Thursday, 13 February 2020
Cape Town: President Cyril Ramaphosa says fixing the fundamentals and deepening the reforms Government has already made, should put the country on course to achieve inclusive growth.
The President said this when he delivered his State of the Nation Address during a joint sitting of Parliament on Thursday evening.
He said this as the country’s economy remained constrained due to global pressures and domestic issues such as load shedding and high levels of unemployment.
“This State of the Nation Address is therefore about inclusive growth.
“It is about the critical actions we take this year to build a capable state and place our economy on the path to recovery. This year, we fix the fundamentals. We pursue critical areas of growth,” he said.
“As we fix the fundamentals, as we deepen the reforms we have made, we pursue critical areas of inclusive growth,” he said.
Social compacting to answer the country’s many challenges
The President said over the course of the last two years – since he first stood in the House to deliver a State of the Nation Address – government has worked to forge compacts among South Africans to answer the country’s many challenges.
Through the Jobs Summit, the Presidency brought labour, business, government and communities together to find solutions to the unemployment crisis.
The Presidency continues to meet stakeholders at the beginning of every month to remove blockages and drive interventions that will save and create jobs.
“We have brought business, labour and government together to craft master plans for those industries that have the greatest potential for growth.
Removing impediments for investment
The President said government has been deliberate in rebuilding institutions and removing impediments to investment.
“We have acted decisively against state capture and fought back against corruption.
“We have steadily improved the reach of education, improved the quality of health care and tended to the basic needs of the poor,” he said.
President Ramaphosa said, however, that this has not been enough to free the economy from the grim inheritance of the past.
It has not been enough to spare the country from the debilitating effects of load shedding, nor from an unstable and subdued global economy.
Shovel-ready projects to expand private investment
The President said the Infrastructure Fund implementation team has finalised the list of shovel-ready projects and has begun work to expand private investment into public infrastructure sectors with revenue streams.
These, he said, include areas such as student accommodation, social housing, independent water production, rail freight branch lines, embedded electricity generation, municipal bulk infrastructure, and broadband roll-out.
He said the social housing programme to build rental housing for low-income families is at implementation stage, which could leverage as much as R9 billion of private investment in the construction of 37 000 rental apartments
Measures to improve energy generation
Government will be implementing measures that are set to fundamentally improve South Africa’s energy generation capacity.
“Over the next few months, as Eskom works to restore its operational capabilities, we will be implementing measures that will fundamentally change the trajectory of energy generation in our country,” President Cyril Ramaphosa said.
Eskom recently announced that the probability of load shedding was expected to increase as the power utility carries out its newly developed comprehensive maintenance plan, aimed at fixing its system which is constrained, unreliable and unpredictable.
Last December, Eskom implemented Stage 6 load shedding for the first time in its 96 year history.
Government has moved to rapidly and significantly increase generation capacity outside of Eskom by introducing measures that will be implemented in an effort to improve the constrained energy supply.
These include a Section 34 Ministerial Determination that will be issued shortly to give effect to the Integrated Resource Plan 2019, enabling the development of additional grid capacity from renewable energy, natural gas, hydro power, battery storage and coal.
“We will initiate the procurement of emergency power from projects that can deliver electricity into the grid within three to 12 months from approval. The National Energy Regulator will continue to register small scale distributed generation for own use of under 1 MW, for which no licence is required,” Ramaphosa said.
The National Energy Regulator will ensure that all applications by commercial and industrial users to produce electricity for own use above 1MW are processed within the prescribed 120 days.
The President noted that there is now no limit to installed capacity above 1MW.
“We will open bid window 5 of the renewable energy IPP and work with producers to accelerate the completion of window 4 projects,” he said.
Government will also negotiate supplementary power purchase agreements to acquire additional capacity from existing wind and solar plants.
In addition, measures will be put in place to enable municipalities in good financial standing to procure their own power from independent power producers.
The President said the load shedding of the last few months has had a debilitating effect on the economy.
“At its core, load shedding is the inevitable consequence of Eskom’s inability over many years – due to debt, lack of capacity and state capture – to service its power plants. The reality that we will need to accept is that in order for Eskom to undertake the fundamental maintenance necessary to improve the reliability of supply, load shedding will remain a possibility for the immediate future,” President Ramaphosa said.
He said where load shedding is unavoidable, it must be undertaken in a manner that is predictable and minimises disruption and the cost to firms and households.
The President said through this compact the social partners seek an efficient, productive and fit-for-purpose Eskom that generates electricity at affordable prices for communities and industries.
The President said the social partners – trade unions, business, community and government – are committed to mobilising funding to address Eskom’s financial crisis in a financially sustainable manner.
Development model to extend to 23 districts
Government is this year expected to expand the District Development Model to 23 new districts, drawing on lessons from the three pilot districts, President Cyril Ramaphosa has announced.
President Ramaphosa officially launched the first pilot site of the district-based coordination model at a Presidential Imbizo in OR Tambo District Municipality in the Eastern Cape, in September, last year. The model was then launched in the eThekwini Metro in KwaZulu-Natal and Waterberg District Municipality in Limpopo.
The model aims to address the challenge of government working in silos, resulting in a lack of coherent planning and implementation, which has made monitoring and oversight of government’s programme difficult.
Major economic reforms set to change SA’s fortunes
President Cyril Ramaphosa has announced that government will soon undertake far-reaching economic reform measures aimed at resuscitating the country’s economy.
“We need to fix our public finances. Our debt is heading towards unsustainable levels, and spending is misdirected towards consumption and debt-servicing rather than infrastructure and productive activity.
Some of these touted reforms are contained in the Economic Transformation, Inclusive Growth and Competitiveness Paper produced by National Treasury.
President Ramaphosa said the country’s low levels of growth mean it is not generating enough revenue to meet its expenses.
Finance Minister Tito Mboweni will outline a series of measures to reduce spending and improve its composition when he delivers his Budget Speech in two weeks’ time, President Ramaphosa said.