Ramaphosa says govt to reprioritise spending in “stimulus package” to revive economy

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PRETORIA, September 21 – President Cyril Ramaphosa said on Friday the government would re-prioritise spending, establish an infrastructure fund and do away with some regulatory restrictions, including in tourism, as part of a stimulus plan to revive an economy languishing in recession.

Announcing an economic stimulus plan involving R50 billion in revamped spending and new project-level funding, Ramaphosa said infrastructure expansion had the potential to create jobs on a large scale, attract investment and lay the foundation for sustainable economic expansion, and that the private sector had expressed interest in participating towards this goal.

“We have decided to set up a South Africa Infrastructure Fund which will fundamentally transform our approach to the rollout, building and implementation of infrastructure projects. In total, the plan will result in reprioritised expenditure and new project-level funding of around R50 billion,” he told a news conference.

“The (fund) will reduce the current fragmentation of infrastructure spend and ensure more efficient and effective use of resources. The private sector will be invited to enter into meaningful partnerships with government in this fund.”

Ramaphosa said the contribution from the fiscus towards the fund over the medium-term expenditure framework period would be in excess of R400 billion, which would be used to leverage additional resources from developmental finance institutions, multilateral development banks, and private lenders and investors.

He said a dedicated infrastructure execution team in the Presidency with extensive project management and engineering expertise would be established to assist with project design, oversee implementation and ensure the funds were used effectively. The Industrial Development Corporation would target to increase its approvals to R20 billion over 12 months, an increase of 20 percent on the previous year, in support of the stimulus efforts.

“This funding will target the productive sectors of the economy, including manufacturing, mining, industrial infrastructure and sectors in distress. We also need short-term municipal investments to address the challenges that our people face,” said Ramaphosa.

“We have identified 57 priority pilot municipalities in order to unlock infrastructure spending in the short term. This spending will cover, among other things, sewerage purification and reticulation, refuse sites, electricity reticulation and water reservoirs.”

The stimulus plan kickstarts a range of measures to revive an economy that has struggled to grow significantly over the past decade, and fell into a technical recession with a second consecutive contraction in the second quarter of this year. The measures will include a jobs summit and an international investment conference next month.

Ramaphosa said the measures would consist of five broad parts, mainly the implementation of growth enhancing economic reforms, reprioritisation of public spending to support job creation, the establishment of an infrastructure fund, addressing urgent and pressing matters in education and health and investing in municipal social infrastructure improvement.

“We are decisively accelerating the implementation of key economic reforms. We have taken decisive steps to rebuild investor confidence, end corruption and state capture, restore good governance at state owned enterprises and strengthen critical public institutions,” he said.

“The measures we are announcing give priority to those areas of economic activity that will have the greatest impact on youth, women and small businesses.”

As the government reprioritises spending, it will focus on agriculture and economic activity in townships and rural areas.

“Agriculture has massive potential for job creation in the immediate and long term. The interventions we have identified will include a package of support measures for black commercial farmers so as to, increase their entry into food value chains through access to infrastructure like abattoirs and feedlots,” Ramaphosa said.

The government would mobilise blended finance from the Land Bank, Industrial Development Corporation and commercial banks, and would finalise the signing of 30-year leases to enable farmers to secure funding for agricultural development.

Ramaphosa said the government would also re-direct resources towards health and education.

“To address some of the shortages in our hospitals, funding is being made available immediately to buy beds and linen, while the Minister of Health and the National Health Council will immediately fill 2,200 critical medical posts, including nurses and interns,” he said.

“Additional funds will be directed to addressing the dire state of sanitation facilities in many public schools, ensuring the completion of 1,100 sanitation projects.”

He said Finance Minister Nhlanhla Nene would provide more detail in his Medium-Term Budget Policy statement next month.

The government will also review its visa regime to boost tourism revenue.

“Within the next few months, amendments will be made to regulations on the travel of minors, the list of countries requiring visas to enter South Africa will be reviewed, an e-visas pilot will be implemented, and the visa requirements for highly skilled foreigners will be revised,” Ramaphosa said.

“These measures have the potential to boost tourism and make business travel a lot more conducive. Tourism continues to be a great job creator and through these measures we are confident that many more tourists will visit South Africa.”

The government had also begun a review of various administered prices, starting with electricity, port and rail tariffs in a bid to reduce the cost of doing business, boost exports and make South African industries more competitive.

“Within the next few weeks, government will initiate the process for the allocation of high-demand radio spectrum to enable licensing,” Ramaphosa said.

“This will unlock significant value in the telecommunications sector, increase competition, promote investment and reduce data costs. Lower data costs will also provide relief for poor households and increase the overall competitiveness of the South African economy.”

– African News Agency (ANA)