Author | Stephan Kornelius – Pragma Professional Services Business Lead
Finance Minister Enoch Godongwana’s 2025 National Budget Speech tried to present a balanced approach to funding both social spending and economic recovery, strongly emphasising infrastructure investment. Pragma’s Professional Services Business Lead, Stephan Kornelius, shared his insights on key aspects of the budget and its implications for South Africa’s infrastructure, investment climate, and business growth.
Infrastructure investment: A promising commitment
A key takeaway from the budget was the government’s continued focus on infrastructure spending across energy, water, rail, and ports. Despite necessary cutbacks in social grants and other areas, infrastructure investment remains a priority, signalling a commitment to enabling economic growth.
“The fact that infrastructure spending remains intact is positive,” says Kornelius. “However, we have recent history in South Africa of significantly overspending on these projects and then failing to properly maintain and operate the assets they create. What stands out is the introduction of energy and infrastructure bonds as a financing mechanism in this budget – creating an expectation of attracting capital market investment in our infrastructure projects. These debt instruments will likely attract institutional investors such as pension funds, but these investors have high expectations regarding governance and asset management. To sustain investor confidence, South Africa must ensure responsible spending and proper infrastructure maintenance.”
While the budget maintains infrastructure funding, Kornelius warns that past issues of project mismanagement and neglect must be addressed. “We cannot afford another cycle of poorly executed capital projects or infrastructure that falls into disrepair shortly after completion,” he adds.
Strengthening investor confidence through governance
For South Africa to attract large-scale private investment, Kornelius stresses the importance of proper contracting mechanisms and regulatory oversight. “The government has long spoken about private sector participation in state-owned entities such as Transnet and Eskom, and the budget highlights electricity transmission infrastructure as a priority. However, ensuring that competent contractors are appointed, and these projects are managed effectively is critical to avoiding past pitfalls such as those of the state capture era.”
Beyond project execution, Kornelius highlights the need for a long-term asset management strategy. “Infrastructure projects must include clear, enforceable plans for proper ongoing maintenance and operation. Before awarding contracts, the government should require proof of capability to manage these assets over their full lifecycle. This principle should also extend to municipal infrastructure grants to ensure that funds are not wasted on projects that quickly degrade due to a lack of maintenance.”
The role of private sector partnerships
Kornelius believes that collaboration between government and private companies is essential for success. “The technical expertise to construct and maintain infrastructure sits largely within the private sector. Government should leverage this expertise through well-structured public-private partnerships (PPPs) that ensure the right skills are in place to execute and sustain projects.”
In addition to the massive impact of corrupt procurement practices, the decline in infrastructure in state-owned enterprises (SOEs) like Eskom is primarily attributed to skills shortages. Kornelius sees an opportunity for the private sector to play a key role in rebuilding capacity. “A major factor in Eskom’s decline has been the loss of critical skills. The private sector can assist in upskilling and capacitating government institutions, provided robust controls are in place to ensure efficiency and accountability.”
Improving the business climate: Budget availability alone is not enough
While the budget avoided increases in corporate tax rates, which is a positive sign for investors, Kornelius points out that broader regulatory reforms are necessary to create a truly business-friendly environment. “The budget itself won’t determine business success—regulatory efficiency, ease of doing business, and policy certainty play a far greater role.”
South Africa’s projected GDP growth of 1.7% to 1.9% over the next three years is insufficient to address unemployment and drive real economic expansion. “To achieve meaningful growth, the regulatory framework must be more conducive to investment. Issues like labour market rigidity, licensing inefficiencies, and policy uncertainty must be addressed to encourage business confidence.”
The missing details: Where will the money go?
While the budget commits to infrastructure and energy spending, Kornelius notes a lack of clarity on how funds will be allocated. “The budget confirms the prioritisation of infrastructure investment, but details on specific projects remain vague. We need transparency on how this capital will be deployed to ensure it delivers long-term economic benefits.”
South Africa’s energy transition, including diversification into renewables, gas-fired power stations, and upgraded transmission infrastructure, requires a clear roadmap. “There has been extensive planning over the years, but little execution. It is now critical for the government to provide definitive guidance on where investments will be made.”
In closing, Kornelius emphasises that while the budget provides a framework for growth, efficient project execution and regulatory certainty will ultimately determine its success. “Infrastructure spending is a necessary stimulus, but without addressing inefficiencies in execution and policy uncertainty, investor confidence will remain low. The government must create a stable, transparent environment where businesses can thrive and contribute to economic recovery.”
For Pragma and other industry leaders, the focus remains on driving asset management excellence and ensuring that South Africa’s infrastructure investments are not just well-funded but also well-executed and maintained for long-term value.
