Analysts sceptical about economic recovery plan
‘ Very little detail as to how the government plans to finance the ambitious goals outlined’
ANALYSTS greeted President Cyril Ramaphosa’s Economic Reconstruction and Recovery Plan, with scepticism yesterday, with a view on waiting to see what could be delivered.
Ramaphosa yesterday addressed a joint sitting in Parliament and said the government would unlock more than R1 trillion in infrastructure investment over the next four years and would create more than 800 000 jobs in the immediate term.
“We are embarking on a massive rollout of infrastructure throughout the country,” said Ramaphosa. “Infrastructure has immense potential to stimulate investment and growth, to develop other economic sectors and create sustainable employment both directly and indirectly.”
The economic recovery plan was unveiled ahead of Finance Minister Tito Mboweni’s Medium- Term Budget Policy Statement on October 28.
Ramaphosa also said the Covid- 19 grant would be extended for three months. “This will maintain a temporary expansion of social protection and allow the labour market sufficient time to recover,” he said.
He said that through the special Covid- 19 grants and the top- up of existing grants, close to R40 billion in additional support had been provided directly to more than 17 million people from poor households.
Casey Delport, an investment analyst at Anchor Capital, said: “All in all, we have mixed feelings surrounding the tabling of the president’s new economic recovery plan. As it stands, it appears to be more of a lofty wish list than a concrete policy plan, that skirts around the economic reality of South Africa.
“Whilst the significant boost in infrastructure development and increased focus on employment creation is greatly needed, very little detail was provided as to how the government plans to finance the ambitious goals that the plan outlined. We remain sceptical surrounding the fundability of these projects.”
Delport said driving down unemployment by boosting public employment opportunities via schools, municipalities and museums further compounded the high public wage bill. “There was a little talk about barriers to entry and ease of doing business, and little detail surrounding the government’s thoughts on the quagmire of policies hindering the private sector.”
The president of the agricultural union TLU SA, Henry Geldenhuys, said: “It all sounds very nice, but the root of the problem was still the policy environment which drove expertise from the country. The ability to deliver all but evaporated and the ability to do service delivery is gone too.” TLU SA said it was satisfied with the intense focus on local production and products and would support this policy.
“We want to see that the four legs of the recovery plan make a difference in practice,” said Geldenhuys. “The economy won’t be regulated by political announcements of who should do what. The market power principle will be the deciding factor to evaluate
any efforts of recovery. Individuals must take responsibility for what the economy claims.”
Agri SA said: “We believe that the environment is well resourced with a strong policy framework foundation in the form of the National Development Plan ( NDP) and the report by the Presidential Advisory Panel on Land Reform and Agriculture. Inefficiencies in terms of implementation and poor co- ordination between stakeholders have stymied the roll- out of the NDP. Implementation remains a massive challenge and if not addressed it poses a serious challenge to achieving the outcomes outlined in the recovery plan as announced by the president.”