South African President Cyril Ramaphosa has proposed an ambitious plan to expand South Africa’s infrastructure in order to revive the struggling economy. He believes that the economy will grow by 3% on average over 10 years.
South Africa’s economy lay in ruins even before the COVID-19 pandemic, with rolling blackouts and almost one-third of the country out of work. The nation’s leaders even had to take out a R70 billion low-interest IMF loan to stay afloat following the economically devastating effects of the pandemic. However, the IMF have also insisted that money not be spent on South Africa’s failing parastatals such as SAA. While the COVID-19 crisis ongoing, South Africa will be facing some tough times going forward. In fact, rebuilding the economy from the ground up may be necessary, given the structural failures that have beset it ever since the colonial era. And, while one should never get one’s hopes up when it comes to promises from an ANC-led government, Ramaphosa’s plan for the economy appears promising, albeit somewhat radical.
“Our recovery will be propelled by swift reforms to unleash the potential of the economy, and supported by an efficient state that is committed to clean governance,” Ramaphosa said when addressing the joint sitting of Parliament, as reported by IOL.
Recognising that the country would need to rapidly rebound from its current economic fiasco, in all parts of the country, with massive-scale investment in infrastructure.
“We have developed a robust pipeline of projects that will completely transform the landscape of our cities, towns and rural areas. By the end of June 2020, we had 276 catalytic projects with an investment value of R2.3 trillion.
“Moreover, a list of 50 strategic integrated projects and 12 special projects was gazetted in July 2020,” he said.
Ramaphosa added that this revitalising infrastructure plan will fast-track regulatory processes in order to receive investments to the tune of R340 billion, while the Infrastructure Fund will provide R100bn in catalytic finance over the next decade, leveraging as much as R1 trillion in new investment for strategic infrastructure projects.
Secondly, Ramaphosa addressed what has been the elephant in the room ever since Thabo Mbeki was President more than a decade ago – Eskom. Eskom has been a sinkhole for the National Treasury every year and Ramaphosa discussed the advantages of splitting the power utility up to create competition in the market.
“To achieve this, 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 [restructuring Eskom into separate entities for generation, transmission and distribution], we aim to achieve sufficient, secure and reliable energy supply within two years,” he said.
“We are 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.”
He added that agreements will be finalised with Independent Power Producers to connect over 2,000 MW of additional capacity from existing projects by June 2021.
Finally the president discussed the potential to create jobs in South Africa’s economy that his ambitious plan entails.
“We have committed R100 billion 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.
“We are going to expand our natural resource management programmes such as Working on Fire and Working for Water.
“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,” Ramaphosa said.
In addition to this, 60,000 labour intensive jobs will be created through the infrastructure project, while he’s also eyeing a way forward for the controversial proposed National Health Insurance program.
“To support our healthcare system an additional 6,000 community health workers and nursing assistants will be deployed as we proceed with the implementation of National Health Insurance.”