South African president Cyril Ramaphosa on Thursday unveiled a plan aimed at helping the economy recover from the ravages of the coronavirus and a lockdown that was implemented to curb its spread.
“The damage caused by the pandemic to an already weak economy, to employment, to livelihoods, to public finances and to state-owned companies has been colossal,” Ramaphosa told lawmakers.
“We need to see this moment as a rupture with the past and an opportunity to drive fundamental and lasting change,” placing the economy on “a new path to growth,” he said.
These are the key points:
- The government is targeting 3% average annual economic growth over the next decade.
- A presidential panel will be established to reduce the time it takes to make decisions on projects that could help grow the economy.
- A state infrastructure fund will provide R100 billion ($6 billion) in finance, a measure the government hopes will unlock a further trillion rand in investment.
- About 11,800 megawatts of new power generation capacity will be brought on line from 2022, more than half of which will come from renewable sources.
- Agreements will also be finalized with independent power producers to supply another 2,000 megawatts of capacity from existing projects by June 2021.
- About R13.8 billion will be spent on creating 800,000 jobs and economic opportunities by the end of March next year. A further R86.2 billion will be spent on employment creation over the next two years.
- The government will seek to promote industrialization by increasing local production and procurement.
- Data costs will be reduced and broadband expanded to poor households.
The time it takes to secure mining and water licenses will be halved.
- A R350 welfare grant for those who don’t qualify for other government support will be extended by three months.
The government intends hiring 300,000 teacher assistants and allocating grants to about 75,000 small-scale farmers. More than 60,000 road-construction jobs will also be created and an additional 6,000 community health workers and nursing assistants will be hired.
“The details, which are still thin, will be laid out at the upcoming Medium Term Budget Statement. We expect a further deterioration in the budget as a result of this additional stimulus,” said economist, Boingotlo Gasealahwe.
“It appears to be more of a lofty wish list than a concrete policy plan,” said Casey Delport, an investment analyst at Anchor Capital.
“Whilst the significant boost in infrastructure development and increased focus on employment creation is greatly needed, very little detail was provided as to how government plans to finance the ambitious goals.”
The president didn’t specify whether budget-deficit targets will be revised, with finance minister Tito Mboweni expected to release details in his medium-term budget on 28 October.