President Cyril Ramaphosa says government will embark on a massive rollout of infrastructure across the country in its economic recovery plan.
He was addressing a joint sitting of Pparliament on government’s plan, known as the South African Economic Reconstruction and Recovery Plan, to get the economy back into a job-creating growth path following the national lockdown to curb the spread of the coronavirus (COVID-19).
Ramaphosa says infrastructure has immense potential to stimulate investment and growth, to develop other economic sectors and create sustainable employment both directly and indirectly.
The President says government would unlock more than one trillion rand in infrastructure investment over the next four years.
He says government has developed a robust pipeline of projects that will completely transform the landscape of cities, towns and rural areas. He further says that by June 2020, government had 276 catalytic projects.
“By the end of June 2020, we had 276 catalytic projects with an investment value of R2.3 trillion. Moreover, a list of 50 strategic integrated projects and 12 special projects were gazetted in July 2020. These catalytic projects have been prioritised for immediate implementation with all regulatory processes fast-tracked; enabling over R340 billion in new investment. These projects are at various stages of the project life cycle.”
The government’s infrastructure build programme is expected to focus on social infrastructure such as schools, water, sanitation and housing for the benefit of South Africans.
In order to ensure implementation, government has developed the Infrastructure SA and the Infrastructure Fund with the capacity to prepare and package projects.
“The Infrastructure Fund will provide R100 billion in catalytic finance over the next decade, leveraging as much as R1 trillion in new investment for strategic infrastructure projects,” he said.
Projects already under construction include the Matlosana N2 in North West, Lufhereng in Gauteng, Greater Cornubia in KwaZulu-Natal and Vista Park in Free State.
The government has set the following targets for the next six months:
- Embark on the modernisation and refurbishment of the commuter rail network, including the Mabopane Line in Tshwane and the Central Line in Cape Town.
- Expand the national rural and municipal road rehabilitation and maintenance programme using labour-intensive methods.
- Fast-track the implementation of gazetted strategic infrastructure projects through the approval of credit enhancing instruments, provision of bulk infrastructure and speedy processing of water use licenses, environmental impact assessments and township establishment.
- Adapt the infrastructure procurement framework to enable public-private partnerships and unlock new funding.
Reaction to the economic recovery plan with SABC News Economics editor:
Ramaphosa says government is accelerating the implementation of the Integrated Resource Plan to provide a substantial increase in the contribution of renewable energy sources, battery storage and gas technology.
He says most of the energy will be from renewable sources.
“This should bring around 11 800 MW of new generation capacity into the system by 2022. More than half of this energy will be generated from renewable sources. In the immediate term, agreements will be finalised with Independent Power Producers to connect over 2 000 MW of additional capacity from existing projects by June 2021. The Risk Mitigation Power Procurement Programme will unlock a further 2 000 MW of emergency supply within twelve months. The process to implement bid window five of the renewable energy programme has begun,” he said.
He says work is still ongoing to separate Eskom into two entities; generation, transmission and distribution.
“The work of restructuring Eskom into separate entities for generation, transmission and distribution continues and will enhance competition and ensure the sustainability of Independent Power Producers going forward. To achieve this, a long-term solution to Eskom’s debt burden will be finalised, building on the Social Compact on Energy Security recently agreed to by social partners.”
Skills are needed to implement the plan:
Ramaphosa says South Africa has experienced a steady decline in manufacturing over the years. In order to set the economy on a new trajectory, government plans to support a massive growth in local production and make South African exports much more competitive.
“We will build on the work that was being done in several areas before the pandemic struck. Through the first two South African Investment Conferences, we managed to secure pledges of around R664 billion in new investment,” Ramaphosa said.
He says, to date, just under R170 billion of capital expenditure committed during investment conferences has been invested in projects for construction and buying equipment is essential to mining, manufacturing, telecommunications and agriculture.
Gains in manufacturing:
- South Africa has exported more vehicles in 2019 than in previous years.
- South Africa currently imports around R1.1 trillion of goods, excluding oil, every year.
- If the country manufactures 10% of goods locally, it is estimated that we could add 2 percentage points to our annual GDP.
- The rest of Africa currently imports R2.9 trillion worth of manufactured goods from outside the continent every year. If South Africa were to supply just 2% of those goods, it would add 1.2 percentage points to our annual GDP.
Ramaphosa says government will publish localisation targets for goods.
“Together with business and labour, we will soon be publishing localisation targets for goods in areas like agro-processing, health care, basic consumer goods, industrial equipment, construction materials and transport rolling stock. We will enforce government policies to ensure that all public infrastructure projects use locally-made materials, including steel products, cement, bricks and other components.”
He says government is fast-tracking reforms to reduce the cost of doing business and lower barriers to entry.
The President says work is under way to improve the efficiency and capacity of the ports of Durban, East London, Ngqura and Cape Town.
“The release of high-frequency spectrum by March 2021 and the completion of digital migration will reduce data costs for firms and households. This process is being managed by ICASA 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 WiFi hotspots.”
President Cyril Ramaphosa presents the economic recovery plan to Parliament: