Infrastructure will be key to helping drag South Africa’s economy out of the crisis caused by Covid-19, the country’s president said while announcing an ambitious programme of spending.
Cyril Ramaphosa outlined the South African Economic Reconstruction and Recovery Plan to parliamentarians.
“As even the darkest of clouds has a silver lining, we need to see this moment as a rupture with the past and an opportunity to drive fundamental and lasting change,” the president said.
“It is an opportunity not only to recover the ground that we have lost over the course of the pandemic, but to place the economy on a new path to growth.”
Ramaphosa said he planned to fix the country’s energy supply, which has been inconsistent for years because of the ailing state-owned enterprise Eskom.
He plans to achieve “sufficient, secure and reliable” energy supply within two years, he added.
In response to job losses caused by the pandemic, he said his interventions will create more than 800,000 jobs “in the immediate term”; and reverse the decline of manufacturing in the country.
He said low-income households will have better broadband access, and he will work to “resuscitate” tourism and other industries that have been hit hard by Covid-19.
However, at the centre of the plan is the government’s hope to unlock more than 1trn rand (£46.8bn) of infrastructure investment in the next four years.
“We are embarking on a massive rollout of infrastructure throughout the country,” Ramaphosa said.
“Infrastructure has immense potential to stimulate investment and growth, to develop other economic sectors and create sustainable employment both directly and indirectly.”
He said the programme would focus on social infrastructure, such as schools, water, sanitation and housing, as well as “critical network infrastructure”, such as ports, roads and rail.
An infrastructure fund set up by the government will provide 100bn rand (£4.7bn), he said, with the hope of leveraging much more investment from the private sector.
The treasury has projected the plan will raise growth to an average of about 3% over the next decade, after years of sluggish expansion.
Ramaphosa said that, so far, the government’s response has been focused on the health response to the virus, and on social and economic relief – which he said equated to the largest support package in Africa (500bn rand, equivalent to about 10% of GDP) – but that the country must now turn its focus to economic recovery.
“Despite [the government’s] vital interventions, the damage caused by the pandemic to an already weak economy – to employment, to livelihoods, to public finances and to state-owned companies – has been colossal,” the president said.
“More than two million people lost their jobs in the second quarter of this year, our economy contracted by 16.4% compared with the previous quarter, and the National Treasury expects a significant shortfall in revenue collection. “This economic shock is unprecedented in our country, and it will take an extraordinary effort to recover from it.”