The government has set aside R372-billion for infrastructure investment over the current medium-term budget period of April 2005 to March 2008, with about 40 percent earmarked for public enterprises.

More than R150-billion is to be spent on infrastructure for electricity distribution, transport, water provision and telecommunications until March 2008, Deputy President Phumzile Mlambo-Ngcuka said on Monday.

Eskom is to get the bulk, R84-billion, to boost its generation, transmission and distribution of electricity, followed by Transnet with R47-billion to spend on harbours, ports, railways and petroleum pipelines.

The Airports Company of SA would get R5.2-billion for airport improvement, among other things, while R19.7-billion is to be spent on water infrastructure.

Some money would go to building or upgrading infrastructure for hosting the 2010 Soccer World Cup.

There would be spending on telecommunications, including the expansion of the broadband network, the completion of a submarine cable project, and subsidies for call centres and labour intensive businesses in poor areas.

Stricter regulations would be considered to bring down telephony costs.

The capital expenditure is to pursue the aims of the government's accelerated and shared growth initiative (Asgisa) of halving unemployment and poverty by 2014, the deputy president told reporters at Parliament.

It also seeks to achieve an average annual growth rate of no less than six percent of gross domestic product (GDP) by 2014.

Several economic sectors have been identified for special attention under Asgisa, the deputy president said.

Plans were afoot to boost the tourism sector's contribution to GDP by four percent to 12 percent by 2014, creating up to 400 000 new jobs.

Key issues to be addressed in this regard included marketing, air access, safety, and skills development.

Business Process Outsourcing (BPO), which entails companies outsourcing non-core functions like human resources, often to vendors in "cheaper" countries, was another key sector, the deputy president said.

South Africa had attracted about 5000 BPO jobs from the rest of the world to date, with potential for the creation of another 100 000 direct and indirect jobs by 2009.

Telecommunications costs and regulatory burdens were among the issues to be addressed in boosting this sector, Mlambo-Ngcuka said.

Several policy challenges were being looked at — including inadequate competition, import parity pricing, the need for incentives for investment in research and development, and ensuring that black economic empowerment yielded true industry transformation rather than a mere transfer of equity.

The biggest impediment to public infrastructure and private investment programmes was a shortage of skills, Mlambo-Ngcuka said.

This applied to professionals like engineers and scientists, financial personnel, project managers, Information Technology specialists and artisans.

To this end, there would be renewed focus on the quality of education, boosting adult basic education and training, improving artisan training, and bringing back a system of apprenticeship.

A Joint Initiative for Priority Skills Acquisition, led by a committee of government ministers, business leaders, trade unionists and education and training experts, is to be launched next month to identify skills needed.

In trying to eradicate the so-called second economy, Asgisa projects are to focus on easier access to start-up finance and unblocking money intended for loans for houses priced between R50 000 and R150 000.

Efforts would be made to "unlock" assets in the hands of the poor, Mlambo-Ngcuka said.

Work was being done to address regulatory constraints to small business development, the deputy president said.

Another area of intervention was the preferential procurement by government of certain services from small, black business owners.

The government's Expanded Public Works Programme would be extended beyond its original targets.

More attention would be given to training those individuals employed on infrastructure development projects, Mlambo-Ngcuka said.

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ECONOMY UPDATE Business expectations remain positive Manufacturing output up 6.2% Retail sales increase Pension fund assets exceed R1-trillion Business confidence at record high Net reserves climb to $18.7bn Govt to spend R372bn on infrastructure Jan house price growth at 14.9% Interest rates unchanged Strong new vehicle sales Manufacturing hit by strong rand SA hotels boost occupancy levels Economic growth creating jobs Producer inflation rises Inflation dampens rate cut hopes