Presidential Budget Vote: Exceeding Goals on Investment Commitments
By Jessie Taylor
South Africa set out on an investment drive five years ago to raise R1.2-trillion in new investment in the economy. This goal was surpassed, with the country raising over R1.5- trillion in investment commitments, President Cyril Ramaphosa announced in his recent presidential department budget vote speech. “These commitments are steadily translating into investments in the productive economy, establishing new enterprises, expanding existing ones, providing opportunities to suppliers along the value chain and creating employment,” – H.E. Ramaphosa.
Creating Jobs Through Investment
The investment is a “significant achievement” in the midst of economic challenges such as the Covid-19 pandemic and electricity crisis, the president said. The investment has been accompanied by focused support on small businesses and cooperatives, and in the last financial year, nearly 75 000 SMMEs and cooperatives received financial support through the Small Enterprise Finance Agency. These funding interventions created over 32 000 new jobs and sustained over 70 000 existing jobs.
“The recovery of our economy relies on a massive increase in investment. As we have reported before, we have been working to improve the capacity of government departments, agencies, state-owned enterprises and partners to prepare and implement infrastructure projects,” said President Ramaphosa. This work is starting to see results, with the Budget Facility for Infrastructure approving blended finance projects with a total project value of over R57-billion in the most recent round. These are mainly bulk water scheme projects, port development and housing projects.
On the basis of a financial commitment of R210-billion, the Infrastructure Fund will engage with financial markets to enable investment in these projects by private investors to ensure that these investments are realised. This new investment comes on the back of R21-billion worth of projects completed last year, said President Ramaphosa, including upgrades to national roads and the development of small harbours.
There are currently more than R300-billion in projects under construction, including energy, water infrastructure and rural roads projects. The energy sector remains a key area for investment, and the development of a pipeline of green hydrogen projects with a value of over R300-billion is underway. President Ramaphosa said that his administration is focused on reducing the “impact of load shedding on households, businesses, hospitals, water provision, food production and all aspects of people’s lives”.
“Our overriding priority now is to end load shedding and achieve energy security. In July last year, I announced a detailed plan to address the energy crisis. I have since established the National Energy Crisis Committee to ensure that this plan is fully implemented and appointed a dedicated Minister in the Presidency to provide a single point of execution for the energy crisis response,” the president said.
Improving Energy Security
The government has made progress in implementing the measures outlined in the Energy Action Plan, including allowing the private sector to invest in electricity generation projects of any size. In addition, more than 100 projects are now at various stages of development, representing over 10 000 MW of new generation capacity and over R200-billion worth of investment.
“The exponential growth of private sector investment in electricity generation is proof that this reform is having a major impact. These investments will significantly close the shortfall in electricity supply,” said President Ramaphosa. “What has been pleasing in this regard is that this reform process has attracted a variety of investors in the form of women-led businesses, black investors, local traditional investors, as well as foreign investors from as far afield as China, the Middle East, United States, Canada, Turkey and Europe.”
He added that the government had also accelerated the procurement of new generation capacity, and three projects from the risk mitigation programme have entered construction. In addition, project agreements have been signed for 25 preferred bidders from Bid Window 5 and 6, amounting to approximately 2800 MW, of which 784 MW is already in construction. In the coming months, we will initiate the procurement of more than 10,000 MW of additional generation capacity from wind, solar, gas and battery storage, which will further contribute to closing the shortfall in energy supply.
“Finally, we are pursuing sweeping legislative reform to end the energy crisis once and for all, with the help of this house. We have already introduced the Electricity Regulation Amendment Bill, which seeks to establish a competitive electricity market and support the unbundling of Eskom,” said President Ramphosa. “This will fundamentally transform the electricity sector as we know it and will create a level playing field for multiple generators to participate in producing the energy that we need.”
However, the work to end the energy crisis is not exclusive to the country’s commitment to a just energy transition, the president said. “The work we are doing to urgently resolve the current electricity shortfall does not diminish our commitment to a just energy transition. We will stick to our commitment to reduce our carbon emissions by 2030 to within a target range which, at its upper level, is compatible with limiting global temperature increase to 1.5ºC,” he said. “Where it may be necessary to delay the decommissioning of coal-fired power stations temporarily to address our electricity supply shortfall, any decision will be informed by a detailed technical assessment of the feasibility of continuing to operate older plants and the cost of doing so relative to alternative energy sources.”
Sources: SA Government