By Jessie Taylor
The state of the nation is linked inextricably to the state of our economy. These were the words of President Cyril Ramaphosa as he delivered the State of the Nation Address in Cape Town on Thursday, 10 February. During his address, President Ramaphosa outlined several measures to reignite South Africa’s economy after the devastating effects of the COVID-19 pandemic. The country’s priorities will remain to overcome the pandemic, roll out infrastructure, increase local production, stimulate employment, and expand energy generation capacity.
Putting South Africans to work
The pandemic has put more than two million South Africans out of work. However, President Ramaphosa said the country is moving towards a new phase in its management of the pandemic. “It is our intention to end the national state of disaster as soon as we have finalised other measures under the National Health Act and other legislation to contain the pandemic. Nearly all restrictions on economic and social activity have already been lifted,” said President Ramaphosa.
COVID-19 – along with the divides of race, geography and education – has deepened the divide between those with jobs and those without. This was made evident in 2021 when South Africa’s employment level reached a record high, said President Ramaphosa.
To bolster employment, the Government will be expanding public and social employment. This includes the Presidential Employment Stimulus programmes, launched in 2022, which has created over 850 000 work opportunities.
“The total number of direct beneficiaries will soon rise to over one million South Africans. This includes over half a million young people appointed as education assistants, making it the largest youth employment programme ever undertaken in our history,” said President Ramaphosa. The employment stimulus will also enable the Department of Home Affairs to recruit 10 000 unemployed young people to digitise paper records, enhance their skills, and contribute to the modernisation of citizen services.
In addition, the Social Employment Fund will create a further 50 000 work opportunities in areas such as urban agriculture, early childhood development, public art and tackling gender-based violence.
“As we work to grow the economy and create jobs, we will expand support to poor families to ensure that no person in this country has to endure the pain and indignity of hunger,” said President Ramaphosa. He announced that the Social Relief of Distress Grant, which has provided support to more than 10 million unemployed people, has been extended by another year.
Creating an environment for business
The private sector remains essential for increasing job creation, with around 80% of all the people employed in South Africa working in the private sector.“We all know that Government does not create jobs. Business creates jobs,” said President Ramaphosa.
“The key task of government is to create the conditions that will enable the private sector – both big and small – to emerge, to grow, to access new markets, to create new products, and to hire more employees.” He said that fundamental reforms would need to be implemented to revive economic growth after the pandemic.
This requires a consensus among South Africans that recognises a shared responsibility in transforming the economy. At the same time, the State must work to create an environment in which the private sector can invest.
The Government has given itself a deadline of 100 days to finalise a comprehensive social compact to grow our economy, create jobs and combat hunger. “This work will build on the foundation of the Economic Reconstruction and Recovery Plan, which remains our common programme to rebuild the economy,” said President Ramaphosa.
In its plans to revive the economy, the Government will be taking measures to unleash the potential of small businesses, micro-businesses and informal businesses. “These are the businesses that create the most jobs and provide the most opportunities for poor people to earn a living. We have started discussions with social partners as part of the social compact process to review labour market regulations for smaller businesses to enable them to hire more people while continuing to protect workers’ rights,” said President Ramaphosa.
One of the measures that will come into effect is a new, redesigned loan guarantee scheme. This will help small businesses to bounce back from the pandemic and civic unrest. The new scheme will involve development finance institutions and non-bank SME providers offering finance, expanding the types of financing available and adjusting eligibility criteria to encourage greater uptake.
In addition, the Business Act and other legislation that affects SMMEs will go under review to reduce the regulatory burden on informal businesses.
“There are too many regulations in this country that are unduly complicated, costly and difficult to comply with. This prevents companies from growing and creating jobs. We are therefore working to improve the business environment for companies of all sizes through a dedicated capacity in the Presidency to reduce red tape,” said President Ramaphosa.
Building blocks of the economy
To encourage companies to invest in the economy, the Government has several infrastructure projects planned to improve ports and railways.
“Our economy cannot grow without efficient ports and railways. Over several years, the functioning of our ports has declined relative to ports in other parts of the world and on the African continent. This constrains economic activity,” he said.
Industries, such as the agricultural sector, rely on well-run ports to export produce.
Transnet is focused on improving operational efficiencies at the ports through procuring additional equipment and implementing new systems to reduce congestion. The Durban and Ngqura Container Terminals will be the initial focus, and Transnet plans to request proposals from private partners.
Transnet will start the process of providing third-party access to its freight rail network from April by making slots available on the container corridor between Durban and City Deep in Gauteng.
The Government is also rehabilitating the passenger rail network in 10 priority corridors.
“Infrastructure is central to our economic reconstruction and recovery. Through innovative funding and improved technical capabilities, we have prioritised infrastructure projects to support economic growth and better livelihoods, especially in energy, roads and water management,” said the President.
Central to this effort is the Infrastructure Fund, which has a R100-billion allocation from the fiscus over ten years. The Fund works with state entities to prepare a pipeline of projects with an investment value of approximately R96-billion in student accommodation, social housing, telecommunications, water and sanitation and transport. Several catalytic projects to the value of R21-billion are expected to start construction this year.
The Government will make an initial investment of R1.8-billion in bulk infrastructure, which will unlock seven private sector projects to the value of R133-billion, said President Ramaphosa.
Reviving industry
At the core of the country’s Economic Reconstruction and Recovery Plan is a drive to increase manufacturing and exports. This has seen new master plans in the steel industry, furniture and global business services launched in the last year.
“Through these plans, business, government and labour are working together to increase production and create more jobs in the sector,” said President Ramaphosa.
The agriculture sector has significant potential for job creation in crops such as citrus, table and dried grapes, subtropical fruit, avocadoes, berries and nuts. The President said that masterplans in the sugar and poultry industries contribute significantly to increased investment, improved production, and transformation.
Focusing on manufacturing and exports is essential now that trading can begin under the African Continental Free Trade Area agreement. “South African companies are poised to play a key role in taking up the opportunities that this presents for preferential access to other African markets. The Free Trade agreement is about Africa taking charge of its destiny and growing its economies faster,” said president Ramaphosa.
“We will continue to pursue Africa’s health sovereignty, working with other African countries and international partners to support the strengthening of the continent’s capacity to respond to pandemics.”
A key focus in the manufacturing sector is the production of vaccines. The country has two companies – Aspen and Biovac – with contracts to produce COVID-19 vaccines. Two additional vaccine projects have also been announced. There is also full local production capability for ventilators, hand sanitisers, medical-grade face masks and gloves and therapeutic drugs and anaesthetics.
“This production capability, worth many billions of rands of production annually, has been put in place in less than two years. South African products have been exported to other African countries, securing vital supplies [for them] and expanding jobs for young South Africans,” said President Ramaphosa.
Tackling climate change
South Africa is one of the regions of the world that is most affected by climate change. During the last year, extreme weather events associated with global warming have taken place in KwaZulu-Natal, Gauteng, and the Eastern Cape.However, the Government has made important strides in the fight against climate change.
For the first time, South Africa’s climate targets are compatible with limiting warming to 1.5°C, as per the commitment made under the Paris Climate Agreement.
The country has also struck a historic deal with the European Union, France, Germany, the United Kingdom and the United States. The R131-billion deal will involve repurposing and repowering some coal plants that are reaching the end of their lives and creating new livelihoods for workers and communities most impacted by this change.
Former Deputy Governor of the Reserve Bank, Daniel Mminele, has been appointed as Head of the Presidential Climate Finance Task Team to mobilise funds for the country’s just energy transition. “Properly managed, the energy transition will benefit all. Renewable energy production will make electricity cheaper and more dependable and will allow our industries to remain globally competitive,” said President Ramaphosa.
The mining sector will be able to expand to strategic minerals that are crucial for clean energy, like platinum, vanadium, cobalt, copper, manganese and lithium. There are also opportunities in green hydrogen, given our world-class solar and wind resources and local technology and expertise, said President Ramaphosa.
“All of these measures – from structural reforms to support for SMMEs, investments in infrastructure and the emergence of new sectors – will drive a turnaround in economic growth driven by the private sector growth over the coming years.”
Creating a corruption-free society
“None of our efforts to revive our economy will succeed if we do not tackle the scourge of corruption once and for all,” said President Ramaphosa.
He referenced the work of the Commission of Inquiry into State Capture headed by Acting Chief Justice Raymond Zondo, saying the reports generated by the Commission clearly showed ‘state capture’. Some of the organisations targeted included SAA, Transnet, Denel, South African Revenue Service and Government Communications.
“This means that public institutions and state-owned enterprises were infiltrated by a criminal network intent on looting public money for private gain,” he said.
“State capture had a direct and very concrete negative impact on the lives of all South Africans, but especially the poorest and most vulnerable members of our society. It has weakened the ability of the state to deliver services and to meet the expectations and constitutional rights of people.”
The president has vowed to present an action plan in response to the Commission’s recommendations by the end of June, as well as strengthen the system to protect whistle-blowers.
“Many individuals and companies that the Commission has found were responsible for state capture must now be held to account. I have every confidence that the National Prosecuting Authority will carry out the further investigations that the Commission has recommended and that it will bring the members of the criminal network that infiltrated Government and captured the state swiftly to justice,” he said.
There are also discussions underway with the Judiciary to create special court rolls for state capture and corruption cases.
“The fight against corruption will take on a new intensity thanks to the outcomes of the State Capture Commission, the strengthening of law enforcement agencies and the implementation of new anti-corruption practices in the public service,” President Ramaphosa said.
Putting public service first
The Government has embarked on several immediate measures to restore State-owned enterprises (SEOs) to health, including reforms that will make these companies more efficient, competitive, accountable and sustainable.
“State-owned enterprises play a vital role in our economy. From water and roads, to energy and ports, to defence and aviation, these strategic assets are necessary to keep our country running. It is essential that we reverse their decline and position them to contribute positively,” said President Ramaphosa.
The Presidential SOE Council has recommended that Government adopt a centralised shareholder model for its key commercial state-owned companies. This would separate the state’s ownership functions from its policy-making and regulatory functions, minimise the scope for political interference, introduce greater professionalism and manage state assets in a way that protects shareholder value.
“As part of this, preparatory work has begun for the establishment of a state-owned Holding Company to house strategic SOEs and to exercise coordinated shareholder oversight. To ensure that state-owned enterprises are effectively fulfilling their responsibilities, the Presidential SOE Council is preparing recommendations on state-owned entities to be retained, consolidated or disposed of,” the president said.
In addition, the Government will soon be finalising a framework for the professionalisation of the public service. This will include tighter measures for recruitment of public servants, continuous professional development through the National School of Government and partnerships between state bodies, professional associations and universities. Lifestyle audits are already being implemented across the public service.
“Government must work for the people. That is why our foremost priority is to build a capable, ethical and developmental state,” said President Ramaphosa. The District Development Model (DDM), which brings all three spheres of Government together with other social partners in every district to grow inclusive local economies and improve the lives of citizens, will continue this year.
The DDM facilitates integrated planning and budgeting across spheres of Government and improves the integration of national projects at a district level.
Despite the challenges of the last few years, South Africans have the potential to transform their economy and create a society in which equality exists at every level.
“Our country has suffered several damaging blows in recent times. A confluence of forces, many of them outside of our control, has brought us to where we are now. We face steep and daunting challenges. Indeed, we are engaged in a battle for the soul of this country. But there can be no doubt that we will win,” said President Ramaphosa.
“I ask every South African to rally together in our fight against corruption, in our fight to create jobs, in our fight to achieve a more just and equal society.”
A focus on energy
South Africa’s electricity crisis is one of the greatest threats to economic and social progress, said President Cyril Ramaphosa. The country has an electricity shortfall of around 4,000 MW, which the Government plans to address with several new energy generation projects over the next few years. These include:
Over 500 MW from the remaining projects in Bid Window 4 of the renewable energy programme, which are at advanced stages of construction
2,600 MW from Bid Window 5 of the programme, with preferred bidders announced last year
2,600 MW from Bid Window 6 of the programme, which will soon be opened
800 MW from risk mitigation power projects
3,000 MW of gas power and 500 MW of battery storage, for which requests for proposals will be released later this year
4,000 MW from embedded generation projects in the mining sector
1,400 MW secured by various municipalities
In addition, the unbundling of Eskom is expected to be completed by the end of the year, and Cabinet has approved amendments to the Electricity Regulation Act for public comment.
Water security commitments
The Government has prioritised institutional reforms to ensure water security, investment in water resources and maintenance of existing assets. These include:
An institutional reform process to capacitate the Department of Water and Sanitation
Reviewing water boards and their mandates to ensure service delivery to municipalities
The water licence application process is to be streamlined through a comprehensive turnaround plan
A National Water Resources Infrastructure Agency will be established, with a white paper published for public comment within the next month
The water quality monitoring system has been reinstated to improve enforcement of water standards at a municipal level
The uMzimvubu Water Project, which includes infrastructure, a hydro-electric plant, Ntabelanga water treatment works and bulk distribution infrastructure at Ntabelanga Dam and Lalini Dam
Sources:
EWN
Mail and Guardian
The Daily Maverick
ECR
