According to Mc Kinsey report, South Africa could boost annual gross domestic product by R260bn by 2030 through smarter infrastructure development spending.
Infrastructure is critical in the economic development of a country, economics comprehend the multiplicative effect of infrastructure on society and a country’s economy. In economic recession infrastructure development is a useful device to mitigate unemployment.
Benefits for infrastructure spending in the short and long-term are:
Infrastructure spending to increase aggregate demand through increased economic activity and employment. Infrastructure spending set to improve medium-term growth by increasing the potential supply capacity of an economy, an example would be to increase the efficiency in the labor market which increases productivity.
Attract Foreign Direct investment
Many developing nations today are attempting to make their business conditions more attractive to foreign investors, foreign investment helps South Africa to achieve its economic potential by providing capital to finance new enterprises, boosting infrastructure and productivity and creating job opportunities in the process, all South Africans are stakeholders in high and improved growth because of the increase in tax revenue which means more revenue is available to spend on hospitals, schools, and other fundamental administrations.