Infrastructure at the heart of Ramaphosa’s plan to boost the economy

A renewed focus on infrastructure will form the backbone of President Cyril Ramaphosa’s economic stimulus package, which was announced at the Union Buildings in Pretoria on Friday.

The highly-anticipated stimulus package is aimed at reigniting economic growth and creating jobs, at a time when the country has slipped into a technical recession, and consumer and business confidence remain weak.

“Infrastructure expansion and maintenance has the potential to create jobs on a large scale, attract investment and lay a foundation for sustainable economic expansion,” Ramaphosa told gathered journalists.

Key Cabinet colleagues from the economic cluster, including Finance Minister Nhlanhla Nene, Economic Development Minister Ebrahim Patel and Public Enterprises Minister Pravin Gordhan flanked Ramaphosa when he made the announcement.

As part of the package a South African Infrastructure Fund will be launched which will include a R400-billion contribution from the national fiscus over the coming three years of the medium–term expenditure framework.

This will be used to leverage additional resources from development finance institutions, multilateral development banks, and private lenders and investors the president said.

The fund is intended to reduce the current fragmentation of spending on infrastructure, and will ensure more efficient and effective use of resources.

As part of the commitment to delivery, a dedicated execution team will be established within the presidency with the project management and engineering expertise to ensure implementation of these projects.

“The team will identify and quantify ‘shovel ready’ public sector projects, such as roads and dams, and engage the private sector to manage delivery,” he said.

Ramaphosa tipped the Brics New Development Bank (NDB) as a likely contributor to the fund, saying that the NDB “ has a facility that can be made available to us”.

He added that the government was seeking ways to avoid having to provide a sovereign guarantee as the state’s lending capacity was constrained.

Other potential investors long-term included pension funds Ramaphosa said, who had shown “keen interest as well”.

“We want them to participate with us in building the core infrastructure assets for the nation,” he said.

Ramaphosa acknowledged that the state’s ability to increase spending or take up more borrowing to boost growth was limited.

As such, much of the money for the stimulus package will come through re-prioritising spending from other areas of the budget.

The details of where exactly the money will come from will be made clearer in the upcoming medium term budget policy statement (MTBPS), Nene said.

The MTBPS is scheduled for the October 24.

But Nene said that “a number of trade offs” will have to be made and funds will likely be reallocated from non-performing government programmes.

Alongside the renewed emphasis on infrastructure, the stimulus package will also include economic reforms aimed at addressing policy constraints that have placed a strangle hold on investment.

These include immediate changes to the country’s visa regime – including the revision of requirements for highly skilled foreigners who want to live and work in South Africa.

In a bid to reduce the cost of business, Ramaphosa said that the state is also committing to review a range of administered prices including electricity, ports as well as railway tariffs.

The reforms will also include addressing concerns over the mining and minerals regime.

Parliament has been asked to halt the processing of the mineral and petroleum resources

development act amendment Bill, which has contributed “a lot of uncertainty in the sector”. A separate piece of legislation will be drafted for regulating the oil and gas industry – a proposal that has long been discussed but has yet to materialize.

The stimulus package was launched ahead of a jobs summit as well as an investment summit that government will hold with business and labour leaders.

“We want to go to that conference saying to investors and potential investors, we have cleared the decks on the policy side. South Africa is open for business and investment, let us now start talking about how you will be able to invest to help us grow our economy and be able to create jobs,” he said.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

Related stories

Tax, wage bill, debt, pandemic: Mboweni’s tightrope budget policy statement

The finance minister has to close the jaws of the hippo and he’s likely to do this by tightening the country’s belt, again.

Johannesburg cannot police its future

South Africa’s biggest city is ground zero for debates about the long-term effectiveness and constitutionality of militarised urban policing and how we imagine the post-Covid city

Toxic power struggle hits public works

With infighting and allegations of corruption and poor planning, the department’s top management looks like a scene from ‘Survivor’

Fix economy: Cut, build, tax

Expert panel presents a range of solutions to the economic crisis that include cost cutting, infrastructure spending and a solidarity levy

ANC’s rogue deployees revealed

Despite 6 300 ANC cadres working in government, the party’s integrity committee has done little to deal with its accused members

Watch it again: Ramaphosa details economic recovery plan

According to the Presidency, the plan aims to expedite, in a sustainable manner, the recovery of South Africa’s economy

Subscribers only

Toxic power struggle hits public works

With infighting and allegations of corruption and poor planning, the department’s top management looks like a scene from ‘Survivor’

Free State branches gun for Ace

Parts of the provincial ANC will target their former premier, Magashule, and the Free State PEC in a rolling mass action campaign

More top stories

Why anti-corruption campaigns are bad for democracy

Such campaigns can draw attention to the widespread presence of the very behaviour they are trying to stamp out — and subconsciously encourage people to view it as appropriate

Tax, wage bill, debt, pandemic: Mboweni’s tightrope budget policy statement

The finance minister has to close the jaws of the hippo and he’s likely to do this by tightening the country’s belt, again.

SA justice delays extradition of paedophile to UK

Efforts to bring Lee Nigel Tucker to justice have spanned 16 years and his alleged victims have waited for 30 years

Former state security minister Bongo back in court

Bongo and his co-accused will appear in the Nelspruit magistrate’s court in Mpumalanga over charges of fraud, corruption and theft

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday