MOU signed to launch R100bn infrastructure fund

The National Treasury and the Department of Public Works have signed an agreement with the African Development Bank of Southern Africa (DBSA) for a R100 billion infrastructure fund for the next 10 years, to facilitate large development projects in the country.

According to a joint press statement released on Monday, the fund is meant to fundamentally transform the state’s approach to the financing of infrastructure projects, reduce the current fragmentation of infrastructure spend, ensure more efficient and effective use of resources and improve the speed and quality of delivery. This is in accordance with President Cyril Ramaphosa’s announcement in September 2018, on the fund.

The parties agreed that the DBSA will both establish and manage the fund while receiving support from Treasury.

Through this fund, government will provide support for co-financing of projects and programmes that blend public and private resources and it will be used to fund large-scale infrastructure investments. It is thus hoped that opportunities for public-private partnership as well as international financiers will open up.

Such financing will complement broader budgeting reforms that government is undertaking to address problems in the infrastructure value chain.

“This constrained fiscal environment limits the availability of investment resources and there is thus a greater need for government to work together to create an enabling environment for effective partnerships with the private sector, DFIs (development finance institutions) and international financiers and local capital market to enable the leveraging of additional resources,” it says.