Here is Ramaphosa’s 4-step plan to fix the South African economy

President Cyril Ramaphosa has announced the government’s plan to rescue the South African economy following the negative impact of the COVID-19 pandemic.

“The damage caused by the pandemic to an already weak economy has been colossal,” Ramaphosa said. “More than 2 million people lost their jobs in the second quarter of this year.”

“This economic shock is unprecedented in our country and it will take an extraordinary effort to recover from it.”

Ramaphosa was speaking to a hybrid Joint Sitting of the National Assembly and the National Council of Provinces to outline South Africa’s economic reconstruction and recovery plan.

He said the plan aimed to provide growth that was both inclusive and transformative, building on the common ground between government, businesses, and labour.

The President said the objectives of the plan are as follows:

  • Create jobs through infrastructure development and mass employment programmes
  • Reindustrialise the economy, focusing on small businesses and strengthening medium and large businesses
  • Accelerate economic reforms, investment, and growth
  • Fight crime and corruption
  • Improve the capabilities of the state

“The creation of jobs is central to the economic recovery plan,” he said.

Ramaphosa said the economic reconstruction plan has four priority interventions, which are detailed below.

1. Infrastructure rollout

The first priority of the reconstruction plan is to facilitate the massive rollout of infrastructure throughout the country.

This has the potential to create jobs both directly and indirectly, Ramaphosa said.

“By the end of June 2020 we had 276 catalytic projects with an investment value of R2.3 trillion,” Ramaphosa said. “A list of 50 strategic integrated projects and 12 special projects were gazetted in July 2020.”

He said infrastructure projects would focus on social development such as schools, water, sanitation, housing, and critical road and rail systems.

“We have taken steps to remove constraints that have over time hampered infrastructure delivery over a number of years,” he said.

“We have established an infrastructure fund that will provide R100 billion in catalytic finance over the next decade, leveraging as much as R1 trillion in new investment for strategic infrastructure projects.”

Several of these infrastructure projects have already started and are under construction, and the pace of development will be expedited.

2. Rapidly expand energy generation

Ramaphosa said the second priority will include the acceleration of the Integrated Resources Plan (IRP), which will provide a substantial increase in the contribution of renewable energy storage.

“This should bring around 11,800MW of new generation capacity into the system by 2022,” he said. “More than half of this will be generated by renewable sources.”

The current regulatory framework will be adapted to facilitate new generation projects while protecting the integrity of the national grid, and the work of restructuring Eskom into three separate entities will continue.

“To achieve this, a long-term solution to Eskom’s debt burden will be finalised,” Ramaphosa said.

“Through these measures, we aim to achieve sufficient, secure and reliable energy supply within two years.”

3. Employment stimulus

The third intervention to help rebuild the economy is an employment stimulus which will create jobs and support livelihoods on a massive scale.

“Large scale job interventions driven by the state and social partners have been successful in many countries that have faced devastation from war and other crises,” he said.

“We have committed over R100 billion to create jobs through public and private employment. This is focused on the solutions that can be rolled out most quickly and have the greatest impact on economic recovery.”

He said traditional forms of public employment are being scaled up and new forms of public employment are being created to meet the immediate need for employment.

These initiatives include the employment of 300,000 people as educational support staff to help teachers bring students up to speed after the COVID-19 pandemic.

Ramaphosa said funding has also been allocated to protect jobs in cultural institutions such as theatres or museums.

“The implementation of the employment stimulus has already commenced – each of these is fully funded and ready for implementation,” Ramaphosa said.

4. Industrial growth

Ramaphosa said that in the context of a steady decline of a manufacturing base over many years, the economy must be placed on a new trajectory.

“We will support massive growth in local production and make South Africa exports much more competitive,” he said. “These will build on the work being done in several areas before the pandemic struck.”

The production of local goods has the potential to provide significant boosts to the economy, Ramaphosa said.

“Despite the weaknesses in our economy, these are some of the strengths on which we can build. There are huge opportunities we can seize through effective partnerships and the active implementation of our plans.”

The government will soon publish localisation targets for goods in areas such as healthcare, basic consumer goods, construction materials, and transport rolling stock.

Ramaphosa added that the COVID-19 special grant would be extended by a further three months, after which the government will not have the funds to continue providing this relief to citizens.

The President also said the release of high-frequency spectrum by March 2021 and the completion of digital migration will reduce data costs for firms and households.

“This process is being managed by ICASA and will promote transformation, reduce costs and increase access,” Ramaphosa said.

“We are developing innovative new models to provide low-income households with access to affordable, high-speed Internet through connection subsidies for broadband and support for public WiFi hotspots.”

Wary of a second wave

Ramaphosa said that while South Africa’s COVID-19 case numbers remain stable, there remains a risk of a second wave.

“On this day seven months ago, we declared a national state of disaster,” Ramaphosa said.

“For the last month and a half, even as we have significantly eased the restrictions that were imposed on movement and economic activity, the average number of daily cases has remained relatively stable.”

However, he said it is far too soon to declare a victory over COVID-19.

The WHO has also advised South Africa that it is entering a phase that requires high vigilance and high readiness to respond, he said, adding that the government’s goal is to reduce new cases to less than 1,000 per day.

“This virus will remain part of our lives for some time to come, and we need to adjust to this new reality and this new normal in all areas of our lives,” Ramaphosa said.

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Here is Ramaphosa’s 4-step plan to fix the South African economy