Government’s strong emphasis on improving infrastructure, fixing the country’s struggling logistics sector and addressing failing municipalities has been widely welcomed.

By Alani Janeke, senior journalist at African Farming and Landbouweekblad

During his medium-term budget policy statement on Wednesday, Finance Minister Enoch Godongwana highlighted government’s commitment to rebuilding South Africa’s infrastructure and restoring functionality to the logistics system.

Wandile Sihlobo, chief economist at Agbiz, says the stronger focus on structural reforms, mainly the network industries, are key to unlocking long-term growth.

“The agricultural sector’s long-term growth prospects are dependent on better-maintained roads, functioning rail, efficient water systems, efficient ports and better-functioning municipalities, among other key areas,” he says. “Treasury’s focus on these and on broader infrastructure is supportive of the sector.”

Sihlobo adds that both the priorities set out in the budget speech and the lower inflation target of 3% are encouraging developments.

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Logistics Reform and Private Investment

Godongwana identified the dysfunctional logistics system as one of the key issues requiring intervention. While freight transport continues to face serious challenges, he said reform was progressing well.

Eleven private train operators now have time slots on 41 routes across six corridors, he said.

Port efficiency has also improved: Ship waiting times have dropped by 75%, and container handling has become faster.

“With Durban Pier 2 welcoming private operators, we expect to unlock R200 billion in investment over the next five years,” he said.

The logistics reforms are expected to increase rail freight volumes, ease port congestion and strengthen the economy.

The Department of Transport’s Private-Sector Participation Unit is also drawing on lessons learnt from the country’s renewable energy independent power producer programme to drive private-sector participation in passenger transport and logistics.

“Following strong interest from the freight logistics requests for information, the unit will issue the first rail corridor request for proposal by December 2025, with others following in early 2026,” Godongwana said. The unit has also issued requests for information for investment opportunities in modernising and growing the passenger rail system.

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Water Security Under Pressure

Another critical challenge is water security. Godongwana said government was moving fast to provide legislative certainty and clarity to stabilise the sector.

The Water Services Amendment Bill will clearly define the roles of different institutions in the industry, and a National Water Resource Infrastructure Agency is set to be established by April 2026.

Investments are also being secured to address South Africa’s water infrastructure challenges. Earlier this year, the Africa Water Investment Summit saw $12 billion committed to 80 projects, 36 of which are in South Africa.

Meanwhile, the Water Partnerships Office is making progress in preparing non-revenue water and reuse projects across municipalities. “These will create a robust pipeline for the private sector to co-invest in,” the minister said.

Boosting Infrastructure and Disaster Recovery

Godongwana said the Budget Facility for Infrastructure (BFI) has been reconfigured to allow four bid windows per year instead of just one. The BFI has since received 28 submissions, with nine projects accepted for detailed analysis.

To raise funds for these BFI projects, a new infrastructure bond will soon be launched to secure at least R15 billion. “The bond forms part of our efforts to introduce dedicated financing instruments that can mobilise cheaper financing to support our infrastructure agenda,” he said.

In addition, R4,1 billion has been allocated for disaster relief to repair schools, pipelines, clinics and substations damaged by floods in KwaZulu-Natal, Mpumalanga and the Eastern Cape last year and this year.

“We are also committed to simplifying the institutional arrangements across the infrastructure ecosystem.

“The new Infrastructure Finance and Implementation Support Agency will be operational by March 2026. The agency will provide project preparation support to supply the BFI pipeline.

“It will centralise infrastructure finance functions to systematically crowd-in private capital and promote the use of alternative delivery mechanisms.”

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Municipal Reform

Weak municipal service delivery and limited capacity were also in the spotlight. Godongwana said several reforms are being introduced to urgently address this “untenable situation”.

“We are piloting a utility reform programme to stabilise and professionalise water and electricity businesses in a few municipalities in Mpumalanga,” Godongwana said. “We will use accredited indirect delivery partners such as the DBSA [Development Bank of Southern Africa] and MISA [Municipal Infrastructure Support Agent] to provide the infrastructure while building municipal capability to do this on their own.

“To address persistent underspending and capacity constraints at the local level, we are reforming the Municipal Infrastructure Grant. Where municipalities show persistent failure, delivery will shift to an indirect model through agencies like MISA and DBSA, coupled with time-bound capability plans aimed at restoring direct funding.”