Finance Minister Pravin Gordhan gave South Africa a boost in the contest to host the lucrative Square Kilometre Array telescope.

South Africa is up against Australia and the winner might be announced in April.

In his budget speech yesterday, Gordhan said: "South Africa is bidding to host the Square Kilometre Array, an international collaboration to build the world's largest radio telescope.

"I am happy to confirm that the project will qualify for VAT relief, which will surely give Minister [of Science and Technology Naledi] Pandor the winning edge in this contest."

"The minister hopes that [the VAT exemption] is going to assist in terms of showing that South Africa is serious about hosting the SKA," said Lunga Ngqengelele, spokesman for Pandor.

In November, London's The Economist magazine reported that Australia had more experience in radio astronomy but South Africa had the advantage of lower costs.

"As a developing country, in which a third of the population still live on $2 a day, [South Africa] might also be considered to have the greater moral claim."

The telescope will consist of about 3000 antennae. Signals from space received by the antennae will be sent through fibre-optic cables to a computer that will produce a picture or graph.

A site in the Karoo, in Northern Cape, will be home to the core of the telescope if the bid is successful.

Namibia will have three antenna stations, Botswana four, and Mozambique, Mauritius, Madagascar, Kenya, Zambia and Ghana one each.

The telescope will have the capacity to observe the first-formed black holes, stars and galaxies.

It will also be on the lookout for signs of life on other planets.

SKA project participants, including China, Italy, the UK and the Netherlands, will decide where the telescope will be sited.