'Government will be looking to increase spending on infrastructure by R34,8bn this year'

Zweli Mokgata

Zweli Mokgata

With the upcoming World Cup in 2010 and South Africa's burgeoning economy, the government will be looking to increase spending on infrastructure by R34,8billion this year to add to the R415,8 billion three-year infrastructure spending programme.

"In my line of work it will be a huge boost," said DEFS Engineering (Northern Cape) managing director Fezile Kies.

"The manufacturing sector has grown by four percent over the past year, and we expect to see huge growth in our own business. We currently produce around 30 tons of steel a week and I expect that we will grow by 30percent with the huge developments that will be taking place."

Kies said that an expansion project for the railway link between Saldanha Bay and Sishen would mean a spike in productivity for all manufacturers and developers.

"There are two mines that are being developed, so a 30percent increase in production is a conservative estimate."

Municipalities will receive a R23,5billion share of government's infrastructure investment this year. The delivery of household and social services will be given high priority with 64percent of the additional R89,5billion in this year's budget.

"The Municipal Infrastructure Grant receives R400million more for a final push to eradicate the bucket system," said finance minister Trevor Manuel.

"A further R600million will go to the electrification programme, R1,4billion for bulk water and sanitation infrastructure and R950million to deliver water and electricity to schools and clinics. Total infrastructure transfers to municipalities now total R52billion over the next three years."

Nedbank chief economist Dennis Dykes said the infrastructure rollout was something "that would have been done anyway, but now there is a firm date. There might have been some infighting, but now the money is being fast tracked."

"Our spending priorities are informed by the overriding objective of accelerating growth, modernising our public services and infrastructure and reducing poverty and inequality," said Manuel.

"Since 2001 we have channelled an ever greater share of our resources into capital spending."

The treasury said in its budget report that the capital investment programme of government and public corporations was a key element in underpinning growth momentum.

"The economy continued to expand at the robust pace of 4,9percent in 2006 generating jobs, broadening the consumer base and providing impetus to rapid growth in investment," Manuel said. "Tax revenue has grown by an average of 17percent a year for the past three years, much faster than the rate of economic growth."