On Thursday, President Cyril Ramaphosa addressed the Joint Sitting of Parliament on South Africa’s Economic Reconstruction and Recovery Plan…
Here are the key things you need to know:
“This is a plan through which all of us as South Africans should work together to build a new economy,” said the President.
The objectives of the plan are clear:
- To create jobs, primarily through aggressive infrastructure investment and mass employment programmes;
- To reindustrialise our economy, focusing on growing small businesses;
- To accelerate economic reforms to unlock investment and growth;
- To fight crime and corruption; and,
- To improve the capability of the state.
All these objectives are linked to the vision of our country set out in the National Development Plan.
“The reality that we must confront is that the pandemic will not be over soon,” warned Ramaphosa. “The pandemic continues to cause severe damage to the global economy, affecting trade, investment, production, international travel and global supply and demand. No country has been spared. No economy has been unaffected. This is also the case on our own continent.”
More than 2 million people lost their jobs in the second quarter of this year
“This economic shock is unprecedented in our country, and it will take an extraordinary effort to recover from it,” said Ramaphosa. “As even the darkest of clouds has a silver lining, we need to see this moment as a rupture with the past and an opportunity to drive fundamental and lasting change.”
“The creation of jobs is at the centre of the Reconstruction and Recovery Plan. We must get our people back into the jobs they lost in the pandemic.”
“We are determined to create more employment opportunities for those who were unemployed before the pandemic or who had given up looking for work.”
According to the modelling done by National Treasury, the implementation of this plan will raise growth to around 3% on average over the next 10 years.
The reconstruction and recovery plan has four priority interventions:
1. Firstly, we are embarking on a massive rollout of infrastructure throughout the country.
Infrastructure has immense potential for stimulate investment and growth, to develop other economic sectors and create sustainable employment both directly and indirectly.
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.
The Infrastructure Fund will provide R100 billion in catalytic finance over the next decade, leveraging as much as R1 trillion in new investment for strategic infrastructure projects.
Within the next six months, we will:
- Embark on the modernisation and refurbishment the commuter rail network, include the Mabopane Line in Tshwane and the Central Line in Cape Town;
- Expand the national rural and municipal road rehabilitation and maintenance programme using labour intensive methods; and
- Fast-track the implementation of gazetted strategic infrastructure projects through the approval of credit enhancing instruments, provision of bulk infrastructure, and speedy processing of water use licenses, environmental impact assessments and township establishment; and
- Adapt the infrastructure procurement framework to enable public-private partnerships and unlock new funding.
2. Our second priority intervention is to rapidly expand energy generation capacity.
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.
In the immediate term, agreements will be finalised with Independent Power Producers to connect over 2,000 MW of additional capacity from existing projects by June 2021.
The Risk Mitigation Power Procurement Programme will unlock a further 2,000 MW of emergency supply within twelve months.
3. Our third key intervention is an employment stimulus to create jobs and support livelihoods.
Large-scale job interventions driven by the state and social partners have proven effective in many countries that have faced devastation from wars and other crises.
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.
The employment stimulus is focused on those interventions that can be rolled out most quickly and have the greatest impact on economic recovery.
At the heart of the employment stimulus is a new, innovative approach to public employment which harnesses the energies and capabilities of the wider society.
- 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.
- More than 60,000 jobs will be created for labour-intensive maintenance and construction of municipal infrastructure and rural roads.
- 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.
- Public employment will be expanded at the provincial and city level, contributing to cleaner, greener and safer public spaces and improved maintenance of facilities.
To assist young people who are unemployed to access these and other opportunities, we will soon launch the national Pathway Management Network as a platform for recruitment and other forms of support.
4. Finally, the employment stimulus includes direct support for livelihoods and the protection of jobs in vulnerable sectors.
Support is being provided to more than 100,000 early childhood development practitioners and to 75,000 small-scale farmers whose production was disrupted by the pandemic.
Grant-making programmes are being expanded in the creative, cultural and sports sector, and funding has been allocated to protect jobs in cultural institutions such as museums and theatres.
More than 40,000 vulnerable teaching posts are being secured in schools which have lost income from fees.
The implementation of the employment stimulus has already commenced. Each of these work opportunities is fully funded and ready for implementation.
The speed and urgency with which we are expanding employment programmes demonstrates our commitment to support those who are without work.
As these and other recovery measures are being rolled out, we need to do everything in our means to provide support to those in society who continue to face hunger and distress.
We will be extending the Special COVID-19 Grant by a further 3 months.
This will maintain a temporary expansion of social protection and allow the labour market sufficient time to recover.
To support tourism over this peak tourism season, we will shortly be publishing an expanded list of countries from where resumption of international travel will be permitted, which will be supported by targeted marketing in partnership with the private sector.
We urge South African to continue to explore their country in support of the tourism recovery as one of the hard hit sectors by the Covid-19 pandemic,
Private sector participation
We are promoting greater private sector participation in rail, including through granting third- party access to the core rail network and the revitalisation of branch lines.
We will establish a single economic regulator in transport as a matter of urgency to promote competition and efficiency.
Work is underway to improve the efficiency and capacity of the ports of Durban, East London, Ngqura and Cape Town.
Access to WiFi
We are developing innovative new models to provide low-income households with access to affordable, high-speed internet through connection subsidies for broadband and support for public WiFi hotspots.
Decisive action against crime and corruption is essential to inclusive growth
Criminal elements in our country have taken to the illegal occupation of construction sites and soliciting protection money from businesses.
To combat these practices, a Joint Rapid Response Team at a national and provincial level will respond to the problem of violent disruptions at construction sites and other business activities.
A well-functioning revenue service is central to our economic recovery programme
The turnaround at the South African Revenue Service has begun in earnest, and significant areas of tax evasion and tax fraud have already been identified.
SARS is rebuilding its capacity to reverse the decline, improve compliance and recover lost tax revenue.
We are working to clamp down on the illegal economy and illicit financial flows, including transfer pricing abuse, profit shifting, VAT and customs duty fraud, under-invoicing of manufactured imports, corruption and other illegal schemes.