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President Cyril Ramaphosa.
- The National Council for Economic Development and Labor has agreed on an action plan for the economic recovery of the country.
- President Cyril Ramaphosa met with the council on Tuesday.
- Details of the plan will be announced once the Cabinet finalizes it.
The National Council for Labor and Economic Development has agreed on an economic recovery plan for South Africa.
According to a statement released by the Presidency on Tuesday, following a meeting between President Cyril Ramaphosa and Nedlac, a body made up of government, business, worker and community representatives, details of the plan will be released once the cabinet finalized it.
The country’s economy is expected to contract between 7% and 13% this year due to the damaging impact of the blockade that was instituted to curb the spread of Covid-19. The most recent data from Stats SA showed that the economy contracted 51% quarter over quarter on an annualized basis as a result of the lockdown, which caused economic activity to pause for five weeks.
The country has had to borrow from multilateral institutions such as the International Monetary Fund, the African Development Bank and the New Development Bank to finance responses to the pandemic and sustain the economy.
“The social partners’ action plan is based on significant convergence on what needs to be done to put the economy on a new, accelerated, inclusive and transformative growth path.
“The social partners have identified priority areas for the reconstruction of the economy, as well as structural reforms and other programs that will allow sustainable and inclusive growth with an intensive focus on job creation,” the presidential statement read.
In particular, Nedlac agreed to a social pact to mobilize funds to address Eskom’s financial crisis “in a sustainable way,” according to the statement. Eskom faces a growing debt burden that currently stands at about R 480 billion. It has been struggling with operational challenges, which has affected its ability to supply power with detrimental effects on business confidence and economic growth.
Commenting on the agreement and the commitments made by the social partners to implement the plan, the president said that “it is a great achievement that is up to the challenge of the moment.”
Failed state?
Speaking to Fin24 on Tuesday morning, South African Chamber of Commerce and Industry Executive Director Alan Mukoki said South Africa could “succeed” and “find its feet” or risk becoming a “failed state.” , depending on the decisions made on the charts. a recovery.
“South Africa is not facing a short-term problem, South Africa is facing a long-term problem. It all starts with a vision. What is South Africa’s vision of itself?” he said.
Mukoki noted that while the National Development Plan (PND) for one outlines goals such as tackling inequality and unemployment, it still lacks a detailed strategy for how to achieve these goals. He compared the NDP to a “wish list”.
Crucial implementation
The chief economist of the Office of Economic Research, Hugo Pienaar, said the country does not need new plans, but should instead focus on implementing the plans that have already been put on the table.
Quick wins would consist of resuming the spectrum license auction, which was recently postponed for another three months. Another option is to launch the new rounds of the Independent Power Producers program to encourage green investment.
Pienaar highlighted the latest advances in the energy space. Last week, the national energy regulator agreed with the ministerial determination that an additional 11,000 MW of energy will be acquired starting in 2022.
“These two things will not change the world, but they are tangible and easy to achieve,” said Pienaar.
“It doesn’t cost the government anything. We know that the government’s finances are overloaded,” he added. Pienaar said the government could get revenue from the license auction and that investment in green energy will come from the private sector.
