The big plan to grow South Africa’s economy by at least 3%
If South Africa successfully expedites reforms, achieves operational improvements at Transnet and Eskom, and swiftly mobilises private sector investment, it could see GDP growth reach 3.3% by the end of 2025 and create millions of new jobs by 2029.
This would ultimately improve sentiment and overall investment flows toward the country.
These were the projections given by President Cyril Ramaphosa, ministers and some of South Africa’s top CEOs at the launch of Phase 2 of the Government Business Partnership at the Industrial Development Corporation on 1 October.
These economic growth predications are seen to be ambitious, given that the economy grew by 1.9% in 2022 and 0.7% in 2023 and GDP is expected to average about 1% in 2024.
However, Adrian Gore, Business Unity South Africa (BUSA) Vice President and co-convenor of the partnership believes that this can be achieved.
“We are setting out stretched goals, but the prize is big; if we keep our heads down, it really can be done,” said Gore.
“Research commissioned by us from the Bureau for Economic Research shows how big the prize is – if we expedite reforms, more quickly achieve operational improvements at Transnet and Eskom, and swiftly mobilise private sector investment – we could see GDP growth reach 3.3% by the end of 2025, providing a crucial uplift from the current baseline,” he added.
In 2023, organised business (comprising about 150 CEOs) pledged its support to the government, offering expertise and capital to help fix the country’s problems in three key areas: electricity, transport and logistics, and crime and corruption.
This support was known as Phase 1.
During Phase 1, businesses contributed over R250 million in direct funding, deployed more than 350 experts, and engaged 57 companies in power station interventions, contributing over 9,000 hours to Eskom.
The contribution of the partnership, working alongside other stakeholders, led to the dramatic reduction in load shedding, which crippled the country’s economy, stands out as an important achievement.
Additionally, R700 million was invested in key transport corridors, over 500 security personnel were assigned to Transnet Freight Rail, resulting in a 50% reduction in security incidents on critical coal transport lines, and R57 million was allocated to establish a forensic analysis centre.
Building on this momentum, Phase 2 will aim to scale these efforts “with increased resources and a clear set of actions to contribute to more rapid economic growth,” said the Presidency and Business For South Africa (B4SA) in a joint statement.
President Cyril Ramaphosa said that “the collaborative efforts of this partnership, and the progress we have made so far, are well aligned with the priorities of the Government of National Unity.”
“Together, we are advancing our bold ambition to move South Africa forward. We are witnessing renewed investor confidence, which speaks to the success of our approach.
“With a more focused and determined effort, Phase 2 will continue to tackle key challenges and contribute to momentum on transformation, economic recovery and long-term prosperity,” added the President.
Gore said that “central to Phase 2 is our shared vision to create a virtuous cycle of growth, jobs and improved narrative and confidence.”
“Sentiment is crucial because it underpins fundamentals, and the work we are doing to foster a more positive narrative is beginning to yield results,” he added.
They said that the key to unlocking growth will be accelerated reforms across the three focal areas:
Energy
Phase 2 aims to enhance long-term energy security by maintaining an Energy Availability Factor (EAF) above 64%, unlocking R23 billion in private investment, boosting renewable capacity to 4GW, and constructing 1,000 km of new transmission lines.
The Department of Energy will facilitate private sector investment in generation, fast-track new capacity procurement, strengthen regulatory frameworks, and expand the transmission network.
Transport & Logistics
By 2025, the partnership targets R28 billion in rail infrastructure investment, increasing rail capacity to 193 million tons to enhance exports and job creation.
Key initiatives include expediting network statements, enabling third-party rail access by Q4 2024, and establishing regulatory bodies to oversee reforms in rail and port operations.
Crime and Corruption:
The partnership’s immediate goal is to support South Africa’s removal from the FATF grey list to boost investor confidence.
This includes establishing a Digital Evidence Unit for prosecuting state capture cases.
In addition to these focal areas, the partnership said that it aims to create 400,000 jobs for youth by 2026 through collaborations, improving tourism visas, and enhancing skills for digital and green industries.
Efforts also include supporting township economies and scaling job platforms like SAYouth.mobi.
Martin Kingston, Chair of the B4SA steering committee, said that “the country, and indeed the business sector, is energised by the uptick in sentiment, but we cannot afford to become complacent or to take our foot off the pedal in driving these crucial reforms forward.”
“We need to mobilise additional funding and resources to deliver on key tangible outcomes.”
Minister of Agriculture and Democratic Alliance leader John Steenhuisen told BusinessTech that “this is exactly what South Africa needs—we have already seen the successes coming from Phase 1, and we now need to accelerate it into high gear.”
“This is a welcome development that we embrace wholeheartedly; public-private partnerships are the way to go, and it ties in with the mission of the GNU of growth and jobs and bringing together the builders in South Africa with a common purpose of taking the country forward,” he added.
Minister in the Presidency Khumbudzo Ntshavheni said that this marked “a very important day for South Africa.”
“We as the government will continue working alongside business and labour to create a conducive environment for these targets to be met.”
Read: Government to step in against Eskom’s massive 36% price hike
Loading ...
