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The country’s economic recovery action plan focuses on a massive public employment scheme, a broadband spectrum auction for March 2021, and major competition for Eskom. The government, companies and workers have not drawn up a single social contract, instead sticking to their own plans and instead agreed on priorities at Nedlac.
Faced with the sovereign debt trap and the possibility of a real unemployment rate of 50%, the government and its business partners, civil society and labor agreed on an “action plan” to rescue the economy.
Seen as a “job-centric growth” plan, the parties have negotiated a specific set of measures (some new, some old) and many with completion dates set to just a few months. The compensation for more employment (by the public and private sectors) is that the parties agree to “review policies and legislation related to employment and empowerment.”
The plan will be overseen by a presidential task force chaired by President Cyril Ramaphosa. Business, labor and civil society leaders, five to a side, will meet monthly to make sure it doesn’t come down to another talk.
A draft of the plan, seen by Daily Maverick, says that broadband spectrum will be auctioned in March 2021; the publication of the request for proposals for the next bidding window for independent power production take-off agreements will take place in January 2021; Self-generation power projects above 1 MW will be accelerated to relieve pressure from Eskom.
“The impact of the economic crisis has led to increasing levels of vulnerability, including extreme poverty and hunger, with the poorest suffering the greatest impact,” says the draft plan. “The country is in a debt trap and the fact that the Covid-19 pandemic may spread more rapidly, where there are labor-intensive industries, accelerates the structural change in the nature of work, thus decreasing the use of hand. working”.
Daily Maverick understands that the talks went to the thread and that the plan is not a classic German-style social contract, but rather a set of action steps or basic commitments and trade-offs because the parties were too far apart to reach a compromise. agreement. a single plan.
The work, for example, lobbied for much higher tax relief, even if it means increasing the debt-to-GDP ratio, and the plan, as signed, does not include a basic income grant. All parties have agreed to “support the implementation of massive public employment programs.”
The plan is led by infrastructure investments with a focus on safe and affordable energy and a commitment to a just transition (to protect coal miners); railway, road and port infrastructure; spectrum and broadband; as well as water and social infrastructure (housing, schools, etc).
Companies have secured commitments from the government to cut red tape, especially in the mining industry and for small and medium-sized enterprises, and a commitment to simpler public-private partnerships in infrastructure.
The parties agreed that “the simplification and modernization of mining regulation will trigger significant investment in exploration and production, generating substantial employment, as well as contributions to the treasury and foreign exchange earnings.”
Under the rubric of “improving energy security and affordability”, Eskom is poised for proper competition for the first time. The burden reduction has hampered growth for 13 years and recent disruptions have threatened to wipe out the green shoots of recovery.
The plan commits the government and regulators to accelerate Eskom’s environmental authorizations, water use licenses, land use approvals and grid connection agreements to create competition in energy. The government has promised to quickly confirm the locations of the gas terminals in Coega, Richards Bay and Saldanha.
The second big driver of the plan is localized manufacturing using the expertise of PPE manufacturing as a launching pad. The growing industries included in the paper are the digital economy, agriculture and agricultural processing, hemp and cannabis (for industrial and medicinal use), and supporting green jobs (presumably largely in energy).
The agreed growth enablers are an ecosystem of support for SMEs, the implementation of the national anti-corruption strategy and a skills strategy that includes the acquisition of critical skills.
The plan recognizes that, being in a debt trap, South Africa may need to obtain foreign and domestic financing from a wide range of sources; the social partners have agreed how to do it. The document says that they will “maximize the mobilization of national and international resources without undermining the integrity of the financial system. This should be carried out as a joint initiative of the social partners to demonstrate a common purpose with regard to obtaining and applying these funds ”.
ANC Treasurer Paul Mashatile has started talks on the nationalization of the Reserve Bank of South Africa and on the prescribed assets (mandatory allocations of investment funds directed by the state) in this Bloomberg report.
