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Ramaphosa’s economic reconstruction and recovery plan...

South Africa

Parliament

Ramaphosa’s economic reconstruction and recovery plan – from infrastructure, mass employment to fighting corruption

President Cyril Ramaphosa. If Ramaphosa’s administration doesn’t arrest wage increases for 1.2-million public servants – a common situation for private sector workers during the pandemic – SA’s Cyril Ramaphosa (Photo: Simon Dawson/Bloomberg via Getty Images)

President Cyril Ramaphosa’s economic reconstruction and recovery plan punts social compacting and joint action. It’s centred on infrastructure and mass employment programmes – and three more months of the R350 grant. But also focuses on energy security and digital transformation, while fighting corruption and boosting state capacity.

President Cyril Ramaphosa told Thursday’s joint sitting of Parliament that what was needed was a selection of specific priority interventions that would swiftly kickstart change and a rapid economic rebound.

“Our recovery will be propelled by swift reforms to unleash the potential of the economy, and supported by an efficient state that is committed to clean governance.

“It will be transformative. It will be inclusive. It will be digital, green and sustainable, and it will invest in our human capital to lay the foundations for the future.”

Infrastructure and mass employment programmes emerged as central to the president’s 5,523 word address to the joint sitting, which took some 80 minutes to deliver.

And if what’s now called South Africa’s Economic Reconstruction and Recovery Plan looks and feels a bit like a bag of allsorts, that’s because it is. In many ways it wants to build on existing plans, but accelerate implementation and delivery by tighter coordination within government – backed up by political will.

Described as an “employment stimulus”, Ramaphosa announced R100-billion over the next three years for mass employment programmes. The aim is to create 800,000 job opportunities before the end of the 2020/21 financial year.

It is understood that R13.8-billion is immediately available for this. 

Traditional works programmes, like the Expanded Public Works Programme (EPWP) would be scaled up, but 300,000 matriculants would be hired as education and schools assistants to help teachers with routine admin. Community health workers and road maintenance programmes would also be expanded.

And while this works out at about R16,000 per work opportunity, it’s understood to be cheaper than government’s usual job creation costs.

But this leg of the economic reconstruction and recovery plan would also include grants to 75,000 small scale farmers, and to thousands of early childhood development workers and cultural workers like actors and musicians.

Government is looking at ensuring these work opportunities are up and running within three months, or by the end of January 2021. That’s because the R350 monthly Covid-19 relief grant, which was meant to end in October, can only be extended for another three months.

Ramaphosa said the grant could not be continued for longer because of the difficult financial situation South Africa is in. But he called for discussions on a basic income grant to continue.

That R350 grant extension – six million South Africans continue to benefit from it – is a clear signal to some of those contesting within Cabinet, and possibly one reason why Finance Minister Tito Mboweni had asked for the Medium-Term Budget Policy Statement (MTBPS) to be postponed to 28 October.

Concerning infrastructure development to drive economic growth, R340-billion is available to push this.

“Our infrastructure build programme will focus on social infrastructure such as schools, water, sanitation and housing for the benefit of our people. We will focus on critical network infrastructure such as ports, roads and rail that are key to our economy’s competitiveness.”

An ambitious school build programme is planned to replace, once and for all, the remaining 143 mud schools and improve the 3,103 schools without adequate sanitation over a 24 to 36 month period.

Alternative building technology is earmarked to speed up construction, while sanitation that does not rely on municipalities is being used.

And while providing adequate sanitation to stop learners from dying in pit toilets is a positive development, bypassing municipalities to achieve this is an indication of the lack of capacity, or will, at local government level. This may still boomerang on government as it pushes the District Development Model.

Given Eskom’s debt and the looming threat of rolling power outages, Ramaphosa could not not talk about energy security.

A little word-shy on self-generation projects – it’s understood ministers will provide details – Ramaphosa on Thursday outlined how accelerating renewable energy sources, battery storage and gas technology should bring some 11,800 MW online by 2022.

“The current regulatory framework will be adapted to facilitate new generation projects while protecting the integrity of the national grid. Applications for own-use generation projects are being urgently fast-tracked.”

This will be closely watched, while the restructuring of Eskom must proceed.

Ramaphosa also outlined a Buy Local campaign, targeted at supporting small businesses in the run-up to the festive season. And as the holidays approach, the president called on people to explore their country to help reboot tourism in South Africa.

Other measures to restart the Covid-19 lockdown-battered economy ranged from sectoral master plans to chart the way for industries like clothing, sugar, automotive and others, and focused support to the 2.4 million to 3.5 million small businesses in South Africa.

Outlining the Covid-19 blow to lives and livelihoods, Ramaphosa defended his administration’s hard lockdown and continuing lockdown – now in Day 203, as it has been extended for yet another month to 15 November.

“While the national lockdown in April had a significant impact on economic activity, the economic consequences of an uncontrolled surge would have been far worse. Due to the dedication and sacrifices of millions of South Africans, we were able to limit the impact of the pandemic on lives and livelihoods.”

But Ramaphosa acknowledged it would take “an extraordinary effort to recover”, as he called on cooperation in line with the social compacting that’s been a hallmark of his administration.

“As even the darkest of clouds has a silver lining, we need to see this moment as a rupture with the past and an opportunity to drive fundamental and lasting change. It is an opportunity not only to recover the ground that we have lost over the course of the pandemic, but to place the economy on a new path to growth.”

But somehow that economic growth must also gel with the appalling public finances and flailing economy that was pushed into recession by the Covid-19 hard lockdown.

Nothing shows more clearly how much this economic recovery plan wants to achieve, than the president’s comments on debt reduction and fiscal discipline.

“This framework will provide a path of fiscal consolidation, debt reduction and reprioritisation that is supportive of growth and recovery. We cannot sustain the current levels of debt, particularly as increasing borrowing costs are diverting resources that should be going to economic and social development.”

It’s now up to Mboweni to find the rands and cents, and allocate them, when he announces the MTBPS on 28 October.

Stressing government’s commitment to fight corruption, and to ensure there was no political interference in the work of law enforcement agencies, Ramaphosa put his presidency front and centre.

The presidency and National Treasury, reporting directly to Ramaphosa, are fast-tracking delivery of economic reforms under Operation Vulindlela, while the planning, monitoring and evaluation that’s located in the presidency continues to play a key role.

The new National Economic Recovery Council, representing ministers required for this effort, is to provide political oversight and rapid decision making. It’s not clear if this council will replace the National Coronavirus Command Council, or, if it doesn’t, how those two councils will coordinate.

In concluding his address on Thursday, Ramaphosa focused on hope and building a fair, just and equal economy.

“(A)s South Africans, we have a deep reservoir of resilience to draw upon. We have endured much, and have always emerged stronger and more united. We stand together at a crucial turning point in the history of our country.

“Our ability to reignite our economy rests on the decisions we take in this moment, and the urgency with which we address this crisis.” DM

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All Comments 5

  • All good and well, but let’s hope Julius and his Vegetable Army don’t start a civil war tomorrow and set this plan back 15 years.

  • To demonstrate that he is serious, the first step should be reducing the size of the cabinet as well as the remuneration for ministers and parliamentarians.

  • A problem that all governments are faced with is the balance between work opportunities and income from tax that is generated by the liquor industry and the cost to the country by allowing the liquor industry to trade. Covid 19 has provided an interesting pause in the right to trade on the part of the liquor industry and an opportunity to assess with a good degree of accuracy what the savings have been as a result in the pausing of the liquor trade. (Dont allow the liquor trade to muddy the waters by insisting that the loss of profit they have suffered should be taken into consideration.) Now the liquor industry wants to trade again with full swing. When this resumes there is another opportunity of assessing what cost is imposed on the country by this trade. When this is assessed it could form the basis for recovering that cost from the source of the problem. The breweries, the distillers, the wine cellars, the liquor traders and even the advertising industry that shamelessly and falsely participates in the one sided promotion of consumption without an equal disclosure of the harm done to society by liquor, these must all shoulder the cost that arises from their plying their trade. Those who benefit from the liquor trade at the expense of the nation should be required to pay the full cost that they impose on the nation.

  • Nowhere can the the devastating and catastrophic effect of lockdown be compared to the “economic consequence” of an imagined “uncontrolled surge”. Reliable estimates put infection rates in South Africa at between 15 an 20 million already so talk of a “surge” to justify the idiotic decision of lockdown is just more alarmist rubbish.

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