President Cyril Ramaphosa has unveiled an ambitious economic strategy that seeks to achieve an annual growth rate of more than 3% through a significant boost in public infrastructure spending nearing R1 trillion in the medium-term in a bid to create jobs and stimulate growth across various sectors.
The announcement made during the State of the Nation Address (Sona) in Parliament last night underscored a strong commitment by the Government of National Unity (GNU) to catalysing job creation through a comprehensive public infrastructure investment plan.
Ramaphosa framed economic growth as the “most urgent task” confronting the GNU.
“To create this virtuous cycle of investment, growth and jobs, we must lift economic growth to above 3%. To achieve higher levels of economic growth we are undertaking massive investment in new infrastructure while upgrading and maintaining the infrastructure we have. We are developing innovative ways of funding infrastructure,” Ramaphosa said.
“We are engaging local and international financial institutions and investors to unlock R100 billion in infrastructure financing. A project preparation bid window has been launched to fast track investment readiness. This includes revised regulations for public private partnerships, which will unlock private sector expertise and funds.
The government plans to allocate more than R940 billion to infrastructure development over the next three years, with R375bn dedicated to spending by State-Owned Companies (SOEs).
Data projections indicate that South Africa’s real gross domestic product (GDP) growth is expected to climb between 1.2% and 1.5% in 2025, bolstered by recovering private consumption and investment, thanks in part to stabilising electricity generation.
However, experts asserted that Ramaphosa’s targeted annual growth of over 3% was essential to reversing the economic malaise, lowering the unemployment rate, and improving the standard of living for South Africans.
Cornelius Coetzee, the country director for cross-border payment provider Verto, welcomedRamaphosa’s vision for economic growth and the emphasis placed on infrastructural development.
“While the government focuses on solving public service for the nation, it is important to also make cross border trade easier for local businesses so they can compete in the global economy,” Coetzee said.
“Government engagement with key financial institutions is a pivotal moment for cross-border trade and economic growth. We hope the President will explain how we are going to enable FDI with complex regulatory reporting.”
The Sona follows the recent Cabinet adoption of the Medium Term Development Plan, which lays out an ambitious five-year roadmap focused on driving inclusive growth, reducing poverty, tackling the high cost of living, and solidifying the state's capabilities.
Ramaphosa indicated that the reforms instituted under Operation Vulindlela had precipitated a renewed sense of optimism in the economy. He acknowledged ongoing efforts to dismantle bureaucratic barriers that hinder more rapid and inclusive growth.
The broader strategy includes vital reforms aimed at crucial SOEs along with essential network industries such as electricity and transportation.
“We have made progress in rebuilding and restructuring a number of our network industries. We are seeing positive results in the improvement of the functioning of our network industries as well as the investment opportunities that are opening up and are being taken by investors leading to job creation,” he said.
“Working together with business, labour and other social partners we must now finish this work. Working with international partners, we are revitalising small harbours, unlocking economic opportunities for coastal communities.”
Moreover, he highlighted the importance of an efficient and restructured SOE sector, stating that these enterprises are pivotal to the country’s infrastructural framework.
“Our immediate focus is to enable Eskom, Transnet and other State-Owned Enterprises that are vital to our economy to function optimally. We are repositioning these entities to provide world-class infrastructure while enabling competition in operations, whether in electricity generation, freight rail or port terminals,” he said.
“We continue with the fundamental reform of our state owned enterprises to ensure that they can effectively fulfil their social and economic mandates. This includes the work underway to put in place a new model to strengthen governance and oversight of public entities.”
Cosatu said on Sona, “We welcome its progressive commitments and applaud progress made but remain deeply concerned about the pace of implementation. The working class and society face numerous crises, in particular our 41.9% unemployment rate, entrenched poverty and inequality, paltry economic growth, endemic crime and corruption, struggling public and municipal service and embattled State-Owned Enterprises.”
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