The only new items added to the National Economic Development and Labour Council economic recovery plan and ANC’s economic recovery and transformation plan that President Cyril Ramaphosa presented in Parliament on Thursday are the continuation of the special Covid-19 relief grant R350 a month for three more months and the 800 000 job opportunities that will be created in the months to come.
Speaking at the joint sitting of Parliament, Ramaphosa said through the special Covid-19 relief and the top-up of existing grants, close to R40 billion in additional support had been provided to more than 17 million people from poor households.
Ramaphosa said studies have shown that these grants are vital in reducing the impact of the Covid-19 coronavirus pandemic on levels of poverty and hunger.
“The evidence suggests that the expansion of social protection has kept more than 5 million people above the food poverty line during the past six months. The special Covid-19 grant in particular represents a significant achievement, reaching more than 6 million unemployed people in a short time,” said Ramaphosa.
He added that a key intervention of the economic recovery and transformation plan was the employment stimulus that starts “now”, with more than 800 000 job opportunities which will be created in the months ahead.
“The employment stimulus is focused on those interventions that can be rolled out quickly and have the greatest impact on economic recovery. At the heart of the employment stimulus is a new, innovative approach to public employment which harnesses the energies and capabilities of the wider society.
“These activities will be locally driven, allowing participants to earn an income while contributing to their community,” said Ramaphosa.
Ramaphosa said R100 billion has been “committed” over the next three years to create jobs through public and social employment as the labour market recovers.
The president also spoke about the need for fiscal consolidation – which simply means reducing government deficits and debt accumulation, a well-functioning SA Revenue Service (SARS), the restructuring of Eskom into separate entities and the reduction of the over-reliance of state-owned enterprises (SOEs) on the fiscus.
He said looking at these issues was critical and would be supportive of growth and recovery.
“We cannot sustain the current levels of debt, particularly as increasing borrowing costs are diverting resources that should be going to economic and social development.”
He said a well-functioning SARS was also central to South Africa’s economic recovery programme.
“SARS is rebuilding its capacity to reverse the decline, improve compliance and recover lost tax revenue. We are working to clamp down on the illegal economy and illicit financial flows, including transfer pricing abuse, profit shifting, VAT and customs duty fraud, under-invoicing of manufactured imports, corruption and other illegal schemes,” said Ramaphosa.
Ramaphosa said government was also reducing the reliance of SOEs on the fiscus by intensifying efforts to stabilise strategic companies, accelerating the rationalisation of SOEs, and identifying strategic equity partners.
He said Eskom would be restructured into three separate entities – for generation, transmission and distribution.
This would enhance competition and ensure the sustainability of independent power producers going forward, he said.
Ramaphosa said this move would finalise Eskom’s long-term solutions and debt burden.
“Through these measures, we aim to achieve sufficient, secure and reliable energy supply within two years,” he said.
He said government would unlock more than R1 trillion in infrastructure investment over the next four years.
Ramaphosa also spoke of the importance of reducing data costs for every South African and expanding broadband access to low-income households.
“The release of high-frequency spectrum by March next year and the completion of digital migration will reduce data costs for firms and households. This process is being managed by the Independent Communications Authority of SA and will promote transformation, reduce costs and increase access.
“We are developing innovative new models to provide low-income households with access to affordable, high-speed internet through connection subsidies for broadband and support for public Wi-Fi hotspots,” said Ramaphosa.
He also spoke about the importance of reversing the decline of the local manufacturing sector and the promotion of reindustrialisation through deeper levels of localisation and exports.
South Africa’s economic recovery would be propelled by swift reforms that are supported by an efficient state committed to clean governance.
He added that the fast-tracking of reforms to reduce the cost of doing business and lower barriers to entry were some of the interventions mentioned in the economic recovery plan.
Ramaphosa said if all these interventions were successfully implemented, the country’s GDP could grow by 3% on average over the next 10 years.