Big players rally behind accelerated economic recovery strategy
JOHANNESBURG – Private sector players have rallied behind the accelerated economic recovery strategy proposed by South Africa’s biggest business grouping with the aim of achieving higher levels of growth to recover from the Covid-19 crisis.
Business For SA (B4SA) on Friday proposed a list of 12 priority initiatives that could possibly increase gross domestic product (GDP) by R1 trillion, create up to 1.5 million jobs and increase tax revenues by R100 billion a year.
The projects included achieving a secure and affordable electricity supply, fast-tracking the green economy, implementing a road and rail strategy, ports expansion, full-spectrum utilisation and acceleration of e-commerce.
This infrastructure-led economic revival plan will, however, require a baseline total funding requirement of R3.4trln from the public and private sectors over the next three years.
B4SA’s proposal also calls for widespread structural and institutional reforms, policy consistency, regulatory reform, improving the ease of doing business, boosting business and investor confidence, addressing crime and corruption, and the restructuring of state companies.
B4SA spokesperson Martin Kingston said the Covid-19 crisis had exacerbated the downward economic spiral.
Kingston, however, said it presented an opportunity to re-imagine South Africa’s future.
“South Africa, therefore, has to attract significant foreign investment from direct and portfolio investors, supplemented by alternative sources of foreign capital that currently have negligible exposure to South Africa,” Kingston said.
“To attract the requisite funding at an appropriate cost of capital, it is important that government and business work together to address the key concerns of foreign investors holistically as the nation competes with other emerging markets as an investment destination.”
B4SA’s proposal coincided with the ANC’s launch of its economic reform paper, which has synergies about fast-tracking industrialisation.
However, the ANC’s discussion paper called for amending the Pension Funds Act to access private savings to fund long-term infrastructure and high-impact capital projects.
Enoch Godongwana, ANC head of economic transformation, said: “The mobilisation of funds for increased investment in infrastructure and key productive sectors will inevitably require a combination of public and private resources. As part of this combined effort, changes should be made to Regulation 28 under the Pension Funds Act to enable cheaper access to finance for development.”
GDP is expected to decline by between 8 percent and 10 percent this year, recovering in the next two years to pre-Covid-19 levels, with muted growth thereafter.
North West University Professor Raymond Parsons said: “The latest ANC and B4SA economic plans are united in stressing infrastructure spend as a major growth driver.”
Minerals Council SA chief executive Roger Baxter said they had identified a number of critical areas for the mining sector that needed urgently to be addressed if the recovery was to occur.
“…if these actions are taken as rapidly as possible, it will mean that by 2024 the industry could be generating an additional R61bn in mineral sales a year and will be contributing R300m in additional tax revenues,” Baxter said.