Thursday, 15 October 2020

Cape Town: While the COVID-19 pandemic has caused much damage to the South African economy, Government’s newly unveiled Economic Reconstruction and Recovery Plan, is set to rebuild the economy and create much needed jobs.

President Cyril Ramaphosa announced details of the long-awaited recovery plan during a joint sitting of the National Council of Provinces and the National Assembly on Thursday.

The President highlighted that the pandemic caused additional strain on an already weak economy, to employment, to livelihoods, to public finances and to state owned companies.

This as Statistics South Africa’s announcement that the economy shrank  by 16.4% from the first quarter to the second quarter of 2020, while more than two million people lost their jobs in the second quarter of this year.

In addition, National Treasury expects a significant shortfall in revenue collection.

While the economic shock is unprecedented, extraordinary effort is required to recover from it.

“As even the darkest of clouds has a silver lining, we need to see this moment as a rupture with the past and an opportunity to drive fundamental and lasting change.

The President said this presents an opportunity not only to recover the ground lost, but to place the country’s economy on a new path to growth.

The plan builds on the common ground established by the social partners – government, labour, business and community organisations – through intensive and detailed consultations over the last few months.

The work to rebuild the economy after the devastation of Coronavirus is guided by Vision 2030 of the National Development Plan and the programme that was outlined at the beginning of the sixth democratic administration.

The creation of jobs is at the centre of the plan with the President emphasising the importance of getting people back into jobs they lost as a result of the pandemic.

“We are determined to create more employment opportunities for those who were unemployed before the pandemic or who had given up looking for work.”

This will be done though the implementation of necessary reforms, removing regulatory barriers that increase costs and create inefficiencies in the economy, securing energy supply, and freeing up digital infrastructure.

Interventions in the plan will  see the country achieve sufficient, secure and reliable energy supply within two years while also creating and supporting over 800 000 work opportunities in the immediate term to respond to job losses.

According to the modelling done by National Treasury, the implementation of the plan will raise growth to around 3% on average over the next 10 years.

Interventions

The plan speaks to four priority interventions with the first being South Africa embarking on a  massive rollout of infrastructure.

“Infrastructure has immense potential to stimulate investment and growth, to develop other economic sectors and create sustainable employment both directly and indirectly.

We have developed a robust pipeline of projects that will completely transform the landscape of our cities, towns and rural areas,” he said.

By the end of June 2020, the country had 276 catalytic projects with an investment value of R2.3 trillion.

A list of 50 strategic integrated projects and 12 special projects was gazetted in July 2020.

These catalytic projects have been prioritised for immediate implementation with all regulatory processes fast-tracked – enabling over R340 billion in new investment.

These projects he said, are at various stages of the project life cycle.

Government is also exploring the use of credit enhancing instruments to unlock bulk water infrastructure and national roads improvement projects.

The infrastructure build programme will focus on social infrastructure such as schools, water, sanitation and housing. It will also focus on critical network infrastructure such as ports, roads and rail that are key to economic competitiveness.

Energy generation

The second priority intervention is to expand energy generation capacity with government accelerating the implementation of the Integrated Resource Plan to provide a substantial increase in the contribution of renewable energy sources, battery storage and gas technology.

This should bring around 11 800 MW of new generation capacity into the system by 2022. More than half of this energy will be generated from renewable sources.

In the immediate term, agreements will be finalised with Independent Power Producers (IPPs) to connect over 2 000 MW of additional capacity from existing projects by June 2021.

The Risk Mitigation Power Procurement Programme will unlock a further 2 000 MW of emergency supply within twelve months.

Meanwhile, the process to implement bid window 5 of the renewable energy programme has begun while further steps are being taken to enable power generation for own-use.

The current regulatory framework will be adapted to facilitate new generation projects while protecting the integrity of the national grid.

In addition, the work of restructuring Eskom into separate entities for generation, transmission and distribution continues.

A long-term solution to Eskom’s debt burden will be finalised, building on the Social Compact on Energy Security recently agreed to by social partners.

“Through these measures, we aim to achieve sufficient, secure and reliable energy supply within two years.”

Employment stimulus

 

The third key intervention is that of employment stimulus to create jobs and support livelihoods.

President Ramaphosa said large-scale job interventions driven by the state and social partners have proven effective in many countries.

He said R100 billion has been committed over the next three years to create jobs through public and social employment as the labour market recovers.

“This starts now, with over 800 000 employment opportunities created in the months ahead.”

The employment stimulus is focused on those interventions that can be rolled out most quickly and have the greatest impact on economic recovery.

At the heart of the employment stimulus is a new, innovative approach to public employment which harnesses the energies and capabilities of the wider society.

It uses the considerable creativity, initiative and institutional resources that exist in society to respond to local community priorities.

The President said traditional forms of public employment are being scaled up and new forms of public employment created to meet the immediate need while natural resource management programmes such as Working on Fire and Working for Water will be expanded.

“We are going to create 300 000 opportunities for young people to be engaged as education and school assistants at schools throughout the country, to help teachers with basic and routine work so that more time is spent on teaching and enabling learners to catch up from time lost because of COVID-19.”

More than 60,000 jobs will be created for labour-intensive maintenance and construction of municipal infrastructure and rural roads.

To support our healthcare system, an additional 6 000 community health workers and nursing assistants will be deployed as the country moves to implement the National Health Insurance.

Public employment will be expanded at the provincial and city level, contributing to cleaner, greener and safer public spaces and improved maintenance of facilities.

To assist young people who are unemployed to access opportunities, government will launch the national Pathway Management Network as a platform for recruitment and other forms of support.

Support is being provided to more than 100 000 early childhood development practitioners and to 75 000 small-scale farmers whose production was disrupted by the pandemic.

Grant-making programmes are being expanded in the creative, cultural and sports sector, and funding has been allocated to protect jobs in cultural institutions such as museums and theatres.

In addition, more than 40 000 vulnerable teaching posts are being secured in schools which have lost income from fees.

“As these and other recovery measures are being rolled out, we need to do everything in our means to provide support to those in society who continue to face hunger and distress.

We will therefore be extending the Special COVID-19 Grant by a further 3 months,” said the President.

This will maintain a temporary expansion of social protection and allow the labour market sufficient time to recover.

Industrial growth

 

With the fourth intervention focussed on industrial growth,  government will support growth in local production and make South African exports more competitive.

Through the first two South African Investment Conferences, the country secured pledges of around R664 billion in new investment.

To date, just under R170 billion of capital expenditure was committed during those investment conferences.

“Our agricultural sector has continued to grow, with a bumper maize harvest and the expansion of many high-value crops.  We have positioned South Africa as one of the most attractive destinations in the world for global business services.”

The President also emphasised the importance of partnerships while also highlighting that the country currently imports around R1.1 trillion of goods, excluding oil, each year.

“If we were to manufacture just 10% of these goods locally, it is estimated that we could add 2 percentage points to our annual GDP,” he said.

Get the entire Economic Reconstruction and Recovery Plan on https://www.gov.za/sites/default/files/gcis_document/202010/south-african-economic-reconstruction-and-recovery-plan.pdf.