TO THE RESCUE

Nedlac economic recovery plan pivots on public jobs, broadband and big competition for Eskom

By Ferial Haffajee 16 September 2020
Caption
President Cyril Ramaphosa. (Photo: Getty Images / Waldo Swiegers / Bloomberg)

The country's economic recovery action plan focuses on mass public jobs scheme, a broadband spectrum auction by March 2021 and big competition for Eskom. Government, business and labour haven’t come up with a single social contract but have kept to their own plans and instead agreed on priorities at Nedlac.

Facing a sovereign debt trap and the possibility of a real unemployment rate of 50%, the government and its partners in business, civil society and labour have agreed on an “action plan” to rescue the economy. 

Billed as an “employment-centred growth” plan, the parties have negotiated a concrete set of measures (some new, some old) and many with conclusion dates set only months away. The trade-off for more employment (by the private and public sectors) is that the parties agree to “review employment and empowerment-related policy and legislation”.   

The plan will be overseen by a presidential working committee chaired by President Cyril Ramaphosa. Leaders from business, labour and civil society – five-a-side – will meet monthly to make sure it is not reduced to another talk shop. 

A draft of the plan, seen by Daily Maverick, says broadband spectrum will be auctioned by March 2021; the release for the request for proposals for the next bid window for independent power production take-off agreements will be done by January 2021; energy self-generation projects above 1MW will be fast-tracked, to take the pressure off Eskom. 

“The impact of the economic crisis has led to increasing levels of vulnerability including extreme poverty and hunger with the poorest bearing the larger impact,” says the draft plan. “The country is in a debt trap and the fact that the Covid-19 pandemic can spread more rapidly, where there are labour-intensive industries, accelerates structural change in the nature of work thereby diminishing the use of labour.”

Daily Maverick understands that talks went to the wire and that the plan is not a classic German-style social contract but is instead a set of action measures or basic compromises and trade-offs because the parties were too far off from each other to come to a single plan. 

Labour, for example, pushed for much more fiscal relief – even if it means pushing up the debt-to-GDP ratio – and the plan, as inked, does not include a basic income grant. All parties have agreed to “support the implementation of mass public employment programmes”.  

The plan is infrastructure investment-led with a focus on secure, affordable energy and a commitment to a just transition (to protect coal miners); rail, road and port infrastructure; spectrum and broadband; as well as water and social infrastructure (housing, schools, etc).

Business has secured pledges from the government to reduce red tape, especially in the mining industry and for small and medium-sized businesses, and a commitment to simpler public-private partnerships in infrastructure. 

The parties have agreed that “simplifying and modernising mining regulation will unleash significant investment in exploration and production, generating substantial employment as well as contributions to the fiscus and foreign exchange earnings”. 

Under the rubric of “improving energy security and affordability”, Eskom is set for proper competition for the first time. Load shedding has hampered growth for 13 years now and recent outages have threatened to stamp out recovery green shoots.

The plan commits the government and regulators to fast-track environmental authorisations, water use licences, land use approvals and the Eskom grid-tie connection agreements to create competition in energy. The government has promised to quickly confirm locations for gas terminals at Coega, Richards Bay and Saldanha.   

The second big stimulus leg of the plan is localised manufacturing using the experience of PPE manufacturing as a launch pad. Growth industries tapped in the document are the digital economy, agriculture and agro-processing, hemp and cannabis (for industrial and medicinal use) and the support of green jobs (presumably largely in energy).  

The enablers of growth agreed to are a supportive SMME ecosystem, the implementation of the national anti-corruption strategy and a skills strategy including the sourcing of critical skills 

The plan acknowledges that, being in a debt trap, South Africa may well need to secure foreign and domestic funding from a diverse range of sources – the social partners have agreed on how to do this. The document says they will “maximise the mobilisation of international and domestic resources without undermining the integrity of the financial system. This should be conducted as a joint initiative by the social partners to demonstrate common purpose with respect to the sourcing and application of such funds”.

ANC treasurer Paul Mashatile has kicked talk of the SA Reserve Bank’s nationalisation and of prescribed assets (compulsory investment fund allocations directed by the state) into touch in this Bloomberg report.  

 

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  • “… will meet monthly to make sure it is not reduced to another talk shop…” you are right, it’s not just another talk shop, it’s just another monthly talk shop.

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