South Africa must collectively work towards building economy

As far back as the State of the Nation Address in February, President Ramaphosa said South Africa would need to focus on three things to begin to turn the country’s fortunes around.

President Cyril Ramaphosa says the advent of the Coronavirus pandemic has placed more impetus on South Africa’s plans to pursue new sources of growth within a fundamentally different context.

“Many of the areas we had identified before remain relevant and urgent, such as a growing small and medium enterprise sector, and an agricultural sector that delivers food security.

“Some sectors have taken on a new significance. We should, for example, use this opportunity to build a greener economy, with our entrepreneurs entering new fields such as hybrid cars, fuel cells, battery storage and waste beneficiation,” said the President in his weekly newsletter to the nation.

With an unemployment rate of 30%, which the President said will soon increase, South Africa must collectively work towards building an inclusive economy, based on a level playing field.

President Ramaphosa said he was confident that plans put in place prior to the pandemic, and those introduced to keep business buoyant in these turbulent times, will enable the reconstruction of the economy. However, this will require buy-in outside of government and an undeterred commitment to action.

“In all the proposals put forward in recent weeks, there is a substantial emphasis on improving execution.

“The [proposals] all say that we should seek out pockets of excellence in the State, and support and deepen them. But they also say that we must look outside the State. We need to bring together the best available local skills, whether in business, academia or civil society to support our common programme,” the President said.

As far back as the State of the Nation Address in February, President Ramaphosa said South Africa would need to focus on three things to begin to turn the country’s fortunes around.

“First, we were going to fix the fundamentals. Second, we would pursue new sources of growth. Third, we would ensure that our actions are underpinned by a capable State.

“Many of the plans under discussion raise these fundamentals, such as reliable energy, access to broadband spectrum, competitive ports and efficient transport. Working with our social partners, we must speed up the pace of implementation so that we can rebuild the base of our economy,” President Ramaphosa said.

One of the pillars that the success of these recovery plans hinges upon is a strong commitment to a social compact – and the institutions necessary to support it – so that the reconstruction of the economy can be “shared responsibility and a shared undertaking,” the President said. This is one way of ensuring that there are no forgotten sectors of society as the country forges a path to economic recovery.

A continental effort

In the year of South Africa’s chairship of the African Union, member States are planning vigorously for the activation of the African Continental Free Trade Area, which has been delayed by the pandemic.

President Ramaphosa said all social partners see the value of expanding trade in an integrated Africa, with concrete proposals on how to overcome the barriers that impede the ability of Africans to trade with one another.

He said South Africa's strategies to promote local production, which is a common theme across the various recovery plans, should support efforts to create regional value chains on the continent.

“When we launched the economic stimulus and recovery plan nearly two years ago, we announced the establishment of an Infrastructure Fund that could blend different forms of finance to drive infrastructure development. This, we identified as the flywheel of economic growth.

“There is now a general consensus that our recovery should be led by infrastructure development and maintenance.

“At the Sustainable Infrastructure Development Symposium organised by the Presidency a few weeks ago, business and government were of one mind on a new methodology to develop an infrastructure pipeline and deliver on it.

“Investors from the multilateral development banks, development finance institutions and the private sector all showed a strong appetite to make the necessary investments to meet South Africa’s extensive and diverse infrastructure needs,” President Ramaphosa said.

Saving jobs

In the coming weeks, the President said the government will work with its social partners to finalise an economic recovery programme, which brings together the best of all the various proposals.

President Ramaphosa emphasised that the most important part of the programme must be the protection and the creation of jobs.

He noted that analysts have estimated the pandemic will cost the country millions of jobs.

The President said job preservation efforts, such as those through the Unemployment Insurance Fund (UIF) and tax measures, aim to prevent job losses in the private sector.

However, he said, if South Africa is going to recover from the worst effects of the pandemic, well-crafted, public employment schemes must be set up.

“Creating jobs for people that add value to their communities through maintenance, care work and other services, keeps people engaged in productive activity. It helps them to retain and develop skills.

“It gives many young people a chance to climb the first rung in the job market ladder. Such jobs complement employment created by businesses, as they start to recover and private investment returns.”

The President is optimistic that as recovery takes hold and the world gradually adjusts to a global economy marked by COVID-19, economic activity is expected to pick up.

“By then, our initiatives to reform and improve the business environment will establish a firm platform for industries with high potential to flourish,” President Ramaphosa said.

Since the onset of the pandemic in South Africa, President Ramaphosa said the government’s strategy has been to provide whatever support it can, within the country’s constrained resources, to protect businesses and preserve jobs.

The President said now is the time to move quickly towards a robust programme of reconstruction and recovery, “and we must do so together”.

“Building on the vast areas of common ground among the proposals from social partners, we now have to put in place a clear, focused and ambitious set of measures to not only restore our economy but to set it on a new path of inclusive and sustainable growth.

“We are faced with health, social and economic crisis of massive proportions. But we are not daunted, nor discouraged. We will do what we must build an economy that is resilient and dynamic, that creates work and opportunity, and that meets the needs of all our people.

“We have all the ingredients for economic recovery; now let us work together to make it happen,” the President said.

(With Inputs from South African Government Press Release)