SA's export industry should be firing on all cylinders - but isn't, hamper ed by skills shortages, transport capacity constraints and high telecommunication costs, among others.
With this in mind government plans to accelerate infrastructure investment and has revised its medium-term budget expenditure framework upwards.
"So that when the storm abates we will grow even faster, with more equitable outcomes," Manuel said in his budget address on Wednesday.
Public-sector infrastructure spending will reach R568,1bn over the next three years - this is R85,7bn higher than the estimate in the 2007 budget - largely as a result of Eskom's revised capex plans.
Infrastructure allocations to provinces will amount to R238bn in 2008/2009, and the increase over baseline for the next three years is R46bn - in particular for improvements in education, health, welfare and housing programmes.
Public transport remains a budget priority and builds on government's 2007 strategy to create integrated rapid transport networks. Investments in public transport are beginning to reshape the urban landscape, like the Gautrain nodes.
The public transport infrastructure systems grant includes R11bn for these programmes over the next three years. The consolidation of commuter and long-distance passenger rail receives an additional R2,4bn while road maintenance receives a paltry additional R800m. But new roads will be financed mainly through tolls.
IT and infrastructure receives a major boost over the next three year through an additional R727m to broadband company Infraco, an extra R300m to fund IT infrastructure at stadiums for the 2010 soccer World Cup, and Sentech receiving R527m for the digitisation of TV broadcasting.
Recognising that electricity expansion has been strained to the limit, the budget sets aside R2bn over the next three years to support more efficient use of electricity, including generation from renewable sources; installation of electricity-saving devices and cogeneration projects.
To speed up housing delivery, the national housing department received an additional R6bn while a further R2,2bn was set aside for the integrated housing and human settlement development grant at the provincial level.
Capital investment by state-owned enterprises remains a pillar of government's infrastructure investment programme. However, in Eskom's case, government is prepared to support it and has allocated R60bn over the medium term. While Manuel indicated that government was "firmly behind Eskom", he was clear that "its capital should mainly be raised through debt, and paid for by users over the course of time through appropriately structured tariffs".
Estimated capital investment plans for state-owned entities (mainly in the areas of energy and transport) rise from R313,4bn to R494,5bn.
But the budget adds that government's hard-won fiscal victories provide scope for municipalities, provinces and state-owned enterprises to increase their borrowings to finance, strengthen and expand public infrastructure - without placing undue pressure on capital markets and interest rates.
The public sector has moved from a cash surplus (0,1% of GDP in 2007/2008) to a borrowing requirement of 1,4% of GDP by 2010/2011. This is driven by the accelerating capital investment programmes.
However, the infrastructure needs to be built and maintained by a skilled and semi skilled workforce, of which SA is critically short. With this in mind, tax measures introduced broaden the internship allowance to include longer-term apprenticeships, targeted at technical skills. Government has allocated a further R1bn to the expanded public works programme to create additional jobs.
Allocating the finance to national, provincial and local government departments to extend services to SA's 45m people is the easy part of the job. Spending it - efficiently and wisely - is the hard part. According to the Ecosa Institute, government departments are struggling to spend their allocations from last year's budget: some still have a hefty 40% to spend before March. Mindful of this, government has made greater use of performance indicators that aim to increase its ability to monitor and evaluate spending outcomes and enhance public oversight.
"This is not our money," Manuel sa id. " This is money we have custody over. The strategic plans of departments need more detail... annual reports need more detail. It's a tough message."
