An assessment of infrastructure financing in South Africa : a theoretical assessment

Abstract: Infrastructure development in many countries is considered as the most important factor which contributes to production growth by encouraging economic activities, productivity and improving the quality of life. Infrastructure is considered to have a positive and significant effect on productivity growth in all sectors of the economy. Infrastructure development is a means of promoting economic growth and it is essential for any country to investment in infrastructure that will leads to economic growth. Infrastructure is categorized in different category namely: physical infrastructure (which includes water system, electricity, roads and transport, etc.) and social infrastructure (which includes education and health facilities). In simple words infrastructure development aid to stimulates economic growth and create jobs for citizens. This is the indication that government must invest in infrastructure development and enjoy the benefits their investments will stimulates and also to maintain service delivery to the public. The objective of this study is to assess the sources of infrastructure financing in South Africa. The study is conducted with reference to existing theoretical literature, published and unpublished researches in order to assess the sources of infrastructure financing in South Africa. Findings revealed that there are major sources of infrastructure financing which includes: tax revenues; lenders to government or enterprises (loans or guarantees); private investors (equity); development agencies (loans); donors (grants); tariffs and public-private partnerships. The study is conducted with reference to existing literature, unpublished and published research. Hence, this study assess the sources of infrastructure financing in South Africa and presented a robust background on the current sources of infrastructure financing. The findings of this study thus contribute to the body of knowledge on infrastructure financing and other available sources of infrastructure financing other than the use of taxation revenues to finance infrastructure. Furthermore, the findings provides a robust understanding of the need and importance of financing infrastructure