In South Africa, the private sector, state-owned enterprises (SOEs) and the government are expected to increase fixed investment in 2025.
South Africa’s fixed investment growth is expected to grow by 5.0% year-on-year this year, after contracting in 2024, according to Annabelle Bishop, chief economist at Investec.
In the first three quarters of 2024, the private sector reduced capital spending, mainly in transportation equipment and residential buildings.
The reduction in transport costs comes as Transnet’s rail capacity increases and port congestion eases.
Bishop pointed out that South Africa’s recent average port congestion was around four days, lower than eight days in the UK and France, six days in the US and India, and 5.5 days in China.
South Africa’s state-owned enterprises increased capital expenditure by 3.1% qqsa and general government by 6.4% qqsa to 3/24 to meet major infrastructure commitments.
This follows increased investment in construction work and non-residential buildings, including state government infrastructure, as well as state departments for water infrastructure and the renovation of government-owned buildings.
“The available supply of untreated or ‘raw water’ is currently roughly in balance with existing demand on a national scale. However, there are localized shortages and surpluses,” the government said.
There are also factors that can lead to reduced supplies, such as physical water loss in urban water distribution, wetland degradation, and the effects of climate change.
Bishop noted that water and freight infrastructure is expected to see significant increases in capital spending this year and for the foreseeable future through 2030, with freight transport trending downward in volumes from 2022 onwards.
The Bureau of Economic Research (BER) recently announced that South Africa needs to invest R200 billion in rail infrastructure and R100 billion in water infrastructure to meet its ambitious growth target of 3% this year.
Unfortunately for people in Gauteng, water restrictions are expected to last until at least 2028.
South Africa is a water-scarce country, with rainfall half the world average and extremely high evaporation rates.
Mr Bishop pointed out that the potential for further development of surface water resources is limited as 75% of available surface water resources have already been used.
The Department of Water and Sanitation (DWS) has announced that the Gauteng Water Security Dashboard will be published every Friday from October 2024 and will continue until the second phase of the Lesotho Highlands Water Project is completed in 2028.
eThekwini has also experienced major power outages and water outages in recent years, and the imbalance is likely to continue until the completion of several major projects in the Umuhomazi water system over the next decade.
“Both systems will remain strained for years to come, with little redundancy and no backup capacity. Municipal water losses (both non-revenue and revenue water) are excessive, fueling rapid demand growth due to population growth,” DWS said.
Regarding water issues in Gauteng and eThekwini, two multi-stakeholder platforms have been established that will engage the public sector, private sector and civil society to strengthen water security in the region.
“The dashboard will give all departments a common understanding of the health of the water system and the progress of system enhancements. The goal is to host the dashboard on the DWS website and develop it over time.”
Water levels in South Africa’s dams were at 90.7% of capacity at the beginning of 2024, but have now fallen to 74.5%.
“More than half of South Africa’s water supply comes from Lesotho and Swaziland, but water distribution through large-scale infrastructure is a critical area that is under severe strain from rising demand and poor maintenance,” Mr Bishop said.
South Africa has seen no load fluctuations for 10 months, but there are still warning signs that it could hit again this year.
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