The biggest winners and losers of the first GNU budget in South Africa

 ·30 Oct 2024

South Africa’s medium-term budget – the first since the formation of a new coalition government in June – focused on luring investors for infrastructure projects, but an increase in spending and lower-than-anticipated revenue meant the budget deficit exceeded forecasts.

Here’s a rundown of who will be impacted by Finance Minister Enoch Godongwana’s budget update:

Winners

  • Infrastructure Companies: The government plans to designate investment in roads, ports and utilities as a “standalone asset class” and introduce infrastructure investment trusts. Spending on capital assets is set to jump almost 11% in the next four years as the government buys equipment for large projects. New public works are likely to boost demand for cement, steel and other building materials.
  • Water Users: The government intends to increase investment in bulk water, sanitation infrastructure, and efficient water-management strategies and implement a new water-pricing strategy.
  • Transnet: The struggling state-owned operator of the nation’s ports and freight-rail system may be in line for government support if it sells non-core assets and explores project financing, concessions and joint ventures to fund new projects and maintain existing ones.
  • The Democratic Republic of Congo: South Africa’s military will be allocated 3.5 billion rand ($198.9 million) to fund a peacekeeping mission in eastern Congo, where rebel groups have been wreaking havoc.
  • Senior Civil Servants: The government has reinstated a program that will enable state workers to take early retirement and has set aside 11 billion rand over the next two fiscal years to fund it.
  • The National Roads Agency: The Treasury will repay R3.2 billion owed by South African National Roads Agency (SOC) Ltd. to compensate it for losses stemming from a scrapped freeway tolling project in the central Gauteng province.

Losers

  • Bond Investors: The government’s consolidated budget deficit is forecast to widen to 5% in the year ending March 31, exceeding the Treasury’s 4.5% estimate in February. The government also intends to take on more debt than previously planned in the next two fiscal years.
  • Eskom: The embattled electricity utility, whose shortcomings caused daily power cuts until earlier this year, risks losing R2 billion of government aid if it fails to sell its financing unit by March 31.

Read: R22 billion tax blow for South Africa – ‘difficult trade-offs’ coming

Show comments
Subscribe to our daily newsletter