President Cyril Ramaphosa’s stimulus package has been met with everything from cautious optimism to downright scepticism, but very little outright conviction that it is the answer to the country’s economic woes.
This is probably because much of what was in the plan has been announced in a similar guise before. The renewed focus on infrastructure investment, however positive,sounds remarkably similar to previous promises, bar the launch of the new South African Infrastructure Fund. And, as South Africans bitterly learned under the previous administration, those previous grand investment projects were co-opted by patronage networks to siphon billions out of the fiscus.
The October adjustments budget is meant to be where the country will get the nitty-gritty —such as where R50-billion will be scrounged from and redirected towards items such as school sanitation. The R400-billion odd that will be concentrated in the Infrastructure Fund is, it appears, what is already in the budget for the coming three years.
Rating’s agency Fitch has pointed out that it is not clear how the fund will operate or whether it will increase the state’s contingent liabilities.
What is clear is that there is no room to manoeuvre and very tough trade-offs will have to be made come October.
But Ramaphosa has begun the immensely difficult task of addressing corruption —starting with sweeping board changes at state-owned entities and restoring their finances. He has promised policy certainty, a long-standing headache for business and investors, starting with the new mining charter announced on Thursday.
The biggest difference between this plan and others is arguably Ramaphosa, rather than Zuma under capture.
He has to get his entire Cabinet and the ruling ANC to pull in the same direction to make it work. Given that it is heading into an election year, it is a tough one indeed.