Ramaphosa Outlines Economic Stimulus And Recovery Plan
The plan “will be implemented immediately to firstly ignite economic activity, secondly restore investor confidence, thirdly prevent further job losses and create new jobs, and fourthly to address some urgent challenges that affect the conditions faced by vulnerable groups among our people”, Ramaphosa said.
The stimulus and recovery plan has five broad parts:
- implementation of growth enhancing economic reforms.
- reprioritisation of public spending to support job creation.
- establishment of an Infrastructure Fund.
- address urgent and pressing matters in education and health.
- investing in municipal social infrastructure improvement.
According to the President, government was rapidly accelerating the implementation of key economic reforms that would unlock greater investment in important growth sectors, including changes to South Africa’s visa regime. “Within the next few months, amendments will be made to regulations on the travel of minors, the list of countries requiring visas to enter South Africa will be reviewed, an e-visas pilot will be implemented, and the visa requirements for highly skilled foreigners will be revised. These measures have the potential to boost tourism and make business travel a lot more conducive.”
Mining sector invigoration
He added that it was imperative that South Africa restored investment and exploration levels in the mining sector as “mining and mineral beneficiation activities have significant potential to drive long term growth, exports and job growth”.
Following extensive consultation that involved industry players, communities, labour and government, Cabinet approved the revised Mining Charter. This will revitalise the mining industry and provide certainty to investors while charting a sustainable path towards a transformed and inclusive industry. Ramaphosa added that parliament would be requested not to proceed with the Mineral and Petroleum Resources Development Act Amendment Bill, given that it has contributed to a lot of uncertainty in the sector. Separate legislation for the regulation of the oil and gas industry will be drafted through the government’s legislative process.
Lowering the cost of doing business
To reduce the cost of doing business, boost exports and to make South African industry more competitive, government has begun a review of various administered prices, starting with electricity, port and rail tariffs. Within the next few weeks, government will initiate the process for the allocation of high-demand radio spectrum to enable licensing, Ramaphosa added. “This will unlock significant value in the telecommunications sector, increase competition, promote investment and reduce data costs.”
Re-prioritised funding will be directed towards investments in agriculture and economic activity in townships and rural areas. Agriculture has massive potential for job creation in the immediate and long term. The interventions identified will include 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.
A significant portion of the funding will go towards export-oriented crops that are highly labour intensive, explained the President, adding that an advisory panel on land reform will be chaired by deputy president David Mabuza.
Apart from igniting economic activity in townships and rural areas, reprioritised funding would also be re-directed towards health and education. In total, the plan will result in reprioritised expenditure and new project level funding of around R50 billion. “With a view to unlocking the potential to create more jobs on a large scale we have decided to set up a South African Infrastructure Fund, which will fundamentally transform our approach to the rollout, building and implementation of infrastructure projects. The contribution from the fiscus towards the Infrastructure Fund would be in excess of R400 billion.”
A dedicated Infrastructure Execution Team in the Presidency will identify and quantify ‘shovel ready’ public sector projects, such as roads and dams, and engage the private sector to manage delivery.
In support of the stimulus efforts, the IDC would increase its approvals to R20 billion over 12 months, an increase of 20% on the previous year.