There’s been talk of the economic stimulus package for weeks. It was discussed at the ANC lekgotla in late July, and at the governing ANC’s subsequent Cabinet lekgotla in early August. There have been rumours, leaks, denials and appeals for patience — the president would make the announcement in due course.
In early September a technical recession was announced after two consecutive quarters of contraction. It came on the back of higher unemployment in July 2018 — to 37.2% joblessness on the expanded definition that includes those too discouraged to even try looking for work. Never mind the impact on citizens’ wallets of an unprecedented value added tax (VAT) increase from April and a series of petrol price hikes.
On Friday President Cyril Ramaphosa took to the podium at the Union Buildings to announce the “economic stimulus and recovery plan”, a smörgåsbord of growth ignition, confidence restoration and joblessness curbing amid tough economic times.
“The stimulus and recovery plan we are outlining consists of a range of measures, both financial and non-financial, that will be implemented immediately to first ignite economic activity, second restore investor confidence, third prevent further job losses and create new jobs, and fourth to address some urgent challenges that affect the conditions faced by vulnerable groups among our people,” Ramaphosa said.
Four days later, Home Affairs Minister Malusi Gigaba became the first Cabinet member to flesh out some of the details. Except the “new” quickly vanished — the visa reforms are based on the October 2015 recommendations by the inter-ministerial committee, chaired by then still deputy president Ramaphosa, looking to mitigate the unintended negative consequences of the 2014 immigration regulations.
While the relaxation of the visa requirements for children travelling with foreign visitors will be in place for the silly festive season tourism influx, anyone wanting to recruit scarce skills from beyond South Africa’s borders will have to wait for April 2019 for the new list of skills for which visas would be expedited.
Interestingly, foreign students who complete a degree in a defined scarce skills area would not have to return to their home country to apply for permanent residence, but could do so from South Africa on graduation.
Some of the announced measures, like the 10-year multiple entry visa for BRICS business people, appear to be up and running. Further talks are planned on matters such as visa waivers for countries like Cuba, Belarus, Saudi Arabia, Ghana and the Saharawi Arab Democratic Republic, and easier paperwork for travellers from Nigeria, Uganda and Kenya.
And while Ramaphosa said on Friday the recovery plan and stimulus package was worth around R50-billion, on Tuesday it was unclear how much the visa reforms would contribute.
“Our duty was not to cost. That would perhaps require skills not available at Home Affairs,’ said Gigaba in response to a question. “But the reforms will contribute to the stimulus package. It will take a little bit of time.”
Gigaba would know. Much of what Ramaphosa announced on Friday is based on the 14-Point Plan, dubbed “government’s inclusive growth action plan”, Gigaba had released in July 2017 while heading the finance ministry in the Jacob Zuma administration. And, of course, in Budget 2018.
Take the South Africa Infrastructure Fund Ramaphosa announced, to “reduce the current fragmentation of infrastructure spend and ensure more efficient and effective use of resources”. It sounds quite like a fancy name for what February’s Budget called “the Budget Facility for Infrastructure… to improve the planning and execution of large infrastructure projects”. That infrastructure budget facility was one of the points in the 14-Point Plan, to be finalised by October 2017 by the then finance minister.
February’s Budget Review said this facility — it includes the Presidential Infrastructure Co-ordinating Commission and the Planning, Monitoring and Evaluation Department, now headed by Minister in the Presidency Nkosazana Dlamini Zuma — had reviewed 38 infrastructure proposals and their funding. Details would be announced in October’s Medium-Term Budget Policy Statement (MTBPS), the document said.
“Options to engage development finance institutions and the private sector through the facility will be explored.” That was Budget Day, 21 February.
On 21 September from Ramaphosa it was: “The private sector will be invited to enter into meaningful partnerships with government in this (South Africa Infrastructure) fund.”
Infrastructure has been a government flagship for more than a decade, with around R2.2-trillion invested in the past 10 years. The R400-billion Ramaphosa talked of is in line with such spending patterns and is already available over the next three years to 2021, according to Budget documentation.
The township economy has been a policy and funding focus since Cabinet was restructured in 2014 to establish a series of new ministries, including small business development.
And agriculture “blended funding” also is not new, nor innovative. Neither are the interventions Ramaphosa talked about on Friday, including “a package of support measures for black commercial farmers so as to increase their entry into food value chains through access to infrastructure like abattoirs and feedlots”.
Already the Budget in February has provided more than R4.6-billion in the current 2018/19 financial year for small scale farmers, black emerging commercial farmers and food security initiatives, including training 45 black agro-processing entrepreneurs with the R273.9-million trade promotion and market access allocation.
And through the Ilama/Letsema conditional grant and other support, the Agriculture Department “expects to support 145,000 black commercial, subsistence and smallholder producers per year”, states the Estimates of Expenditure, adding that the programme would also provide production inputs and farm infrastructure.
It would also be “… piloting the blended funding model in partnership with commercial and developmental funding institutions such as the Land (Bank) and Agricultural Development Bank of South Africa”.
Much of the July 2017 14-Point Plan is being implemented, like the launch of the Competition Commission inquiry into data costs. Often deadlines have long been missed as, for example, the Post Bank licensing deadline of December 2017, or the debt relief for the most vulnerable, and in reckless lending cases that was supposed to be done by February 2018. Parliament’s trade and industry committee finalised its Debt Relief Bill adopted by the National Assembly earlier in September.
On other points of the 14-Point Plan it will be a tight race, as in the completion of the spectrum licence process by December 2018. On Friday Ramaphosa said:
“Within the next few weeks, government will initiate the process for the allocation of high-demand radio spectrum to enable licensing.”
While the name has changed to “economic stimulus and recovery plan”, there is consistency and continuity in policy – and funding. Like the 14-Point Plan, the stimulus and recovery plan relies on reprioritised monies, or allocations shifted from underperforming areas to those where it is hoped to get bang for the buck.
Budget 2018 announced that R53-billion had been saved at national level, rising to cuts worth R85-billion over the next three years to 2021. In February, some R23-billion of that was allocated to fee-free higher education, social grants increases and contingencies.
So there’s still money available, particularly if departments have scrapped some more expenditure. Some of it could come from the R2-billion spent on gardening and cleaning services at national and provincial government and State-owned Entities (SOEs), according to a recent parliamentary reply to a question by EFF MP Godrich Gardee. Or the R7.65-billion government spent on private security in the 2017/18 financial year, as emerged in response to another parliamentary question from Gardee.
Whether any other minister aside from Gigaba will step up and publicly brief on their contribution to this “new dawn” recovery plan remains to be seen. Finance Minister Nhlanhla Nene has no choice: on 24 October he delivers the MTBPS that adjusts departmental allocations and signals priorities going forward.
It’ll be tough. SoEs like Eskom, described as the “biggest risk” to the economy in February’s Budget, remain so. And the National Treasury annual report shows that provisions to cover the risks linked to SAA increased to R23-billion, up from R13-billion impairment in the previous financial year.
SAA, like South African Express and Denel, would not table their annual reports in Parliament as required by law, Public Enterprises Minister Pravin Gordhan had to inform National Assembly Speaker Baleka Mbete.
It’s a sign that not all’s well. Nene has little wiggle room. And yet, like others, he has to do something with nothing, and make it look good. DM
"The soul is known by its acts" ~ Thomas Aquinas