The government’s target of 3% growth by 2025 requires the adequate functioning of the 10-member government of national unity (GNU), says the presidency.
The ambitious growth target was recently endorsed by organised business and President Cyril Ramaphosa at the launch of the second phase of their partnership, which aims to combat challenges in logistics, energy and electricity, as well as crime and corruption.
Modelling by the Bureau for Economic Research (BER) at Stellenbosch University released earlier in October shows that the presidency and Treasury initiative aimed at reinvigorating the ailing economy could cause growth to accelerate more than 3% by 2025.
“Everything possible is being done to sustain the GNU for the full five-year term. We are confident all members of the GNU are well now settled in their respective roles in government and equally confident that notwithstanding any disagreements that emerge, no member of the GNU will leave,” Ramaphosa’s spokesperson, Vincent Magwenya, told journalists on Wednesday.
“If we double our efforts ... that target is achievable. The president was never going to settle for a less ambitious target.”
In the modelling, the BER says the package of reforms outlined in the second phase of Operation Vulindlela is also likely to add 130,000 new jobs yearly (job growth rises 2.1% a year) and 2.68-million by 2029. It will also lead to favourable inflation effects from lower electricity and transport prices that support a repo rate cut.
The BER said Operation Vulindlela should focus on reforms in the following areas:
- Electricity: sustain the reduction in load-shedding by maintaining momentum on the electricity programme.
- Ports and rail: increase export volumes particularly for industries that are job creators such as agriculture and mining.
- Water: improve service delivery and increase business confidence and encourage investment.
- Crime, corruption and governance: improve business confidence through removal from the Financial Action Task Force greylist, finalising visa reforms and an improvement in local government governance.
“Meaningful progress in these areas will support economic growth but delays could postpone progress, while faster implementation will accelerate growth,” the report said.
“Even in this positive scenario we still face a huge challenge in overcoming structural unemployment and vast inequality.”
For the growth target to be achieved, the BER assumes that there should be investment of R2-trillion over the next ten years in new electricity and cheaper Eskom tariffs, R200bn investment in rail and ports over the next five years and a R2.3bn investment in water and infrastructure.
The first phase of Operation Vulindlela focused on speeding up economic growth through structural reform. The programme focused on key areas such as energy, digital infrastructure, transport and water to stimulate investment, improve service delivery and enhance the competitiveness of the economy.
Operation Vulindlela was established by President Cyril Ramaphosa in October 2020 as a presidency and Treasury delivery unit to fast-track structural reforms.
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