Ramaphosa’s 6 step plan to get South Africa’s economy out of the gutter

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    President Cyril Ramaphosa has outlined six key factors that need to be addressed to get South Africa’s economy back on track.

    In a keynote address to Business Unity South Africa (BUSA) on Sept. 1, Ramaphosa called on major businesses to unite with the government to address challenges by sharing resources, expertise and capabilities.

    He noted that during Covid-19, business and government teamed up and managed to deliver 37 million doses of vaccines and reuse industrial capabilities to produce necessary care units such as face masks or ventilators – with a view to a common goal.

    He said businesses and government should now have a common plan with a clear set of actions to take.

    “As we make the sweeping reforms needed to fundamentally transform our economy and society, there are several immediate issues on which we must now focus our attention and resources. As a company and government, we are broadly in agreement on what those issues are,” said Ramaphosa.

    He listed six key issues facing South Africa today:

    1. Stabilizing the country’s energy supply;
    2. Ensuring an effective and sustainable water supply;
    3. Repairing rail and port infrastructure to realize the full export potential of the economy;
    4. Free up investments in infrastructure;
    5. Fighting crime and corruption; and
    6. Improving the functioning of municipalities.

    Ramaphosa said that to address these issues, the government and business should not only agree on a mechanism for cooperation, but also finalize the ‘Framework for a Social Compact in South Africa’.

    Under the ‘social pact’, the government promises to accelerate structural reforms, improve governance of state-owned enterprises and municipalities, and protect infrastructure from sabotage. However, issues such as basic income benefits are getting a boost from business groups.

    “As government and business, we may not always agree, and we shouldn’t,” Ramaphosa said.

    Despite this, he noted that both sides have a shared responsibility to foster cooperation and consensus so that they can achieve what everyone in South Africa wants.

    “We share a common desire to see our economy grow and our people to thrive.”


    Energy

    Ramaphosa said the government is working on a new energy plan to stabilize the national power grid. He said the plan aims to improve the performance of Eskom’s existing power plants, accelerate 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 been put back into service, reducing the risk of load shedding.

    “Detailed work is underway to finalize a sustainable solution to Eskom’s debt by October 2022. We are encouraged by BUSA’s belief that we must continue to work together, leveraging all existing channels, to oversee the effective implementation of the energy plan,” said Ramaphosa.


    Water

    The president said the government is making sweeping reforms in the water sector to strengthen governance and invest more in infrastructure to ensure a sustainable, high-quality water supply.

    “We have prioritized the establishment of a National Water Resources Infrastructure Agency to take on the construction, operation, financing and maintenance of national water resources. The department is also taking a series of measures to improve the quality of water services at the municipal level,” he said.


    Import and Export

    Ramaphosa said the government is addressing both policy and operational issues in this sector.

    He said the new law on economic regulation of transport, once finalized, will ensure open and non-discriminatory third-party access to the rail network and the establishment of an economic regulator for transport.

    In the meantime, there are proposals from private operators for 16 slots to be made available by Transnet on the Durban-City Deep and Pretoria-East London lines – which is an important initiative that will enable private investment, he added.


    Infrastructure

    In the budget of the National Treasury, spending on public infrastructure has increased by 30%.

    Despite this, there are several roadblocks to increased infrastructure spending that the government is trying to address, he said.

    Through Infrastructure South Africa, the government has purchased valuable technical expertise from the private sector on board to aid project preparation and is seeking to pool resources from government, private investors, multilateral development banks and development finance institutions to more effectively fund infrastructure.


    Corruption

    On corruption, Ramaphosa said earlier this week he announced appointments to the National Anti-Corruption Advisory Council, which will oversee the government’s anti-corruption strategy and implementation of the Zondo Commission’s recommendations.

    He added that the Hawks have recently reported progress in tackling crimes that have a particularly adverse effect on business, such as money robberies, damage to critical infrastructure, pipeline fuel theft, copper cable theft and illegal mining.


    municipalities

    “The reality is that city councils are in disarray,” Ramaphosa said.

    He said the new Local Municipal System Amendment Act would go a long way in improving the functioning of municipalities.

    A recent report from the Auditor General shows that 41 of the 257 municipalities in South Africa (16%) received a clean audit in the past year. One hundred municipalities received an unqualified audit with findings, while 78 had a qualified audit with findings.

    “What we see when we look at this year’s audit results is that there has been no improvement in the status of transparency, accountability, performance or integrity of the local government,” said Auditor General Tsakani Maluleke.

    What this means is that many municipalities are unable to provide basic services and are unable to build and improve clinics and hospitals, and repair roads, Ramaphosa said.


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