26 mega-projects coming to South Africa – including a new airport and ‘city’

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14-08-2024
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Planned fixed investment projects worth R793.7 billion have been announced for South Africa.

According to Nedbank’s Capital Expenditure Project Listing, the over R700 billion announced in new projects trumps the annualised R193.2 billion and R260.4 billion recorded in 2023 and 2022, respectively.

The improvement comes from a significant jump in new projects announced by all sectors.

Projects in the private sector jumped sharply from R83.1 billion to R206 billion.

However, the private sector accounted for only 26% of the total, dwarfed by a jump in the value of projects announced by the general government.

The largest planned private sector development is the new Bankenveld District City in Johannesburg, which is worth R18 billion.

The new mixed-use ‘city’ is being developed by Calgro M3 and Eris Property Group and will feature residential, commercial, retail, industrial, educational, and healthcare components.

R113 billion of the new projects announced are energy-related, with the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) accounting for 69% of this total. This highlights the country’s shift to renewable energy.

The general government announced projects worth an annualised R393.3 billion.

The government’s expenditures include a R104 billion public housing and community development programme and R36 billion for phase 2 of the Rooiwaal wastewater project.

After two years of subdued investment, public corporations plan to spend R194.4 billion in the coming years on energy projects, refurbishments of health facilities, airport infrastructure, special economic zones, and more.

Looking at the 26 mega-projects, there is a notable push in the transport sector, particularly the airport space.

Airports Company South Africa (ACSA) is the leading investor in the sector, accounting for 55% of the R22.4 billion worth of planned projects.

Another notable project in the sector is the planned Cape Winelands Airport for R7 billion.

Other notable mega-projects include Volkswagen’s R4 billion refurbishment of its Kariega plant and Eskom’s R35 billion pumped hydro storage project in Tubatse.

The 26 mega-projects planned for South Africa can be found below:

• Structural reform infrastructure (Public housing project) - Department of Human Settlement and Infrastructure - Estimated
  
  completion date: Dec-28 - Estimated value (R million): R43 700


• Eskom Tubatse pumped hydro storage project Eskom - Estimated completion date: Dec-28 - Estimated value (R million): R35 800


• Rooiwal Phase 2 wastewater project in Tshwane City of Tshwane - Estimated completion date: Dec-28 - Estimated value (R million): R35 800


• Private sector catalytic project Housing Development Agency - Estimated completion date: Dec-28 - Estimated value (R million): R34 000


• Eskom Mossel Bay gas project PetroSA - Estimated completion date: Dec-28 - Estimated value (R million): R30 000


• Southern Farms Human Settlement Project City of Johannesburg - Estimated completion date: Dec-28 - Estimated value (R million): R27 000


• City of Johannesburg capital expenditure budget City of Johannesburg - Estimated completion date: May-25 - Estimated value (R million):  R22 000


• Bankenveld District City development Calgro M3 & Eris Property Group - Estimated completion date: Dec-26 - Estimated value (R million): R18 000


• Project to refurbish health facilities Human Settlements and Infrastructure Development - Estimated completion date: Dec-28 - Estimated value (R million): R16 000


• Umoyilanga Energy project EDF Renewables and Perpetua Holdings - Estimated completion date: Mar-25- Estimated value (R million): R14 600


• ACWA Power Project DAO ACWA Power - Estimated completion date: Jun-26 - Estimated value (R million): R14 480


• ACSA infrastructure investment plan Airports Company South Africa - Estimated completion date: Dec-28 - Estimated value (R million): R12 220


• Mulilo Total Hydra storage project Total Energies, Hydra Storage Holdings & Reatile - Estimated completion date: Jan-25 - Estimated value (R million): R10 000


• Impofu wind power farms cluster Enel Green Power South Africa - Estimated completion date: Jan-26 - Estimated value (R million): R 9 000


• Bayside Canal upgrade City of Cape Town - Estimated completion date: Jun-25 - Estimated value (R million): R8 750


• First Land Mixed Use and Agri-hub City of Tshwane - Estimated completion date: Dec-28 - Estimated value (R million): R8 500


• Schools project in Limpopo and KwaZulu-Natal Department of Basic Education - Estimated completion date: Dec-28 - Estimated value (R million): R8 500


• Nkhomazi Special Economic Zone (SEZ) in Mpumalanga Department of Trade and Industry - Estimated completion date: Dec-28 - Estimated value (R million): R8 400


• Mponeng extension project Harmony Gold - Estimated completion date: Dec-27 - Estimated value (R million): R7 900


• Bengwenyama Platinum group metals Bengwenyama Platinum Group metals Jul-26 - Estimated value (R million): R7 385


• Cape Winelands Airport RSA. Aero Dec-27 - Estimated value (R million): R7 000


• Volkswagen Kariega manufacturing plant Volkswagen Group South Africa - Estimated completion date: Dec-27 - Estimated value (R million): R4 000


• Witberg wind energy project Red Rocket - Estimated completion date: Dec-25 - Estimated value (R million): R3 400


• Namakwa Special Economic Zone (SEZ) in the Northern Cape Department of Trade and Industry - Estimated completion date:  Dec-28 - Estimated value (R million): R2 900


• Springbok solar photovoltaic plant (PV) SOLA Group - Estimated completion date: Jul-25 - Estimated value (R million): R2 800


• Teraco solar photovaltaic plant Teraco - Estimated completion date: Sep-25 - Estimated value (R million): R2 000

Minimum R1 billion spend

Nedbank’s economists noted that South Africa’s gross fixed capital formation (GFCF) remained weak in the first quarter of 2024, contracting by 1.8% quarter-on-quarter on the back of reduced outlays from the private sector, which accounts for 74% of GFCF.

“The weakness in private sector investment reflected the challenging economic environment brought on by power shortages, high input costs, higher interest rates, shrinking corporate profits and heightened policy uncertainties, which undermined business confidence,” said Nedbank.

“Capital expenditure by public corporations increased, probably reflecting the contribution of Transnet’s recovery plan and Eskom’s ramped-up maintenance. Capital spending by the government also rebounded after three consecutive quarters of decline.”

However, the new listing suggests that the outlook is more promising.

The economic landscape improved with decreased load shedding, as increased alternative renewable energy sources helped to reduce pressure on the national grid.

Rail and port services also improved, even if the logistics networks remained largely inefficient.

“Globally, demand has improved somewhat and is expected to increase further because of declining inflation, easing monetary policy, and a commodity cycle recovery. These will support operations

in the mining and manufacturing industries.

“On the demand side, consumer finances remain stretched by high debt services costs and its impact on real personal disposable incomes.”

That said, relief is expected towards the end of the year as inflation recedes and the South African Reserve Bank reduces interest rates, boosting demand and accelerating the restoration of companies’ profitability.

The Government of National Unity (GNU) is also expected to accelerate the implementation of structural reforms, which should lift business confidence and prompt companies to resume capacity expansion programmes.

“Government infrastructure programmes will continue in an attempt by the government to accelerate employment creation and address some of the social and infrastructure backlogs.”

“However, the pace will be slow and limited by fiscal consolidation. Nonetheless, the anticipated cyclical recovery and increased capital project plans will come too late to lift GFCF in 2024.”

“We still forecast GFCF to contract, considering its base and the lag between project announcements and implementation. Therefore, the impact of most of the project announcements in 2024 will likely materialise in 2025.”

There are still risks that shock the global economy, and delays in local economic reforms could result in cancellations or delays in some of the announced projects.