SA Commits Over R1 Trillion to Infrastructure and Jobs to Spur Growth

“Allocations towards capital payments remain the fastest-growing area of spending by economic classification. Public infrastructure spending over three years will exceed the R1 trillion mark,” Godongwana said.

South Africa’s economic growth strategy remains firmly anchored in infrastructure development and employment creation, with Finance Minister Enoch Godongwana reaffirming government’s commitment to allocate more than R1 trillion towards public infrastructure over the medium term. Delivering the 2025 Budget Speech in Parliament, the Minister outlined how this investment will be directed toward revitalizing core sectors of the economy, including transport, energy, and water, while also boosting job creation and enhancing private sector collaboration.

Infrastructure Investment: The Cornerstone of Growth

Minister Godongwana emphasized that quality infrastructure investment not only enhances the country’s productive capacity but also serves as a critical enabler of service delivery and inclusive economic growth. It is considered the fourth pillar in the government's comprehensive growth strategy.

“Allocations towards capital payments remain the fastest-growing area of spending by economic classification. Public infrastructure spending over three years will exceed the R1 trillion mark,” Godongwana said.

The infrastructure budget will target both the maintenance of existing assets and the development of new ones. Government aims to optimize returns from its capital spending by focusing on sectors that are key to economic revitalization—namely transport and logistics, energy, and water and sanitation.

Sectoral Spending Breakdown

Transport and Logistics (R402 Billion)

The transport and logistics sector will receive the lion’s share of the infrastructure allocation, amounting to R402 billion. Key components of this funding include:

• R93.1 billion for the South African National Roads Agency (SANRAL) to maintain and rehabilitate a 24,000-kilometer national road network.

• R53.1 billion to upgrade and refurbish provincial roads, improving regional connectivity.

• R66.3 billion for the Passenger Rail Agency of South Africa (PRASA), including:

  • R18.2 billion for the rolling stock fleet renewal programme.

  • R12.3 billion for signalling system upgrades.

PRASA aims to increase passenger trips from 60 million in FY2024/25 to 186 million by the end of the Medium Term Expenditure Framework (MTEF) period, thereby restoring commuter confidence in rail services.

Energy (R219.2 Billion)

The energy sector is set to benefit from R219.2 billion, with a focus on:

• Strengthening generation capacity.

• Expanding transmission networks.

• Upgrading distribution systems.

These investments are designed to address chronic electricity supply issues and to support the broader objective of stabilizing the power grid.

Water and Sanitation (R156.3 Billion)

To address the pressing need for sustainable water management and sanitation services, the government has earmarked R156.3 billion for:

• Construction of new dams and water infrastructure.

• Expansion of bulk water systems to service mining operations, industrial users, and agricultural stakeholders.

This sectoral investment is vital for ensuring long-term water security and supporting economic activities in water-scarce regions.

Reforms to Unlock Private Sector Participation

In a bid to scale up infrastructure delivery, the government is also reforming the regulatory framework governing public-private partnerships (PPPs). New PPP regulations, gazetted earlier this year, are scheduled to come into effect next month. These reforms are expected to:

• Simplify procedural requirements.

• Increase the volume and speed of PPP deal-making.

• Attract private investment into public infrastructure.

Godongwana noted that the National Treasury has finalized enabling guidelines, including:

• A framework for managing unsolicited proposals from the private sector.

• A framework for overseeing fiscal commitments and contingent liabilities, aimed at bolstering fiscal risk governance.

Additionally, the issuance of South Africa’s first infrastructure bonds is planned for FY2025/26, with further exploration into alternative financing instruments involving pension funds, commercial and development banks, and international financiers.

“These reforms are how we plan to leverage infrastructure investment to ease supply-side constraints and improve access to essential social services,” the Minister said.

Employment and Economic Inclusion

Acknowledging the country’s persistent unemployment challenges, the 2025 Budget Overview outlines R8.8 billion in additional funding for Public Employment Programmes (PEPs). Although South Africa recorded 16.8 million employed people in Q1 2025, the unemployment rate remains high at 32.9%.

The new funding will benefit key departments:

• Department of Basic Education: R5.8 billion for the Basic Education Employment Initiative, which offers youth employment opportunities in schools.

• Department of Sport, Arts and Culture: R350 million to boost employment in the creative industries.

• Department of Trade, Industry and Competition: R1.3 billion for the Social Employment Fund, which supports community-based job creation.

National Treasury, in collaboration with the Presidency and other stakeholders, has launched a comprehensive review of active labour market policies, PEPs, and the social support system to ensure improved efficiency and long-term sustainability.

“With these efforts, government hopes to make significant strides in reducing unemployment,” stated the Treasury overview.

A Holistic Strategy for Resilience and Prosperity

South Africa’s 2025 Budget represents a pivotal shift from consumption-driven expenditure to investment-led growth. Through a robust infrastructure rollout and strategic employment initiatives, the government aims to create a more resilient, inclusive, and competitive economy.

Minister Godongwana’s announcement reinforces the notion that public investment, when well-targeted and efficiently managed, can be a transformative tool for addressing economic stagnation, unemployment, and service delivery backlogs—laying the groundwork for long-term national prosperity.