During the State of the Nation Address (Sona), President Cyril Ramaphosa unveiled an ambitious economic strategy designed to elevate South Africa’s annual growth rate above 3% through a near-R1 trillion boost in public infrastructure spending. This comprehensive investment plan seeks to catalyse job creation and stimulate growth across multiple sectors, reinforcing the strong commitment of the Government of National Unity (GNU) to addressing the nation’s economic challenges.
Ramaphosa framed economic growth as the “most urgent task” confronting the GNU, acknowledging the pressing need to foster an environment where investment, growth, and job creation can thrive. “To create this virtuous cycle of investment, growth, and jobs, we must lift economic growth to above 3%. To achieve higher levels of economic growth we are undertaking massive investment in new infrastructure while upgrading and maintaining the infrastructure we have. We are developing innovative ways of funding infrastructure,” the President stated.
The government plans to allocate more than R940 billion to infrastructure development over the next three years, with R375 billion earmarked for spending by State-Owned Companies (SOEs). Efforts to engage both local and international financial institutions are a critical part of the strategy, with Ramaphosa announcing an objective to unlock R100 billion in infrastructure financing through a newly launched project preparation bid window aimed at accelerating investment readiness.
Data projections indicate that South Africa’s real gross domestic product (GDP) growth is expected to rise between 1.2% and 1.5% by 2025, bolstered by recovering private consumption and investment, aided significantly by stabilising electricity generation. Nonetheless, experts underscored the necessity of achieving Ramaphosa’s targeted annual growth of over 3% to reverse the economic malaise afflicting the nation, lower unemployment rates, and improve the standard of living.
Cornelius Coetzee, the country director for cross-border payment provider Verto, welcomed Ramaphosa’s vision for economic growth and the emphasis placed on infrastructural development. He noted, “While the government focuses on solving public service for the nation, it is important to also make cross-border trade easier for local businesses so they can compete in the global economy.” He called for clarity from the President on enabling foreign direct investment (FDI) amid complex regulatory reporting requirements.
The announcement comes on the heels of the Cabinet’s recent adoption of the Medium Term Development Plan, which outlines an ambitious five-year roadmap focused on driving inclusive growth, reducing poverty, and tackling the high cost of living. Ramaphosa acknowledged that reforms instituted under Operation Vulindlela had instilled a renewed sense of optimism in the economy, alongside ongoing efforts to dismantle bureaucratic barriers that stifle growth.
Integral to this broader strategy are critical reforms targeting vital SOEs and essential network industries, including electricity and transportation. The President remarked, “We are seeing positive results in the improvement of the functioning of our network industries as well as the investment opportunities that are opening up and are being taken by investors leading to job creation.”
Furthermore, Ramaphosa emphasised the importance of a robust and restructured SOE sector, crucial to the country’s infrastructural framework. “Our immediate focus is to enable Eskom, Transnet, and other SOEs that are vital to our economy to function optimally. We are repositioning these entities to provide world-class infrastructure while enabling competition in operations, whether in electricity generation, freight rail, or port terminals,” he explained.
Despite these positive strides, Cosatu has expressed mixed sentiments regarding the Sona, stating, “We welcome its progressive commitments and applaud progress made, but remain deeply concerned about the pace of implementation. The working class and society face numerous crises, in particular our 41.9% unemployment rate, entrenched poverty and inequality, paltry economic growth, endemic crime and corruption, struggling public and municipal service, and embattled State-Owned Enterprises.”