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President Cyril Ramaphosa outlined South Africa’s economic recovery and reconstruction plan to parliament on Thursday afternoon (October 15).
The plan aims to accelerate the recovery of the South African economy which was, like most economies, deeply affected by the Covid-19 pandemic, the president said.
The presidency said that the objectives of the plan are:
- Create jobs by developing infrastructure and mass employment programs;
- Reindustrialize the economy, focusing on small businesses and strengthening medium and large businesses;
- Accelerate economic forms, investment and growth;
- Fight crime and corruption;
- Improve state capacity.
Lock required
Ramaphosa said the country’s harsh lockdown was aimed at restricting the spread of the coronavirus, with up to 500 coronavirus cases reported in the country every hour at its peak.
He said the average number of daily cases is now much more stable at around 2,000 cases per day. However, he warned that the country could see a resurgence of cases and a second wave as seen in other countries.
To do this, he said that measures should be intensified to reduce the case to less than 1,000 new cases per day. This means that South Africans must adjust to the “new normal” and remain vigilant, he said.
The latest Quarterly Workforce Survey for the second quarter showed that up to 2.2 million jobs were eliminated in the country during this period.
Under the expanded definition, which includes people who have stopped actively seeking work, the real unemployment rate in South Africa rose from 39.7% to 42% during the period.
Stats SA also revealed that GDP fell just over 16.4% between the first quarter and the second quarter of 2020, resulting in an annualized growth rate of -51%.
800,000 new jobs
Ramaphosa said the government is determined to create jobs for both South Africans who lost their jobs during the coronavirus shutdown and those who were jobless before the pandemic.
“Our goal is to do this through a major infrastructure program and a large-scale employment stimulus, coupled with a push for intensive industrial location and expansion.”
Combined, these initiatives will support more than 800,000 jobs in the immediate term, the president said. It will also unlock more than R1 trillion in infrastructure development over the next four years.
Other benefits include
- Infrastructure development will also result in lower data costs and broadband penetration;
- This will include an efficient and safe energy supply to the country within the next two years;
- The president said that the implementation of his plan will contribute an additional 1.7% to the baseline of economic growth of 1.3%, bringing average growth over the next 10 years to approximately 3% per year.
“This will be transformative, inclusive, digital, green, sustainable and will invest our human capital to lay the foundations for our future.”
Ramamphosa said that infrastructure development has immense potential to stimulate growth in the country and create sustained employment, both directly and indirectly.
He said that at the end of June 2020, the country had 276 ‘catalyst projects’ which would contribute more than R340 billion in investment.
“We must get people back to work, to their jobs, the jobs that were lost during the pandemic,” the president said.
“We are determined to create more job opportunities. Those who were unemployed before the pandemic or who had stopped looking for work.
“This means unlocking the potential of our economy,” he said, including removing regulatory barriers that increase costs and create inefficiencies.
Public employment and extension of the Covid-19 grant
Speaking about the origin of the new 800,000 new jobs in South Africa, Ramamphosa said that the public sector will play an important role in recruitment.
He said R100 billion to create jobs through public and social employment as the labor market recovers.
Some of the job opportunities that will be created include:
- As part of the 300,000 job opportunities that will be created for education assistants in the country’s schools;
- More than 60,000 jobs will be created for municipal infrastructure and road maintenance;
- 6,000 community health workers and an assistant to help with the implementation of the NHI.
This stimulus will also provide additional support to vulnerable sectors such as small farmers and child development workers.
Ramamphosa said the special Covid-19 grant will be extended for three more months (until the end of December) to help those who are in distress and help with additional support.
“The exaggerated nature of our financial resources makes it impossible to extend them beyond these three months,” he said.
Energy
Ramamphosa said the government is rapidly accelerating its energy plans to focus on renewable resources, battery power and storage.
This will contribute 11,800MW of new energy to the country’s power grid by 2022, he said. In the medium term, the government is looking to sign agreements with independent power producers to bring an additional 2,000MW of power to the group.
He said the government is also working to restructure Eskom, which will open the door to independent power producers in the future.
Ramamphosa promised that the government will also address Eskom’s growing debt problems as part of this restructuring.
Industrialization and local focus
“To put our economy on a new trajectory, we are going to support massive growth in local production and make South African exports much more competitive,” the president said.
He said this will include renewed support to grow South Africa’s business and exports.
“If we were to manufacture only 10% of the annual imported product locally, it is estimated that we could add two percentage points to our GDP,” he said, “if South Africa supplies only 2% to Africa, it could add 1.2 percentage points to our annual GDP. “.
As part of the plan, a range of consumer products will be prioritized for local procurement, Ramaphosa said.
He said the government will soon publish “location targets,” that locally manufactured materials will be prioritized, and that the government will help establish supplier programs for large companies.
“We call on all South Africans to contribute to the recovery effort to purchase locally made products and services. This is one way we can all contribute to rebuilding our economy, ”he said.
“Many countries that have experienced exponential growth have relied on locally made products.”
Other priorities include:
- Focus on women-led businesses;
- The introduction of a new electronic visa system, as well as visa waivers to more countries to boost tourism;
- A list of expanded countries that will be allowed to travel to the country under level 1 lockdown restrictions;
- The launch of the high frequency broadband spectrum by March 2021;
- Internet connection subsidies for low-income households;
- The implementation of a restructuring strategy in SARS;
Fiscal plan
Ramamphosa said that Finance Minister Tito Mbwoeni will publish more information on the country’s fiscal consolidation plans in his medium-term budget at the end of October.
This will include details on reducing the country’s high debt levels as well as streamlining the country’s state-owned companies.
Rmamaphosa said some of the country’s state-owned companies could go public to help raise capital.
Read: We don’t need another plan from Ramaphosa, this is what we should focus on instead: Dawie Roodt
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