Central and local governments and state companies will lift infrastructure spending 27 percent to about R67.5 billion in the 12 months to March 2004, according to the national treasury.
Projects include a new port on the eastern seaboard, upgrading airports and supplying new trains for the rail network.
The government can afford the money after slashing the budget deficit to 1.4 percent of gross domestic product in 2002 from 9.1 percent in 1994.
With 56 consecutive months of economic growth and a boom in trade, the dilapidated railway system and congested ports are delaying exports from companies such as Sappi and Iscor.
The infrastructure "is not delivering everything we want it to deliver", said Andre Oberholzer, the corporate affairs manager at Sappi, which is having trouble getting wood to its mills.
Highveld Steel and Vanadium, the second-biggest steel maker, and chemicals firm Sasol have complained that inadequate transport links are harming exports. Granite exporter Kelgran said last year that rail delays might cause it to lose as much as 25 percent of its export sales.
Their complaints are beginning to be addressed, as the government moves to upgrade a transport system that is already the most extensive in Africa.
Parastatal rail utility Spoornet will announce the winners of contracts worth R2.9 billion in the next few weeks to supply locomotives - part of a 15-year, R42 billion programme to renovate its infrastructure.
"The carrying capacity of rail will improve," public enterprises minister Jeff Radebe said in a recent speech to parliament.
"The shift from road to rail of heavy freight will accelerate and the real pricing of rail services will drop."
Other major projects include a new R3.2 billion port at Coega and a R2.7 billion upgrade of the country's airports.
"There are large contracts in the pipeline," said Carl Grim, the chief executive of Aveng, the biggest engineering and construction company.
"We are quite bullish."
Electricity parastatal Eskom plans to spend R9.4 billion on infrastructure this year, up from R5.6 billion in 2002. Another R12.2 billion rand has been allocated for 2004, much of that for power stations that are due to run out of spare capacity in 2006/07.
South Africa's 56 consecutive months of economic growth and 47 percent expansion of trade over the past five years have left roads, railways, airports and ports battling to cope.
"Between 1999 and 2000 infrastructure spending suffered, in particular maintenance spending, and in some ways we are trying to rectify that," said Kuben Naidoo, the chief director of fiscal policy in the national treasury. "When you cut budgets, the easiest thing to cut is capital budgets."
The government increased annual spending by an average of 9.3 percent between 1999/2000 and 2001/02 to R262.9 billion. In 2002/03 spending rose 11 percent, and in this financial year expenditure of R334 billion is budgeted - a 14.4 percent increase.
"The numbers are very substantial," said Cees Bruggemans, the chief economist at First National Bank. "It is a very positive development after years of no increase in the net infrastructure."
The government hopes to stimulate the economy and provide jobs to the one in three South Africans of working age who are unemployed.
Infrastructure development "is a critical anchor of our strategy going forward", said deputy finance minister Sipho Mpahlwa.
Government officials caution that it will take time before the benefits materialise.
"We will start seeing the results, I think, in about 18 months to two years," said Ian Phillips, an adviser to the ministry of public enterprises.
