Ramaphosa’s 6-step plan to pull South Africa’s economy out the gutter
President Cyril Ramaphosa has outlined six key factors that need to be addressed for South Africa’s economy to be put back on track.
In a keynote address to Business Unity South Africa (BUSA) on 1 September, Ramaphosa called on big business to unite with the government to overcome challenges through sharing resources, expertise and capabilities.
He noted that during Covid-19, business and government partnered together and managed to deliver 37 million vaccination doses and repurpose industrial abilities to produce necessary care units like face masks or ventilators – in the pursuit of a common goal.
He said that businesses and government must now have a common plan with a clear set of actions that need to be undertaken.
“As we undertake the far-reaching reforms necessary to fundamentally transform our economy and society, there are several immediate issues on which we must focus attention and resources right now. As business and government, we are in broad agreement on what those issues are,” said Ramaphosa.
He listed six key issues facing South Africa today:
- Stabilising the country’s energy supply;
- Ensuring an effective and sustainable supply of water;
- Fixing rail and port infrastructure to realise the full export potential of the economy;
- Unlocking investment in infrastructure;
- Combating crime and corruption; and
- Improving the functioning of municipalities.
Ramaphosa said that to address these issues, the government and businesses must not only agree on a mechanism for collaboration but must also finalise the ‘Framework for a Social Compact in South Africa’.
Under the ‘social compact’, the government pledges to accelerate structural reforms, improve governance of state companies and municipalities, and protect infrastructure against sabotage. However, issues regarding things such as the basic income grant have received pushback from business groups.
“As government and business, we may not always agree, nor should we,” said Ramaphosa.
Despite this, he noted that both parties have a shared responsibility to nurture cooperation and consensus so that they can realise what South Africa everyone wants.
“We share a common desire to see our economy grow and our people thrive.”
Ramaphosa said that the government is working on a new energy plan to stabilise the national power grid. He said that the plan aims to improve the performance of Eskom’s existing power stations, accelerate the procurement of new generation capacity, increase private investment in generation and enable businesses and households to invest in rooftop solar.
He added that since the plans were announced in July, additional generation units at Eskom have returned to service – reducing the risk of load shedding.
“Detailed work is underway to finalise a sustainable solution to Eskom’s debt by October 2022. We are encouraged by BUSA’s view that we need to continue to work together, utilising all existing channels, to oversee the energy plan’s effective implementation,” said Ramaphosa
The president said that the government is undertaking far-reaching reforms in the water sector to strengthen governance and increase investment in infrastructure to ensure a sustainable supply of quality water.
“We have prioritised the establishment of a National Water Resources Infrastructure Agency to undertake the building, operation, financing and maintenance of national water resources assets. The department is also putting in place a range of measures to improve the quality of water services at the municipal level,” he said.
Import and export
Ramaphosa said that the government is addressing both policy and operational issues in this sector.
He said the new Economic Regulation of Transport Bill, once finalised, will provide for open and non-discriminatory third-party access to the rail network and the establishment of a Transport Economic Regulator.
In the interim, proposals are due from private operators for 16 slots made available by Transnet on the Durban-City Deep and Pretoria-East London lines – which is a major initiative that will enable private investment, he added.
The National Treasury’s budget has seen a 30% increase in spending on public infrastructure.
Despite this, there are several blockages to increased infrastructure spending, which the government is working to address, he said.
Through Infrastructure South Africa, the government has bought on board valuable technical expertise from the private sector to assist in the preparation of projects and is seeking to pool resources from government, private investors, multilateral development banks and development finance institutions to fund infrastructure more effectively.
On the topic of corruption, Ramaphosa said that earlier this week, he announced appointments to the National Anti-Corruption Advisory Council, which is set to oversee the government’s anti-corruption strategy and the implementation of the recommendations of the Zondo Commission.
He added that the Hawks recently reported progress in dealing with crimes that have a particularly detrimental impact on business, such as cash-in-transit heists, damage to essential infrastructure, pipeline fuel theft, copper cable theft and illegal mining.
“The reality is that municipal administrations are in disarray,” said Ramaphosa.
He said that the new Local Municipal Systems Amendment Bill would go a long way in improving the functioning of municipalities.
A recent report by the Auditor-General showed that 41 of South Africa’s 257 municipalities (16%) received a clean audit over the last year. One hundred municipalities received an unqualified audit with findings, while 78 had qualified audits with findings.
“What we see looking at this year’s audit outcome is that there is no improvement in the status of transparency, accountability, performance, or integrity of local government,” said the auditor-general Tsakani Maluleke.
What this means is that many municipalities are unable to deliver basic services and are unable to build and upgrade clinics and hospitals, and fix roads, said Ramaphosa.