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SA recovery plan lacks specifics, unrealistic - BLSA

Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso. Picture: Simphiwe Mbokazi/African News Agency(ANA)

Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso. Picture: Simphiwe Mbokazi/African News Agency(ANA)

Published Oct 16, 2020


JOHANNESBURG - South Africa’s economic recovery plan unveiled by President Cyril Ramaphosa lacks specifics in some areas and is based on unrealistic assumptions in others, while much of it cannot be be implemented immediately, a leading business association said.

Ramaphosa laid out the plan before Parliament on Thursday, saying its key objectives were to create jobs, primarily through aggressive infrastructure investment and mass employment programmes, to accelerate economic reforms and unlock investment, as well as to fight crime and corruption.

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He tabled it seven months after declaring a national state of disaster in South Africa in response to the global Covid-19 pandemic, paving the way for a lockdown which grounded most economic activity and pushed the country into its biggest contraction in 60 years.

Focusing on the key components of the plan, Business Leadership South Africa (BLSA) said while the goal to achieve sufficient, reliable energy supply within two years was key to recovery, the time frame was unrealistic given the logistics of procuring new power, working with the energy regulator on licensing and with state utility Eskom on connecting that new power to the grid.

Ramaphosa’s failure to mention any specifics regarding the liberalisation of the entire energy sector was also disappointing.

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“BLSA strongly supports all efforts to address the energy crisis, but we believe that it is important to liberalise the sector so that everyone from businesses to households can generate and contribute energy to the grid. This would rapidly lead to increases in supply,” the group added.

It also questioned the sustainability of the government’s employment stimulus plans aimed at creating new jobs after a massive number were lost due to the Covid-19 pandemic.

Ramaphosa committed R100 billion (US$6 billion) over the next three years to create 800,000 employment opportunities through public and social employment as the labour market recovered.

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“Such measures can only provide temporary relief. It is only through economic growth and policies to stimulate employment in the private sector that quality sustainable jobs can be created,” BLSA said.

“We are concerned that a public works programme can become a substitute for the policies that stimulate employment in the private sector. Sustainable employment comes from a productive business sector that is competitive.”

The recovery plan leans heavily on energy supply and re-industrialisation, but does not give enough attention to supporting early-stage entrepreneurs, said Philani Sangweni, managing partner at startup investment fund Entrepreneurs for Entrepreneurs Africa.

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“South Africa’s always talked a big game when it comes to entrepreneurship,” Sangweni said.

“But if we’re not putting entrepreneurship at the heart of our economic recovery plan, how serious are we about it really?”

South Africa’s official opposition party, the Democratic Alliance, said the latest document was yet another addition to a surfeit of economic plans the country has had over the years, which have however come up short at the implementation stage.

“If South Africa’s economy is to recover at all, then it is not more plans that are needed,” DA head of finance Geordin Hill-Lewis said, urging Ramaphosa to fire ministers standing in the way of reform.

“The only thing that counts now is whether the needed reforms can actually be implemented in time to avoid further mass unemployment and poverty. The clock is already ticking.”

- African News Agency (ANA)

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