Presenting his budget speech in Parliament on Wednesday, Minister of Finance Mr Enoch Godongwana, said it is only through sustained economic growth that South Africa can create enough jobs to reduce poverty and inequality. This is the only way we will be able reach our goal of a better life for all.
To this end, the government’s Economic Reconstruction and Recovery Programme (ERRP) remains essential to growth. “We are accelerating the implementation of critical structural reforms contained in the ERRP, in particular in electricity, rail, ports and telecommunications,” he explained.
To complement these interventions, the government will be accelerating infrastructure investment which the government believes is the backbone of a thriving economy. The National Treasury will be implementing the results of a recently completed review of the Public-Private Partnerships (PPPs) framework. “We aim to create a centre of excellence for PPPs and other blended finance projects. This centre of excellence will be established with direct Treasury oversight. It will be a direct interface with private financial institutions for investments in critical government infrastructure programmes.”
National Treasury will also work with other national departments and the Eastern and Northern Cape provinces to pilot a revised approach to infrastructure delivery. This will include innovative financing and delivery mechanisms, as announced by the President in the State of the Nation Address. These projects have the potential to include private investors for bulk infrastructure.
“As we upgrade roads, bridges, water and sewerage, transport, school infrastructure and hospitals and clinics, the aim is to unlock higher levels of employment for those involved in the projects. I am pleased to inform this House that a provisional allocation is set aside in this Budget for R17.5 billion over the MTEF for infrastructure catalytic projects. We look forward to engaging with specific proposals in this regard.”
On supporting businesses in distress due to the Covid-19 pandemic, a new business bounce-back scheme will be launched, using two mechanisms that will be introduced sequentially. Firstly, small business loan guarantees of R15 billion will be facilitated through participating banks and development finance institutions. This allows access for qualifying non-bank small and medium loan providers. The government will partner with loan providers by underwriting the first 20% of losses for banks and other eligible small and medium loan providers. The eligibility criteria, including the requirement for collateral, has been loosened. This mechanism will be launched and operational next month.
Secondly, by April this year, “We intend to introduce a business equity-linked loan guarantee support mechanism. We intend to bring the total support package through the bounce-back scheme to R20 billion.”
The equity support mechanism of this scheme will be facilitated through DFIs and will also be available to qualifying non-bank small and medium finance providers. Details of the terms of the equity-linked guarantee mechanism will be provided soon.
Mava Lukani
25 February 2022
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