R1 trillion for reconstruction and recovery
JOHANNESBURG - President Cyril Ramaphosa yesterday unveiled his much anticipated economic recovery plan that he said would be underpinned by a R1trillion investment in critical infrastructure over the next four years, a stable energy supply in two years and an implementation committee of Cabinet ministers to see it through.
Ramaphosa told a joint sitting of the National Assembly and the National Council of Provinces the economic reconstruction and recovery plan was aimed at creating jobs and to boost economic growth and activity in the medium term.
He said the plan would create more than 800 000 employment opportunities and respond to the immediate economic impact of Covid-19 by driving job creation and expanding support for vulnerable households.
“We aim to do this primarily through a major infrastructure programme and a large-scale employment stimulus, coupled with an intensive localisation drive and industrial expansion,” Ramaphosa said.
At least 2.2 million jobs were lost between April and June when the economy shrunk by an annualised 51 percent due to the Covid-19 induced national lockdown.
Ramaphosa said energy security would be realised within two years with additional supply accelerated to address electricity constraints.
He described the instability of the grid as the largest constraint to growth and a deterrent to investments.
Ramaphosa said the recovery plan would also focus on infrastructure build programmes such as schools, water, sanitation and housing, and also on critical network infrastructure like ports, roads and rail. He said the government had taken steps to remove the constraints that have hampered infrastructure delivery in the past.
Ramaphosa said the Infrastructure Fund would provide R100billion in catalytic finance over the next decade, leveraging as much as R1trln in new investment for strategic projects.
He said the second key priority intervention in the plan is rapidly expanding energy generation capacity to shore up the struggling Eskom’s grid. Ramaphosa reiterated that the current regulatory framework would be adapted to facilitate new generation projects while protecting the integrity of the national grid.
“We are taking further steps to enable power generation for own-use. Applications for own-use generation projects are being urgently fast-tracked,” he said.
Ramaphosa also announced an employment stimulus for large-scale job interventions and industrial growth as other key priority economic interventions.
He said the employment stimulus was focused on those interventions that can be rolled out most quickly and have the greatest impact on economic recovery.
These would include expanding public employment at the provincial and city level, and 300000 opportunities for young people to be engaged as education and school assistants, among other job opportunities.
“The implementation of the employment stimulus has already commenced,” Ramaphosa said.
He said that the government will support the ramping up of local production, following a steady decline of the manufacturing base over many years, to make South African exports much more competitive.
He said South Africa currently imported around R1.1trln of goods, excluding oil, each year.
Ramaphosa said that if just 10percent of these goods were manufactured locally, it was estimated that this could add 2 percentage points to South Africa’s annual gross domestic product. “It is to realise this huge potential that the social partners have agreed to prioritise a range of consumer and industrial products for local procurement,” he said.
“We will enforce government policies to ensure that all public infrastructure projects use locally-made materials, including steel products, cement, bricks and other components.”