Growth. That was the focus of the state of the nation address by President Cyril Ramaphosa on Thursday night.
And ministers will need to sign performance agreements with Ramaphosa before the end of this month to “strengthen the capacity of the state and increase accountability”.
This, he said, will help create “a culture where corruption, nepotism and patronage are not tolerated, and action is taken against those who abuse their power or steal public money”.
Ramaphosa was under no illusions that South Africa is “facing a stark reality”.
He addressed the sluggish economy, the unimproving rate of unemployment, state-owned entities, public finances and the “persistent energy shortages [which] have disrupted businesses and people’s lives”.
And he mentioned a number of measures to kickstart this growth, including a state bank, a sovereign wealth fund and the establishment of a new university of science and innovation in Ekurhuleni, the only metro in the country that doesn’t have a university.
Ramaphosa didn’t mince his words when it came to the country’s energy crisis.
“Every time [loadshedding] occurs, it disrupts people’s lives, causing frustration, inconvenience, hardship. At its core, load-shedding is the inevitable consequence of Eskom’s inability over many years – due to debt, lack of capacity and state capture – to service its power plants,” he said.
Over the next few months, as Eskom works to restore its operational capabilities, Ramaphosa said, the state would be implementing measures that will fundamentally change the trajectory of energy generation in our country.
- The Integrated Resource Plan 2019 will soon come into effect, enabling the development of additional grid capacity from renewable energy, natural gas, hydro power, battery storage and coal;
- The National Energy Regulator will continue to register small scale distributed generation for own use of under 1 MW, for which no licence is required;
- The National Energy Regulator will ensure that all applications by commercial and industrial users to produce electricity for own use above 1MW are processed within the prescribed 120 days.
It should be noted that there is now no limit to installed capacity above 1MW;
- Supplementary power purchase agreements will be negotiated to acquire additional capacity from existing wind and solar plants; and
- Municipalities in good financial standing will be allowed to procure their own power from independent power producers.
When Ramaphosa said that measures would be put in place to enable municipalities in good financial standing to procure their own power from independent power producers, the House erupted into cheers and applause, especially from members of the DA.
He said that social partners – trade unions, business, community and government – were committed to mobilising funding to address Eskom’s financial crisis in a financially sustainable manner.
Ramaphosa received more applause when he said: “They would like to do this in a manner that does not put workers’ pensions at risk and that does not compromise the integrity of the financial system.”
Ramaphosa promised that the Presidential Commission on Climate Change would ensure that, as the country moves towards a low carbon growth trajectory, no one was left behind.
He said the Climate Change Bill would be finalised soon.
This bill provides a regulatory framework for the effective management of inevitable climate change impacts by enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change – and identifying new industrial opportunities in the green economy.
“Low levels of growth mean that we are not generating enough revenue to meet our expenses, our debt is heading towards unsustainable levels, and spending is misdirected towards consumption and debt-servicing rather than infrastructure and productive activity,” Ramaphosa said.
“We cannot continue along this path. Nor can we afford to stand still.”
The Budget Speech, which would be delivered in two weeks’ time, would see a series of measures being outlined that would reduce spending and improve its composition.
“We are engaged with labour and other stakeholders on measures to contain the public wage bill and reduce wastage.”
The state of public finances should be improved by working with the Auditor-General to reduce irregular expenditure, and by shifting government spending from consumption expenditure to investment in infrastructure.
“We have decided to establish a sovereign wealth fund as a means to preserve and grow the national endowment of our nation, giving practical meaning to the injunction that the people shall share in the country’s wealth,” Ramaphosa said.
He also said that a state bank would be established as part of the effort to extend access to financial services to all South Africans.
Far-reaching economic reform measures are on the agenda, said Ramaphosa.
State-owned enterprises needed to be repurposed to support growth and development.
“In consultation with the Presidential SOE Council, we will undertake a process of rationalisation of our state owned enterprises and ensure that they serve strategic economic or developmental purposes.”
He said that the” extent of capture, corruption and mismanagement in state-owned entities is best demonstrated at South Africans Airways”, which was placed in business rescue late last year.
The business rescue practitioners are expected to unveil their plans for restructuring the airline in the next few weeks.
A key priority this year is to fix commuter rail, which transports more than a million commuters to and from work, and is vital to the economy and to the quality of life.
The Central Line in the Western Cape and the Mabopane Line in Pretoria have been closed for essential refurbishment and upgrades to the tune of R1.4 billion each.
Work under way on other lines includes station upgrades, parkway replacements, new signalling systems and overhead electrical traction upgrades.
Growth and job creation will in large measure be driven by private enterprise, said Ramaphosa, and the focus will be on building an operating environment that is favourable to doing business.
Working together with social partners, the state continues to address several issues that have been barriers to job creation.
Some of the improvements include that water use licences are now issued within 90 days, and through the Bizportal platform a company can be registered in one day, and people can register for UIF and SARS and even open a bank account,
A three-stream curriculum model, heralding a fundamental shift in focus towards more vocational and technical education, is being implemented.
Various technical vocational specialisations have been introduced in 550 schools and 67 schools are now piloting the occupational stream.
Nine new TVET college campuses are being built this year in the Eastern Cape and KwaZulu-Natal.
The process of distributing tablets to schools is also under way.
Early reading programmes are gathering momentum, Ramaphosa said, and this year, coding and robotics would be introduced in grades R to 3 in 200 schools, with a plan to implement it fully by 2022.
The new University of Science and Innovation in Ekurhuleni will enable young people to be trained in high-impact and cutting-edge technological innovation for current and future industries.
Police visibility, effective training and better resourcing of police stations are priorities.
Specialised units – bringing together SAPS and the National Prosecuting Authority – were mandated to combat these crimes of economic disruption.
To support the growth of the tourism industry, the SAPS will increase visibility and a reserve police capacity at identified tourist attraction sites.
Following the graduation of 5 000 police trainees last year, 7 000 new police trainees have been enlisted this year to strengthen local policing.
To improve the quality of general and specialised SAPS investigations, a Crime Detection University will be established in Hammanskraal.
The emergency action plan has been implemented and R1.6 billion has been reprioritised to support this plan until the end of the current financial year.
The Domestic Violence Act will be amended to better protect victims in violent domestic relationships and the Sexual Offences Act will be changed to broaden the categories of sex offenders whose names must be included in the National Register for Sex Offenders.
A law will be passed to tighten bail and sentencing conditions in cases that involve gender-based violence.
The social housing programme to build rental housing for low-income families is at implementation stage, which could leverage as much as R9 billion of private investment in the construction of 37 000 rental apartments.
University and TVET College students face serious accommodation challenges.
R64 billion will be spent on student accommodation over the next few years and the state will leverage at least another R64 billion in private investment.
A new smart-city is taking shape in Lanseria, which 350 000 to 500 000 people will call home within the next decade.
Working with development finance institutions the state has put together an innovative process that will fund the bulk sewerage, electricity, water, digital infrastructure and roads that will be the foundation of the new city.
It will not only be smart and 5G ready, but will be a leading benchmark for green infrastructure continentally and internationally.
Of the 1.2 million young people who enter the labour market each year, about two thirds remain outside of employment, education or training.
More than half of all young people are unemployed.
We need to make this country work for young people, so that they can work for our country, Ramaphosa said.
The solution to this crisis must be two-pronged – we must all create opportunities for youth employment and self-employment.
“From today, we begin the implementation of the Presidential Youth Employment Intervention – six priority actions over the next five years to reduce youth unemployment,” he said.
1. New pathways have been created for young people into the economy and cutting-edge solutions to reach young people where they are – online, on the phone and in person.
Five prototype sites in five provinces have been launched. These will grow to a national network reaching three million young people through multiple channels.
This will allow them to receive active support, information and work readiness training to increase their employability and match themselves to opportunities.
2. There will be a fundamental change to how young people are prepared for the future of work – the provision of shorter, more flexible courses in specific skills that employers in fast-growing sectors need.
3. New and innovative ways to support youth entrepreneurship and self-employment are being developed.
4. The Youth Employment Service is being scaled up to ensure that more students receive practical experience in the workplace to complete their training.
5. The first cohort of a Presidential Youth Service programme will unlock the agency of young people and provide opportunities for them to earn an income while contributing to nation building.
6. 1% of the budget will be set aside through “top slicing of the budget” to deal with the high levels of youth unemployment.
“Government stands ready to table an Expropriation Bill that outlines the circumstances under which expropriation of land without compensation would be permissible,” Ramaphosa said.
To date, 44 000 hectares of state land has been released for the settlement of land restitution claims, and this year around 700 000 hectares of state land will be released for agricultural production.
“We are prioritising youth, women, people with disabilities and those who have been farming on communal land and are ready to expand their operations for training and allocation of land,” he said.
A new beneficiary selection policy includes compulsory training for potential beneficiaries before land can be allocated to them.
A new SheTradesZA platform has been set up to assist women-owned businesses to participate in global value chains and markets.
Over the next five years, the Industrial Development Corporation is targeting R10 billion of own and partner funding for women empowered businesses.
The Procurement Bill will soon be presented to Parliament as part of the state’s efforts to empower black and emerging businesses and advance radical economic transformation.
Effective from Thursday, new regulations published in the Government Gazette will enable investigation and action against abuse of buyer power and price discrimination.
This will help even the playing field for small businesses and emerging entrepreneurs.
The competition authorities are now working towards a resolution with the large mobile operators to secure deep cuts to data prices across pre-paid monthly bundles, additional discounts targeted at low income households, a free daily allocation of data and free access to educational and other public interest websites.
“This is an important step to improve lives, bring people into the digital economy and stimulate online businesses,” Ramaphosa said.
The licensing of the wireless open access network is likely to completed during the course of next year.
This year the state aims to open up and regulate the commercial use of hemp products, providing opportunities for small-scale farmers; and formulate policy on the use of cannabis products for medicinal purposes, to build this industry in line with global trends.
“I see when I talk about cannabis people get quite excited,” he joked.
In preparation for the National Health Insurance,more than 44 million people have been registered at 3 000 clinics in the electronic Health Patient Registration System, and this system is now being implemented in hospitals.
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