Government’s plan to ignite growth will see trade support for sectors such as sugar and others affected by import surges, increased investment in public infrastructure, and further support for entrepreneurs and small and medium business.
President Cyril Ramaphosa made the announcement on Tuesday night in his capacity as ANC president, following a two day party lekgotla, hours after Statistics South Africa released the Quarterly Labour Force Survey showing the official unemployment rate surged 0.5% to 27.2% in the second quarter of 2018.
“Given this economic environment, the lekgotla directed government to move with urgency to develop and implement a stimulus package to ignite growth that will lead to the creation of jobs, especially for young people and women,” Ramaphosa said in a televised address.
In the week that the International Monetary Fund (IMF) warned of rising public debt and the possibility of bailouts to state-owned companies (SOC’s) placing further pressure on the fiscus, Ramaphosa promised: “the stimulus package will be based on existing budgetary resources and the pursuit of new investments while remaining committed to fiscal prudence.”
He also committed to ensuring that procurement focuses on localisation and to provide training for young people which will match with the changing economy.
The Congress of South African Trade Unions (Cosatu) expressed concern about the economy and the rising jobless rate on Tuesday saying it was “deeply distressed”.
The federation questioned why National Treasury no longer speaks about former Finance Minister Malusi Gigaba’s 14-point plan from July 2017 to revive the economy, after the country slipped into a technical recession.
Gigaba, then announced a host of measures including addressing issues at SOCs, clarifying the Mining Charter and boosting telecommunications and public procurement. He promised to do all this within the fiscal framework.
The ANC advocated for an urgent farmer support programmes in depressed areas before the first rains this year, in order to boost agrarian reform.
“This should include supporting farmers with tools, tractors, fertilisers, seeds, extension services, finance and access to key infrastructure,” Ramaphosa said.
Ramaphosa also announced that the ANC wanted to amend the constitution to clarify the conditions under which expropriation of land without compensation would take place.
This dealt a fresh blow to the rand, which traded 0.8% weaker at R13.37 to the US dollar in early trade on Wednesday morning.
The ANC will, through the parliamentary process, finalise a proposed amendment to the constitution that outlines more clearly the conditions under which expropriation of land without compensation can be effected," said Ramaphosa.
Public hearings on the proposal to amend the constitution are currently taking place nationwide and will wrap up on August 7. There will then be a two-week period of oral submissions to parliament and the final report is expected to be handed over to the National Assembly at the end of September.
Meanwhile, the mid-year cabinet lekgotla in Pretoria, scheduled for Wednesday to Friday will discuss an initial report by economic cluster ministers aimed at alleviating the burden of the Value Added Tax (VAT) and petrol increases, according to Presidency spokesperson Khusela Diko.
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