R400bn promised
President Cyril Ramaphosa’s Economic Stimulus and Recovery Plan is intended to attract investment from the private sector and stimulate the economy at a time when there is no fiscal room to do so.
It has been in the making since July, when the ANC resolved at a Cabinet meeting to introduce a fiscal stimulus package to support an economy that has slipped into a recession.
Ramaphosa, whose presidency since February has been centred on the economy and rooting out corruption, says the infrastructure plan will focus on the roll-out of projects worth R400 billion.
Already identified in the fiscal framework, they will be rolled out over the medium to long term. Some are already led by the government through state-owned enterprises, which have ongoing roads, dams and public transport network projects.
To fund the projects, Ramaphosa will be looking at development financiers such as the Development Bank, Industrial Development Corporation (IDC), African Development Bank and pension funds like the Public Investment Corporation, which manages the Government Employees Pension Fund.
The infrastructure plan has already received the stamp of approval from the IDC, which plans to extend R20 billion worth of funding in the next 20 months.
Ramaphosa says an infrastructure executive team in the Presidency has been set up, which will feature skilled individuals from the private sector to monitor the implementation of projects.
“The true test will be how much of the infrastructure plan Ramaphosa will be able to implement, how quickly and whether we can get economic growth from it,” says Citibank economist Gina Schoeman. “We need to stimulate the economy by increasing business confidence, certainty and by getting the private sector to invest.”
Other initiatives include reprioritising government’s budget to support emerging farmers in the agricultural sector; revising the mining charter; the release of radio spectrum; easing of visa regulations to boost tourism; and expanding government’s procurement from small businesses.