It has been announced that approximately R800 billion worth of fixed investment projects are planned in South Africa.
The approximately R800 billion announced in new projects is higher than the annualized R193.2 billion and R260.4 billion recorded in 2023 and 2022, respectively, according to Nedbank’s capital expenditure project list.
This improvement is due to a significant increase in new projects announced across all sectors.
Private sector projects jumped from just under R85 billion to around R200 billion.
However, the private sector accounts for only 26% of the total, dwarfing the rapid increase in project amounts announced by the general government.
The largest private sector development planned is Johannesburg’s new Bankenveld District City, valued at R18 billion.
The new mixed-use “city” is being developed by Calgro M3 and Eris Property Group and will feature residential, commercial, retail, industrial, education and healthcare components.
R113 billion of the new projects announced were energy-related, with the Risk Mitigated Independent Power Producer Procurement Program (RMIPPPP) accounting for 69% of this total. This highlights the country’s transition to renewable energy.
General Government announced projects worth R393.3 billion annually.
Government spending includes R104 billion for the social housing and community development program and R36 billion for the second phase of the Lowiwal drainage project.
After two years of curbs on investment, public enterprises are set to spend R194.4 billion over the next few years on energy projects, refurbishing health facilities, airport infrastructure and special economic zones.
Looking at the 26 mega-projects, we see a notable push in the transport sector, particularly in the airport sector.
Airports Authority of South Africa (ACSA) is the main investor in the sector, accounting for 55% of the R22.4 billion worth of planned projects.
Another notable project in this area is the proposed R7-billion Cape Winelands Airport.
Other notable megaprojects include the R4 billion refurbishment of Volkswagen’s Kariega factory and Eskom’s R35 billion pumped hydro storage project in Tubatse.
Here are the 26 mega projects planned for South Africa.
completion
date estimation
value
(Million Billion) Structural Reform Infrastructure (Public Housing Projects) Ministry of Human Settlements and Infrastructure 28 December 43 700 Eskom Tsubatse Pumped Storage Energy Project 28 December 2035 800 Ruiwalu Phase 2 Waste Water Project in Tshwane 28 December 2035 800 Private Catalyst Project Housing Development Authority 28 December 2012 000 Eskom Mossel Bay Gas Project Petro SADecember – 28R30 000 Southern Farms Human Settlements Project City of Johannesburg December – 28R27 000 City of Johannesburg Capital Expenditure Budget City of Johannesburg May – 25R22 000 Bankenfeld District Urban Development Calgro M3 & Ellis Property Group December – 26R18 000 Health Renovation Projects Facilities Human Settlements and Infrastructure Development December 28 R16 000 Umoiranga Energy Project EDF Renewables and Perpetua Holdings 25 March 2014 600 ACWA Power Project DAOACWA Power 26 June 2014 480 ACSA Infrastructure Investment Plan South African Airports Company December 28R12 220 Murilo Total Hydra Storage Project Total Energies, Hydra Storage Holdings and Realile January – 25R10,000 Impov Wind Farm Group Enel Green Power South Africa January – 26R 9,000 First Land Mixed use and agricultural hub City of Tshwane December 28R8,500 City of Limpopo and KwaZulu-Natal school projects Department of Basic Education December – 28R8,500 Nhomazi Special Economic Zone (SEZ) Mpumalanga Department of Trade and Industry December 28R8 400 Mponeng Expansion Project Harmony Gold Dec 27R7 900 Ben Wenyama Platinum Group Metal Ben Wenyama Platinum Group Metal July 26R7 385 Cape Winelands Airport RSA. Aero December R7 000 Volkswagen Kariega Manufacturing Plant Volkswagen Group South Africa December 27R4 000 Witberg Wind Energy Project Red Rocket December R3 400 Northern Cape Namaqua Special Economic Zone (SEZ) Department of Trade and Industry December 28R2 900 Springbok Solar Power Plant (PV) SOLA Group July 25R2 800 Terraco Solar Photovoltaic Plant Terraco September-25R2 000 Bayside Canal Upgrade Cape Town City June-25R87.5
Economists at Nedbank said South Africa’s gross fixed capital formation (GFCF) remained weak in the first quarter of 2024, contracting by 1.8% sequentially due to lower spending from the private sector, which accounts for 74% of GFCF.
“Weakness in private sector investment reflects a challenging economic environment driven by power shortages, high input costs, rising interest rates, compressed corporate earnings and heightened policy uncertainty, which have undermined business confidence,” Nedbank said.
“Capital spending by public enterprises increased, likely reflecting the contribution of Transnet’s recovery plan and enhanced maintenance by Eskom. Capital spending by governments also recovered after three consecutive quarters of decline.”
But the new listing suggests the outlook is more promising.
The increase in alternative renewable energy sources has reduced pressure on the national grid, resulting in reduced load shedding and improved economic conditions.
Rail and port services also improved, although logistics networks remained inefficient.
“Globally, demand has improved slightly and is expected to increase further due to lower inflation, easing monetary policy and a recovery in commodity cycles. These will support operations.”
in mining and manufacturing.
“On the demand side, consumer credit remains under pressure due to high debt servicing costs and their impact on real personal disposable income.”
However, easing is expected towards the end of the year as inflation recedes and the South African Reserve Bank lowers interest rates, boosting demand and accelerating the recovery in corporate profitability.
The Government of National Unity (GNU) is also expected to accelerate the implementation of structural reforms, which should boost business confidence and encourage companies to resume capacity expansion programs.
“Government infrastructure programs will continue to accelerate job creation and address some of the infrastructure backlog.”
“However, the pace will be slow and limited by fiscal consolidation. Still, the expected cyclical recovery and planned increase in capital projects will be too slow to lift GFCF in 2024.”
“Given the fundamentals of the GFCF and the delays between project announcements and implementation, we still expect the GFCF to contract. Therefore, most impacts of projects announced in 2024 are likely to materialize in 2025.”
The risk of a shock to the global economy remains, and delays in regional economic reform could cause some announced projects to be canceled or delayed.
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