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Gauteng using infrastructure spend to grow economy
2017/03/07 Phumla Sekhonyane
​The Gauteng Provincial Government has allocated R44.4 billion for the delivery of infrastructure projects in the province. 
Delivering the 2017/18 budget at the Gauteng Legislature, MEC for Finance Barbara Creecy said this year, government was doing something new by splitting this figure into R31.9 billion which is in the baseline of departments and R12.5 billion ring fenced in the ‘Asset Financing Reserve’.
Creecy said this was done to incentivise sound infrastructure planning practices.  Departments that present additional projects that are ready to roll out, in the course of the financial year, or in future financial years, will be allocated more money.
The biggest share of R17.8 billion is allocated to Human Settlements; followed by Education with R6.2 billion; and Roads and Transport with R4 billion.
“We use government’s infrastructure spend to transform the apartheid spatial economy and settlement patterns by integrating economic opportunities, transport corridors and human settlements,” said Creecy.
Creecy said economists generally agreed that infrastructure investment contributed to lower transaction costs, creation of jobs, concentration of economic activity, and improvement of productive capacities of firms and households as well as creating economic linkages.
New research indicates that we have indeed achieved these objectives.
A preliminary independent analysis of Gauteng’s Infrastructure spend by KPMG for the period 2013 to 2016 found that Gauteng’s spend of R30 billion:
• Created 92 000 direct jobs and sustained 69 000 indirect jobs
• Added R15 billion to household income;
• Raised R6 billion in government revenue; and
• Created economic activity worth R26 billion with an average of 92c being added to Gauteng’s economy for every R1 spent by this government on infrastructure.
Creecy said the Treasury’s own research showed that Gauteng’s infrastructure spend significantly contributed to the empowerment of disadvantaged individuals and black firms with 91% of our spend in construction and professional services going to Historically Disadvantaged Individual (HDIs).
In addition, KPMG anticipates that if Gauteng spend the R44.4 billion over the next three years it can:

• Achieve the largest provincial infrastructure investment in the country with an annual escalation of 6%;
• Create approximately 190 000 direct and sustain 140 000 indirect or jobs; and
• Generate R55 billion worth of activity to contribute to our provincial economy.
Meanwhile, Creecy announced that the Gauteng Planning Division has developed an Infrastructure Master Plan 2030, noting that with current fiscal constraints it is unlikely that all of these facilities will be funded from government sources.
The Gauteng Infrastructure Financing Agency is one vehicle that is assisting the province to tap into alternative sources of funding.
To date GIFA has a pipeline of 20 projects, which have been through feasibility studies and collectively, have the potential to raise an additional R40 billion for infrastructure financing over the Medium Term Expenditure Framework period.

Issued by Gauteng Provincial Government
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<March 2017>