President Cyril Ramaphosa has put economic recovery and structural reforms at the centre of the government’s priorities aimed at resuscitating the economy from the ravages of the Covid-19 pandemic. Photo: Elmond Jiyane/GCIS
President Cyril Ramaphosa has put economic recovery and structural reforms at the centre of the government’s priorities aimed at resuscitating the economy from the ravages of the Covid-19 pandemic. Photo: Elmond Jiyane/GCIS

SONA 2021: Ramaphosa pledges economic reforms

By Siphelele Dludla Time of article published Feb 12, 2021

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JOHANNESBURG - PRESIDENT Cyril Ramaphosa has put economic recovery and structural reforms, including job creation and fixing Eskom, at the centre of the government’s priorities aimed at resuscitating the economy from the ravages of the Covid-19 pandemic.

Delivering his State of the Nation Address (SONA) in Parliament last night, Ramaphosa said economic reforms and the government’s relief measures would result in the recovery driven by job creation.

“We must accelerate our economic recovery. We must implement economic reforms to create sustainable jobs and drive inclusive growth,” he said. “As a result of the relief measures that we implemented and the phased reopening of the economy, we expect to see a strong recovery in employment by the end of 2020.”

South Africa’s economy is forecast to shrink by 7.3 percent year on year in 2020 due to the impact of the Covid-19 pandemic and its associated lockdown restrictions. But for 2021, gross domestic product is forecast to expand by 2.9 percent, albeit off the very low base of 2020.

The lockdown restrictions resulted in the unemployment rate rising to an unprecedented 30.8 percent as there were 1.7 million fewer people employed in the third quarter of 2020.

Ramaphosa said the government wanted to ramp up job creation initiatives through measures such as buying locally manufactured goods and supporting small and medium businesses.

He said all social partners who participated in the development of the Economic Reconstruction and Recovery Plan had agreed to work together to reduce reliance on imports by 20 percent over the next five years.

“If we achieve our target,” he said, “we will significantly expand our productive economy, potentially returning more than R200 billion to the country’s annual output.”

Ramaphosa said the government would implement master plans in the poultry and sugar industries, and revive the auto industry to drive more investment and create employment.

This follows billions of rand of investment from Ford Motor Company, Toyota, Nissan, Mercedes Benz and Isuzu to expand production facilities in South Africa.

Turning his attention to the energy crisis, Ramaphosa said the government wanted rapidly to expand energy generation capacity and restore Eskom to operational and financial health.

He said the government would soon announce the successful bids for 2 000 megawatts (MW) of emergency power and initiate the procurement of an additional 11 800MW of power from renewable energy. Eskom has estimated that, without additional capacity, there will be an supply shortfall of between 4 000MW and 6 000MW over the next five years as coal-fired power stations reach their end of life.

“As part of the measures to address this shortfall, we will in the coming weeks issue a request for proposals for 2 600MWs from wind and solar energy as part of Bid Window 5. This will be followed by another bid window in August 2021,” Ramaphosa said.

The renewable energy industry will be relieved to hear that Ramaphosa supports increasing the distributed generation license exemption cap.

Ramaphosa said recent analysis suggested that easing the licensing requirements for new embedded generation projects could unlock up to 5 000MW of capacity and help to ease the impact of load shedding. “We will therefore amend Schedule 2 of the Electricity Regulation Act within the next three months to increase the licensing threshold for embedded generation,” he said.

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