Deputy Finance Minister David Masondo speaking at the Steel and Engineering Industries Federation of Southern Africa (Seifsa) annual conference yesterday. Picture: National Treasury/X
Deputy Finance Minister David Masondo has assured the steel and engineering sector of concerted efforts by the government to aid industry recovery efforts through unravelling red tape in state-sponsored infrastructure projects, a higher build budget, and additional tax drives to shield the fiscus from extensive commitments.
Speaking at the Steel and Engineering Industries Federation of Southern Africa (Seifsa) annual conference yesterday, Masondo – just weeks ahead of the Medium-Term Budget Policy Statement (MTBPS) – said planned infrastructure budgets were set to grow by 4.9% over the medium term, with a focus on energy and transport, as well as the introduced revised public-private partnerships (PPPs) regulations aimed at simplifying the rules governing PPPs.
Masondo said this included a differentiated and simplified approach for smaller projects, reducing administrative burdens, and streamlining mechanisms for unsolicited proposals.
“These changes will make it easier for the private sector to participate in infrastructure projects, ultimately improving delivery outcomes in the energy sector,” he said.
“We are working with the International Finance Corporation (IFC) to explore options for off-balance sheet financing, a strategy that will accelerate private-sector investment in transmission projects. A pilot project is already in the works, and this initiative will be a blueprint for how we leverage private-sector resources to meet our infrastructure needs.”
In the water sector, the Water Partnerships Office had been set up in collaboration with the Department of Water and Sanitation.
Referring to the February 2024 Budget Review, Masondo said the gross public debt stock was expected to increase from R5.2 trillion (73.9% of GDP) in 2023/24 to R6.3 trillion (74.7% of GDP) in 2026/27. In line with the government fiscal strategy, gross loan debt was expected to stabilise at around 75.0% of GDP.
“Despite the expected debt stabilisation, debt-service costs currently consume roughly one out of every five rands of government revenue,” Masondo said.
“Our taxation policies always strike a delicate balance between supporting economic activity and raising sufficient revenue to meet the nation’s needs. In 2024/25, we projected a gross tax revenue of R1.86 trillion.
“To alleviate fiscal pressure, the government has proposed tax increases of R15 billion. These include no inflation adjustments for personal income tax and higher excise duties on alcohol and tobacco. However, we have decided not to increase the fuel levy, recognising the strain it places on consumers. Additionally, we are committed to reforms that will promote investment.”
Masondo said the Section 12B renewable energy allowance would be reconsidered to reflect the removal of the private electricity generation threshold, creating new opportunities for private investment in energy production.
“Incentives to stimulate local electric vehicle production are also on the horizon. From 1 March 2026, producers will be able to claim 150% of qualifying investment spending on the production capacity for electric and hydrogen-powered vehicles,” he said.
“This initiative, estimated to cost R500 million in 2026/27, will position South Africa as a key player in the global transition to green transport solutions.
“As we focus on building a sustainable and resilient economy, the implementation of the global minimum corporate tax will play a pivotal role. By ensuring that large multinational corporations are subject to a minimum effective tax rate of 15%, we will bolster our corporate tax base and reduce opportunities for profit shifting to low-tax jurisdictions.
“The metal and engineering sector suffered considerably from load shedding, and I hope that it is beginning to see the benefits of the recent reduction in load shedding.”
Seifsa president Elias Monareng said the interventions by the government were long overdue as the sector suffered from lack of demand for metal and engineering products and long decisions from SOEs, municipalities and indecisiveness on the part of leadership.
“The state capture had paralysed the decision-making process and long procurement processes and at times institutions hide behind PFMA (Public Finance Management Act) and B-BBEE requirements,” Monareng said.
“The fiscal consolidation and budgets cut across state entities and municipalities, lack of maintenance and proactiveness of the institutions.”
He also said the domestic outlook for the industry was hindered by, among other things, the dumping of steel by the Chinese industry and investment nations in competition with South Africa.
BUSINESS REPORT