Infrastructure investment remains a key component in driving economic growth and government has maintained its R1 trillion allocation for infrastructure investment over the medium term to support this growth.

This according to minance Minister Enoch Godongwana, who delivered the Budget Speech in Parliament on Wednesday.

“[Quality] infrastructure investment expands the productive capacity of the economy and responds to the diverse needs of the citizens. Infrastructure is also a rich source of jobs in construction, engineering, and related industries across a range of skill levels.

“It is for these reasons that infrastructure is the fourth pillar of the growth strategy, and this budget demonstrates our resolve to change the composition of spending from consumption to investment. Allocations towards capital payments remain the fastest-growing area of spending by economic classification. Public infrastructure spending over three years will exceed the R1 trillion mark,” Godongwana said.

Spending will focus on “maintaining and repairing existing infrastructure, building new infrastructure, and acquiring equipment and machinery” primarily in transport and logistics, energy and water and sanitation.

“Of the R402 billion for transport and logistics, R93.1 billion is for the South African National Roads Agency to keep the 24 000-kilometer national road network in active maintenance and rehabilitation. R53.1 billion is for the maintenance and refurbishment of provincial roads.

R66.3 billion was allocated to PRASA, out of which R18.2 billion is for the rolling stock fleet renewal programme and R12.3 billion is provisionally allocated for the renewal of the signalling system.

The spending will sustain progress in rebuilding the infrastructure to provide affordable commuter rail services. “This will enable PRASA to increase passenger trips from 60 million in 2024/25 to 186 million by the end of the MTEF [Medium Term Expenditure Framework] period,” said the minister.

The energy sector, he added, will invest R219.2 billion on strengthening the electricity supply network, from generation to transmission and distribution. “The water and sanitation sector will spend R156.3 billion on expanding our water resource and service infrastructure, including dams, bulk infrastructure to service mines, factories and farms,” Godongwana said.

The minister announced that new regulations for public-private partnerships (PPPs), which were gazetted earlier this year, are expected to take effect next month.

“These will reduce the procedural complexity of undertaking PPPs, increasing the deal flow and allowing government to leverage its limited resources to fast-track infrastructure provision. The National Treasury has developed enabling guidelines and frameworks to support the new regulations.

“Specifically, the unsolicited proposals framework will create clear rules for managing proposals from the private sector. And the framework for fiscal commitments and contingent liabilities will strengthen fiscal risk governance. These guidelines and frameworks will be published in the next few weeks,” he said.

Furthermore, the process of issuing the first infrastructure bonds in 2025/26 remains in place.

“We are also exploring alternative financing instruments to allow pension funds, commercial banks, development banks and international financial institutions to participate in financing our infrastructure plans.

“These reforms are how we plan to leverage infrastructure investment to ease supply side constraints to the economy and improve access to social services the people get,” Godongwana said.

Meanwhile, in the 2025 Budget Overview, National Treasury said additional funding of some R8.8 billion has been allocated to public employment programmes (PEPs).

“Although the number of people employed was 16.8 million in the first quarter of 2025, South Africa’s unemployment rate remained very high at 32.9%.

“Public employment programmes are crucial to address persistently high unemployment,” National Treasury noted.

Welcome commitments made in the Budget Speech refer to: growing the economy – a key element of job creation, accelerating infrastructure investment and facilitating greater private sector participation in public infrastructure, said Dr Andrew Golding, chief executive of the Pam Golding Property group.

“Much to the relief of consumers, as recently announced, the proposed VAT increase has been removed in the revised Budget.

“This is also encouraging for home buyers acquiring new-build units in property developments which incorporate VAT in the purchase price, as well as first-time and other home buyers embarking on property acquisitions as there are a number of VAT-inclusive services associated with the purchase of a home,” he said.

The revised Budget also retained the 10% increase in the threshold for transfer duties, meaning that properties up to R1.21 million are exempt. Golding described this as ‘meaningful for first-time buyers’ as the average price paid by a first-time buyer from January to April 2025 was R1.245 million, according to ooba Home Loans.

“Amidst a muted local economy faced by various global headwinds, it is extremely encouraging for homeowners and investors that the recovery in national house price inflation (HPI) continues, with the Pam Golding Residential Property Index for HPI rising to 7.2% in April 2025 from year-earlier levels.

“For the year to date, national house price inflation has averaged 6.4% which is double the average for the whole of 2024 (3.2%),” said the property expert.

With consumer inflation remaining anchored just below the lower limit of the current inflation target – at 2.8% in Apr’25, the real (inflation-adjusted) Pam Golding Residential Property Index rose to 4.4% in Apr’25 – the highest recorded since August 2007 – having averaged 3.4% year to date, he said.

The Western Cape remains the leading province, with house prices rising by 7.3% in April from year-earlier levels. Encouragingly however, the recovery in house prices in both Gauteng and KwaZulu-Natal continues to gather momentum – rising by 5.4% and 4.8% respectively last month (April).