it is estimated that government will spend R987.4 billion (US$71.6 billion) on the construction and modernisation of infrastructure. Government said that of the total infrastructure spend, R334 billion (US$24.2 billion) will be invested in transport and logistics, R243 billion (US$17.6 billion) in energy, and R137 billion (US$9.9 billion) in water and sanitation.