A greater role for the private sector in boosting economic growth was envisaged in SA’s economic recovery plan, President Cyril Ramaphosa said on Wednesday.
The private sector remained the main jobs driver in most economies. But, with the government, it had been affected adversely by the coronavirus and the national lockdown.
Responding to the debate on the plan that he presented in a joint sitting in parliament last week, Ramaphosa said the need to create an enabling environment for the private sector to thrive and create jobs was emphasised in the government’s approach.
Critics of the plan — in which it is proposed that the state spend R14bn creating about 800,000 employment and economic opportunities among other ambitious targets — raised concern that it seemed to focus on state-led growth, yet government finances were stretched.
The plan focused on key government interventions such as a large employment stimulus package, an infrastructure drive and a pledge to accelerate energy generation and fast-track long-promised reform measures.
The government estimated that if implemented it could raise growth 3% on average over the next decade.
Ramaphosa said it was acknowledged in the plan that the private sector was by far the main driver of economic growth, hence the need to remove impediments to business operations such as energy supply constraints was emphasised in it.
The plan made provision for securing a reliable energy supply within two years, bringing about 11,800MW of new generation capacity into the system by 2022. More than half of that energy would be generated from renewable sources.
Ramaphosa said the proposed reforms and the infrastructure build and maintenance programme was aimed at inducing the private sector and pension funds to invest in the country.
Structural reforms
“The plan is underpinned by a commitment to fiscal sustainability and economic reforms that will enable growth ... The plan recognises that the private sector is by far the biggest driver of employment. This is why the plan emphasises growth-enhancing measures that enable businesses to recover, to grow and to thrive,” Ramaphosa said.
He said this involved urgent steps to remove impediments to investment such as fixing energy challenges, undertaking structural reform in areas such as telecommunications and transport, and improving the ease of doing business.
“The plan is a response to a severe economic contraction. This is not the time to grandstand, but to close ranks and work together to achieve a common purpose,” Ramaphosa said.
This week, S&P Global Ratings’ primary credit analyst for SA, Ravi Bhatia, said it seemed the plan was more a “spending plan than a reform plan”. It focused on certain sectors and spending in key areas of the economy but it was less clear on how this would be financed and what effect it would have on the country’s fiscal metrics.
During Wednesday’s debate, opposition parties poked holes in the plan.
DA leader John Steenhuisen said it was a misconception to say that SA was trying to recover from the Covid-19 crisis.
“We’re trying to recover from decades of bad governance and poor ANC policy. And it is disingenuous — and extremely opportunistic — to claim otherwise. Our economy was in recession, more than 10-million South Africans couldn’t find work and we’d already been relegated to junk status long before anyone had heard the word ‘coronavirus’,” Steenhuisen said.
“And when the virus did arrive, it wasn’t the pandemic that worsened our situation. It was the heavy-handed response by [the] government — the hardest, longest, most unscientific lockdown in the world. That is what closed down factories, restaurants, retailers and thousands of other businesses.”
Steenhuisen said the recovery plan read much like a Christmas wish list, and its implementation would be challenging.
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