National Treasury Launches First Infrastructure Bond to Boost SA’s Long-Term Investment Drive

The new bond will be offered under government’s existing domestic borrowing programme, creating an innovative avenue for mobilising capital to support nationwide infrastructure upgrades.

The National Treasury has introduced a landmark financial instrument — the Infrastructure and Development Finance Bond — marking the first time the South African government has issued a bond dedicated exclusively to infrastructure development. The new bond will be offered under government’s existing domestic borrowing programme, creating an innovative avenue for mobilising capital to support nationwide infrastructure upgrades.

A First-of-Its-Kind Bond to Attract Long-Term Investment

According to Treasury, the new bond responds to strong investor demand for infrastructure-linked assets, widely regarded as stable, long-term investment vehicles.

“This is the first time government has issued an infrastructure bond. It aims to take advantage of investors’ appetite for infrastructure as an asset class to raise funding at favourable market rates,” Treasury said on Wednesday.

The bond will be used to finance critical infrastructure across key sectors:

• Energy generation and grid expansion

• Water and sanitation systems

• Transport networks, including roads, rails and ports

• Social infrastructure, such as schools, health facilities and public housing

Each supported initiative will undergo rigorous technical and financial evaluation to ensure long-term viability and alignment with national development goals.

Funds to Be Disbursed Through the Infrastructure Fund

To ensure proper governance, accountability and timely delivery, proceeds from the bond will be channelled through the Infrastructure Fund managed by the Development Bank of Southern Africa (DBSA).

Disbursements will be linked to project delivery milestones, limiting the risk of wasteful spending and reinforcing transparency in how public capital is allocated.

This approach forms part of broader fiscal reforms first outlined in the 2024 Medium Term Budget Policy Statement (MTBPS), which emphasised the need for new long-term financing instruments to stimulate infrastructure-led growth.

Exclusive Financing for Budget Facility for Infrastructure Projects

The new bond’s proceeds will be earmarked strictly for eligible Budget Facility for Infrastructure (BFI) projects. The BFI — a specialised instrument for evaluating and funding public infrastructure — has undergone extensive reconfiguration to improve efficiency and strengthen oversight.

Treasury highlighted that raising infrastructure investment is central to South Africa’s long-term growth strategy, and the 2025 MTBPS reinforced this by prioritising expenditure shifts away from consumption and toward investment.

The reconfigured BFI now operates four bid windows per year, increasing opportunities for project proposals to receive funding and ensuring more predictable planning cycles.

In the first two quarters of its new cycle:

• 28 project submissions were received

• Nine projects progressed to detailed appraisal

This pipeline demonstrates rising activity in infrastructure planning, particularly in projects targeting service delivery improvements and economic revitalisation.

Broadening Funding Mechanisms for Efficiency and Transparency

The launch of the Infrastructure and Development Finance Bond marks an important shift in government’s funding strategy. Treasury aims to diversify financing instruments to:

• Improve efficiency in capital allocation

• Provide greater transparency over project financing

• Reduce reliance on traditional budget funding and short-term borrowing

• Mobilise private-sector capital at competitive rates

By raising capital through a structured and transparent bond linked to tangible infrastructure outcomes, government aims to give investors confidence while ensuring accountability in how funds are spent.

A Step Forward in Rebuilding South Africa’s Infrastructure Backbone

Infrastructure backlogs in energy, water, transport and social services have long been barriers to economic growth and service delivery. The new bond represents a strategic intervention to accelerate upgrades, support job creation and unlock long-term structural gains.

As government continues to implement its infrastructure reform agenda, the Infrastructure and Development Finance Bond is expected to form part of a broader toolkit of innovative financing instruments, all designed to stimulate sustainable growth and modernise South Africa’s economic foundations.