PROGRESS IN IMPLEMENTING THE ECONOMIC RECOVERY PLAN - ANC TG, Paul Mashatile
Significant progress is being made in implementing the South African Economic Reconstruction and Recovery Plan. Announced by President Cyril Ramaphosa in October last year, the Plan outlines interventions towards reversing the stagnation of the South Arica economy, elevated levels of inequality, poverty and unemployment as well as subdued development; all of which were once again forcefully highlighted by the COVID-19 crisis.
The Plan recognizes that the economic recovery process is a collective responsibility of all social partners. It also recognizes that the path to economic reconstruction and recovery involves a series of interlinked actions; from industrial policy, macro-economic policy, structural reforms, energy security, sectoral interventions to the strengthening of institutions. The Plan identifies an array of tools that are listed as pillars of economic reconstruction and recovery. It also identifies enablers necessary for the successful implementation of the Plan. Both the pillars and enablers of the Plan need to be implemented effectively and simultaneously if South Africa is to experience the much needed economic turnaround.
It is encouraging that significant progress is being made in implementing key aspects of the Plan. The following are some of the areas where notable progress is being made:
On aggressive infrastructure investment
Modernizing and reforming network industries such as electricity, roads, rail, ports and telecommunications are critical components of the economic reconstruction and recovery effort. They are also major drivers of our country’s aggressive infrastructure investment programme.
As announced by Comrade Tito Mboweni in the Budget Speech, government has committed R 791.2 billion towards infrastructure investment, focusing on network industries, over the next three years. The infrastructure investment programme is supported by partnerships with the private sector and other players through initiatives such as the Infrastructure Fund.
On reindustrialization through localization
To boost local manufacturing, social partners at NEDLAC have agreed to jointly implement a Buy Local Campaign. The social partners have also committed to reducing imports by 20% over the next five years with a view to contribute towards rejuvenating and reviving local manufacturing.
In this regard, 42 products – including Personal Protective Equipment, steel products, green economy inputs, edible oils and furniture – will be sourced locally. In addition, 1 000 locally produced products have been designated for procurement from local SMMEs. SMMEs are also being assisted to access larger domestic and international markets.
The implementation of sector Master Plans is an important intervention aimed at strengthening key economic sectors. Already, 4 sector Master Plans are being implemented: in the poultry; sugary; clothing, textile, foot-wear and leather industries.
Government is working closely with the automotive sector to increase investment and jobs in this sector. The result of this work can be seen from:
- The R 16 billion additional investment by the Ford Motor Company at the Tshwane Automotive Special Economic Zone;
- The announcement by Toyota to invest in their KZN facility to start the first generation of their hybrid vehicles to be manufactured out of South Africa; and
- Announcements by Isuzu, Mercedes Benz and Nisan to expand their investment in our country.
On stimulating mass employment
The Presidential Employment Stimulus is one of the most significant interventions aimed at creating mass employment opportunities in our country. It covers areas such as education, arts and culture, global business services, early childhood development, and small-scale and subsistence farming.
By the end of January 2021, over 430 000 opportunities had already been supported through the stimulus, and a further 180 000 opportunities are currently in the recruitment process.
Government has allocated R 83.2 billion for public employment programmes and an additional R 11 billion has been allocated for the Presidential Employment Stimulus programme. This means nearly R 100 billion has been budgeted for direct employment creation programmes.
On support for tourism
To preserve and rejuvenate the supply side of the tourism sector, government working together with commercial banks, have established an R 1.2 billion Tourism Equity Fund. The Fund will support transformation in tourism by expanding the participation of black people, women, youth as well as township and rural tourism entrepreneurs in the mainstream of the sector. It will also contribute towards the long-term sustainability of the sector, which has been identified as one of the key drivers of economic reconstruction and recovery.
On the expansion of energy generation
The ANC is alive to the reality that the effectiveness of our reconstruction and recovery effort will depend largely on the scale and pace at which new electricity generation capacity can be brought onto the grid. In this regard, we have committed ourselves to pursue several measures, simultaneously.
These include the procurement of new generation capacity in line with the Integrated Resources Plan – focusing on renewable energy, the procurement of emergency power, improving the efficiency of Eskom, and enabling energy generation by private firms and households for own use. These measures will create massive scope for private sector involvement in meeting our country’s energy needs.
In December last year, government, organized labor and representatives of community constituencies signed the Framework Agreement for the Social Compact on Supporting Eskom for Inclusive Economic Growth.
This is a significant development that will help place Eskom firmly on a path to financial and operational viability. It will also strengthen South Africa’s energy security; and thus support inclusive and accelerated growth.
On enablers for the Plan
With regards to the implementation of the enablers of the Plan, it is encouraging that progress is being made in amending Regulation 28 of the Pension Funds Act. The amendment of Regulation 28 has now been Gazetted.
This is an important development that will make additional resources available to fund the reconstruction and recovery effort, especially to fund our massive infrastructure roll out. This is also an indication of the willingness by social partners to work together towards the success of the Economic Reconstruction and Recovery Plan.
Also encouraging, is the progress being made in implementing structural economic reforms. The reforms are aimed at removing brakes to economic growth by fundamentally altering the structure of the South African economy, lowering barriers to entry, broadening ownership patterns, raising productivity and lowering the cost of doing business.
The ANC government intends staying the course with regards to the implementation of structural reforms; many of whom are a product of consensus at NEDLAC.
Our continent offers major opportunities for investment and growth. This is particularly the case in the context of COVID-19 where some of our major trading partners are inwardly focused; seeking to rebuild first and foremost their local economies and industries.
In this era of economic nationalism, we must continue to foster greater integration, trade and investment within our continent. Accordingly, we are encouraged by the coming into operation of the Africa Continental Free Trade Area. This is an important milestone in the development of our continent.
It heralds a new era of industrialization, infrastructure development, growth as well as intra Africa trade and investment. It gives us hope that: as predicted by that African intellectual, Pixley ka Isaka Seme, more than a century ago, a brighter day is rising upon Africa.
At a practical level and in in order to take advantage of opportunities presented by the Africa Continental Free Trade Agreement, in particular to improve access to African markets, 6 of our country’s busiest border posts, staring with Beitbridge, will be upgraded and expanded.
As we implement the Plan, we will continue to strengthen the role of township and village economies; SMMEs and cooperatives especially in our programme of reindustrialization through localization.
We will also be deliberate in promoting access to sustainable local and international markets for SMME’s and cooperatives.
We will amend relevant regulations to allow for set asides and expanded participation by SMMEs and cooperatives in the economic mainstream. We are particularly determined to fast track the finalization of the Public Procurement Bill to, among others, cater for set asides for SMME’s and co-operatives as part of localization.
Our focus will also be on accelerating the economic inclusion of women, young people and persons with disabilities.
Work will also continue to restructure, repurpose and ensure the financial sustainability of SOEs. Ultimately, our goal is to ensure that our SOEs are fit for purpose. They must deliver on their developmental mandate, as well as provide basic services efficiently.
We remain confident that the progress being made thus far will spur all social partners to work even harder towards the success of the Plan. Time is of the essence.
ANC Treasurer General