President Cyril Ramaphosa’s speech today (Thursday, 15 October, 2020) unveiled South Africa’s economic reconstruction and recovery plan.
Ramaphosa delivered the speech at a joint sitting of Parliament in Cape Town. Here is a summary.
Economic recovery plan’s objectives
The President said the objectives of the government’s economic recovery plan are to:
- Create jobs primarily through aggressive infrastructure investment and mass employment programmes.
- Re-industrialise South Africa’s economy, focusing on growing small businesses.
- Accelerate economic reforms to unlock investment and growth.
- Fight crime and corruption.
- Improve the capability of the state.
Ramaphosa also said the plan’s interventions will seek to achieve the following:
- Sufficient, secure and reliable energy supply within two years.
- Create over 800,000 jobs in the immediate term.
- Unlock over R1 trillion in infrastructure investment over the next four years.
- Reduce data costs and expand broadband access to low-income households.
- Promote the local manufacturing sector and re-industrialisation through more localisation and exports.
- Revive vulnerable sectors such as tourism.
“According to the modelling done by National Treasury, the implementation of this plan will raise growth to around 3 percent on average over the next 10 years,” Ramaphosa said.
The plan will also be inclusive, transformative, green, digital and sustainable. It will rely on human capital, he added.
President Cyril Ramaphosa’s speech outlined the plan’s four priority interventions as follows:
1 Massive rollout of infrastructure
The government has identified 276 “catalytic” infrastructure projects, which have an investment value of R2.3 trillion, for implementation.
Of these, the government will prioritise 52 projects for immediate implementation, thereby unlocking R340 billion in new investment.
2 Expansion of energy generation capacity
The government will bring 11,800 MW of new generation capacity into the system by 2022 by accelerating the implementation of the Integrated Resource Plan.
It will bring in a further 2,000 MW from independent power producers by June 2021 and additional 2,000 MW within 12 months through the Risk Mitigation Power Procurement Programme.
3 Employment stimulus
“We have committed R100 billion over the next three years to create jobs through public and social employment as the labour market recovers,” Ramaphosa said.
This will create more than 800,000 job opportunities “in the coming months,” he added. 300,000 will be education and teaching assistant jobs for the youth.
60,000 jobs will be created “for labour-intensive maintenance and construction of municipal infrastructure and rural roads.”
The government will also employ 6,000 community health workers and nursing assistants during the implementation of the National Health Insurance (NHI).
Social grants extended: Ramaphosa also announced a three-month R350 SRD grant extension to “maintain a temporary expansion of social protection and allow the labour market sufficient time to recover.”
4 Industrial growth
“To place our economy on a new trajectory, we are going to support a massive growth in local production and make South African exports much more competitive,” the President said.
The government will publish localisation targets for goods in sectors such as agro-processing, health care and basic consumer goods.
It will also enforce the use of locally made materials in all public infrastructure projects. “We call on every South African to contribute to our recovery effort by choosing to buy local goods and support local businesses.
“In promoting localisation and industrialisation, we will be focusing in particular on the development of small, medium and micro enterprises,” Ramaphosa said.
In addition, the government will prioritise women-owned businesses “to progressively reach our target of directing at least 40% of procurement spend to such enterprises.”
In addition to the four priority interventions, the government will seek to create an enabling environment for inclusive growth. Ramaphosa outlined the following measures:
- Fast-tracking reforms to reduce the cost of doing business and lower barriers to entry.
- Reducing timeframes for mining, prospecting, water and environmental licenses by 50 percent.
- Finalising the Petroleum Resources Development Bill to unlock South Africa’s enormous untapped potential in upstream oil and gas reserves.
- Implementing an efficient e-visa system and extending visa waivers to new tourism markets.
- Publishing an expanded list of countries from where resumption of international travel to South Africa will be permitted.
- Publishing a revised list of critical skills, occupations in high demand and priority occupations to enable fast recruitment of highly skilled individuals.
- Promoting greater private sector participation in rail, including through granting third-party access to the core rail network.
- Urgently establishing a single economic regulator in transport to promote competition and efficiency.
- Ensuring the release of high-frequency spectrum by March 2021 and completion of digital migration to reduce data costs.
- Developing a National Anti-Corruption Strategy.
- Fiscal consolidation, debt reduction and reprioritisation.
- Rationalisation of state-owned enterprises (SOEs).
To read President Cyril Ramaphosa’s speech/economic economic recovery plan in full, click here.