ANALYSIS

Ramaphosa’s economic recovery plan: Mixed all-sorts, most of which we’ve seen before

By Marianne Merten 16 October 2020
Caption
President Cyril Ramaphosa presents the Economic Reconstruction and Recovery Plan to a joint sitting of Parliament. (Photo: Kopano Tlape / GCIS)

Energy security in two years, 800,000 work opportunities by March 2021 and a R1-trillion infrastructure build to 2024. Dubbed the Economic Reconstruction and Recovery Plan, it pulls together existing policy and pledges accelerated implementation – with clean governance. But not everyone’s convinced: South Africa has been here before.

The politics of the Economic Reconstruction and Recovery Plan are complex. Some of it is based on the determined drive to get buy-in from business and labour at the National Economic Development and Labour Council (Nedlac) over the past three months. Some of it arises from a determined push in the governing ANC to compile economic policy proposals, literally within six months.

The “reconstruction” in what the ANC, with a nod to the Reconstruction and Development Programme, the RDP, dubbed the Economic Reconstruction and Transformation Programme in June, has made it into the plan.

When on Thursday President Ramaphosa presented the Economic Reconstruction and Recovery Plan to a joint sitting in Parliament, he got to make a bold political and policy statement. (Photo: Kopano Tlape / GCIS)

More concretely featured was Nedlac. To wit, the mid-September Nedlac Plan of Action agreed to aggressive infrastructure, energy security, the creation of an enabling regulatory environment and fighting corruption.

If anything, this domestic Economic Reconstruction and Recovery Plan is steeped in the social compacting ethos of the President Cyril Ramaphosa administration. It’s what shores up Ramaphosa as president of South Africa, against the factional contestation he faces as governing ANC president. 

And when on Thursday Ramaphosa presented the Economic Reconstruction and Recovery Plan to a joint sitting in Parliament, he got to make a bold political and policy statement.

Infrastructure investment of R340-billion, rising to R1-trillion in four years. A R100-billion investment over three years, of which R13.8-billion is to be spent by the end of March 2021, for 800,000 work opportunities in mass public employment programmes. Energy security, as additional megawatts from renewables, self-generation and gas come within two years. And measures for localisation to boost domestic industrialisation.

The rands and cents of South Africa’s economic recovery are for Finance Minister Tito Mboweni to find – and to announce in the Medium-Term Budget Policy Statement (MTBPS) on 28 October following a week’s postponement.

Some of the reasons for that delay – and the behind the scenes contestation – emerged in Thursday’s presidential address.

Ramaphosa announced the extension of the R350 monthly Covid-19 social relief grant for another three months. “Our stretched finances do make it difficult and impossible to extend this by more than three months.”

Following the dire warnings of South Africa’s debt levels in the June emergency Covid-19 Budget – 21 cents of every tax rand is spent to service interest on debt, Mboweni said – Ramaphosa talked fiscal discipline.

The recovery plan would allow “debt reduction and reprioritisation that is supportive of growth and recovery”, said Ramaphosa.

“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.”

Despite the MTBPS’s postponement, apparently to rework some of the rands and cents numbers, discussions on financial modelling seemed at an advanced stage.

That’s why on Thursday Ramaphosa could tell Parliament the implementation of the Economic Reconstruction and Recovery Plan would, “according to the modelling done by National Treasury… raise growth to around 3% on average over the next 10 years”.

The referencing of “implementation” is key: the word was used 15 times in the presidential speech.

“It is clear that implementation is going to be the key in giving effect to this recovery and reconstruction plan. This requires a more effective and efficient state, with greater coordination and integration between national, provincial and local government.”

And that’s where the Presidency emerges front and centre, in what seems another step towards a super-Presidency, or the centralisation of executive power within the president’s office.

The economic plan is driven by the Investment and Infrastructure Office headed by former Tshwane mayor Kgosientsho Ramokgopa, the Project Management Office headed by Rudi Dicks, and a joint initiative of the Presidency and National Treasury, Operation Vulindlela, to fast-track delivery of economic reforms.

Ramaphosa already chairs the Presidential Infrastructure Coordinating Commission (PICC) and the Presidential Coordinating Council that brings together premiers, mayors and others.

Now a collection of ministers serve on a new structure, the National Economic Recovery Council, for coordination and quick decision-making. It was not clear how this council relates to the National Coronavirus Command Council (NCCC), effectively all of the Cabinet meeting in a different structure, which has dominated South Africa’s Covid-19 lockdown.

Importantly, the Constitution only recognises the Cabinet – the president and ministers – as executive decision-makers.

The policy focus has been on providing set-top boxes to about 4.7 million indigent households with old televisions to receive the new digital signals. But the October 2020 Cabinet lekgotla briefing on the economic plan, seen by Daily Maverick, shows only R1.6-billion of the required R5.7-billion being available.

The government seems to accept the domestic economic recovery plan is not necessarily anything new. While initially, rewriting the policy playbook may have been a factor, it became clear that policies existed – and they were about coordination and implementation.

The infrastructure programme is a case in point.

Infrastructure-led growth was a cornerstone of the Jacob Zuma administration, whose economic development minister, now Trade and Industry Minister Ebrahim Patel already then touted the R1-trillion investment.

In 2012, the National Infrastructure Plan was launched, outlining 18 Strategic Infrastructure Projects, dubbed SIPs.

“Providing infrastructure for the economy and communities is one of the main ways South Africa will realise inclusive and jobs-rich growth. Quality, affordable infrastructure raises economic productivity, permits economic expansion and allows marginalised households and communities to take advantage of the new opportunities,” said the plan foreword by PICC management committee chairperson, then rural development minister Gugile Nkwinti, and Patel, who headed the commission secretariat.

Fast-forward to 2020. It’s now called South Africa’s Infrastructure Investment Plan, has its own office in the Presidency and a coordination hub, called Infrastructure SA.

Following June’s inaugural, virtual Sustainable Infrastructure Development Symposium of South Africa (Sidssa), on 24 July 2020, Public Works Minister Patricia de Lille gazetted a series of what’s now called Strategic Integrated Projects, still abbreviated as SIPs.

Spectrum release is another example of policy dithering, even as the government has long recognised spectrum release as key to cheaper data, broadband rollout and digital migration.

It’s been talked about since the start of the Ramaphosa presidency, and two years later remains outstanding. On Thursday it was confirmed the spectrum auction would take place by the end of March 2021. Related to this is digital migration for which South African missed the global June 2015 deadline.

The policy focus has been on providing set-top boxes to about 4.7 million indigent households with old televisions to receive the new digital signals. But the October 2020 Cabinet lekgotla briefing on the economic plan, seen by Daily Maverick, shows only R1.6-billion of the required R5.7-billion being available.

This illustrates how the Cabinet drags governance. According to the lekgotla document, the Cabinet decided on this set-top box policy in December 2019. But actually it was two communications ministers ago, when Nomvula Mokonyane, in October 2018, announced set-top boxes would now be a joint public-private approach to slash costs to R2-billion.

Or, as the statement of the Cabinet meeting of 10 October 2018 put the policy change:

Cabinet approved a revised delivery model on implementation of the Broadcast Digital Migration Project. The model adopts a market/retail-driven approach through collaboration and partnerships with the private sector and industry. This provides South Africa with headway towards the completion of the project in a manner that is inclusive, affordable and efficient, and that reduces risk to government.”

Immediate reaction to the Economic Reconstruction and Recovery Plan was low-key, largely highlighting the lack of freshness.

DA finance spokesperson Geordin Hill-Lewis also emphasised the president’s failure to state what reform had to be done by when, and to assure South Africa that ministers and officials faced consequences when that was not done.

The EFF talked of “the dismal failure to put together a practical and believable economic plan”.

Freedom Front Plus leader Pieter Groenewald said much of the plan had been heard before, on infrastructure, energy and Buy Local.

Much of the domestic business reaction also seemed to focus on the need for implementation.

The speech was broadly okay on the policy front, though it offered little really new, except the detailed release of the employment programme, which is positive,” said Intellidex analyst Peter Attard Montalto. 

“The bar for the speech to pass was not on policy, however, but on implementation. This is where it missed. Overall, people will be disappointed, I think. This will especially be true on energy, where the announcement of energy on grid targets was so unrealistic as to damage the president’s credibility.”

But Ramaphosa got backing from the ANC’s alliance partner, labour federation Cosatu, whose main criticism was that the state did not play a bigger role.

“The plan fails to acknowledge that the state can play a dynamic developmental role as a key economic agent. The state is the biggest employer, consumer and investor, and through its fiscal and monetary policies, and the composition of its budget, it exerts a tremendous economic influence.”

This Economic Reconstruction and Recovery Plan comes at a crucial time for South Africa, where the Covid-19 lockdown cost at least 2.2 million jobs, accelerated economic contraction to 8.2% for 2020 and raised inequality, poverty and hunger.

The political statement by Ramaphosa done and dusted, it’s now all eyes on the rands and cents to be presented in the MTBPS by Mboweni. DM

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All Comments 5

  • When a business is in trouble, it has to look at increasing revenue (we can do better at the tax hole but we cannot increase the rates), it has to cut costs (the public sector wage bill is absurdly high) and it has to sell stuff to reduce debt. There must be tens of billions of assets both land and enterprises that the state could sell.

  • Sorry I am not sold on this “plan”. I want to see (actually see) a few things getting done (actually getting done) before I smile. Data spectrum. ALL criminals in jail (actually in jail). Wind and solar power contracts signed (actually signed in a very few days). Racist BEE relaxed at least 50%. Paperwork cut for all businesses. NOW! Privatise city rail lines. Formalise the taxi industry. They must pay tax! Sell the navies’ submarines and the airforces’ Saab fighters. And that is just a start.

  • The plan brings together all the policy agreed as you say, over a long period of time. Its common cause that we are good at determining what our policies SHOULD be, and even how to action them, but not good at implementation. This administration is not focussing on re-writing policy- it isnt needed. Its focussing on getting things done. I have personally seen the results for example, of Masterplanning for action, as noted in the Industrialisation leg, as well as the funds that have actually banked for the priority infrastructure projects. We ARE moving now. After 20 years of relative inaction, it is important (I believe) to begin with the big hairy audacious goals….like spectrum, infrastructure, and exports that can be actioned immediately (remove the admin inefficiencies and barriers to significantly speedy export earnings), and speaking as a practitioner heavily involved – I am actually seeing movement. I dont know how he manages, but he is making it happen. Its taken many years to get us to this point of awfulness, with COVID adding to the problems- its not going to be possible to generate an immediate turnaround, but if we implement what CR has tabled, in one year we will see very tiny green shoots, after which such catalytic interventions will gather their own momentum.

  • So I did not miss much by ignoring his speech !
    More panels and talk shops fleshing out the ‘master plan ‘ !
    Small wonder Tito has had to go back to the kitchen to cook the books again .
    So , R13.8 billion , just on creating work opportunities for 800000.
    R1725/ person .
    Once the opportunity has been created , who will pay the 800000 ? A minimum of R2500 ?
    R20 billion , no real return for income tax !
    ‘Infrastructure’ , ‘jawell no fine ‘ !
    The ANC has a dismal record with that hot potatoe .
    Just when are ‘pit toilets ‘ about to be eradicated at schools and rural areas ?
    As Cosatu says ‘The state is the biggest employer, consumer and investor ! ‘
    We all know how that is working .
    As an employer , they are in the critical areas , underpaid and understaffed . The rest , overpaid , overstaffed and underworked .
    A big consumer , at specially inflated rates , to cover , kick backs , bribes , and dysfunctional municipalities .
    As an investor ? Do they mean the PIC , covered in glory are they 🙂 !
    As usual , all guff, smoking mirrors and playing to the masses .
    Wherever the billions come from , it is pointless unless the basic ‘machinery’ of state is ‘functional’!
    You can make all the fancy parts to make a car look fantastic , yet with no engine and flat tyres , is not going anywhere .
    Nothing has been said of those ‘rubbing their hands with glee ‘ brigade !
    I use that term in it’s military sense .
    Covid corruption will now scale even greater heights !

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