Stimulus recap: What Ramaphosa announced on Friday | Fin24
 
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Stimulus recap: What Ramaphosa announced on Friday

Sep 21 2018 19:26
Jan Cronje

President Cyril Ramaphosa announced a package of economic reforms and spending plans on Friday morning in an effort to boost South Africa's sluggish economy.

Ramaphosa said the stimulus and recovery plan would be "implemented immediately".

Its goals are to ignite economic activity, restore investor confidence, prevent further job losses and create new jobs. He also said the plan aims to address "urgent challenges" affecting vulnerable South Africans. 

Acknowledging that the country had "limited fiscal space to increase spending or borrowing" Ramaphosa said the central element of the stimulus would be a "reprioritisation" of spending between government departments.

He did not list which departments or ministries would lose funding and which would gain. Finance Minister Nhlanhla Nene will announce the details of the funding changes in his mini budget in late October.

Here are seven of his key announcements 

1. Boost tourism and business travel

The president said onerous regulations governing the travel of minors would be amended, the list of countries needing visas to visit South Africa will be relooked at and an "e-visas pilot" initiative would be implemented.

The visa requirements for highly skilled foreigners will be revised, he said. "These measures have the potential to boost tourism and make business travel a lot more conducive."

2. Finality on the revised Mining Charter 

Ramaphosa said the fact that Cabinet had approved the revised Mining Charter would provide certainty to investors. The finalised text has not yet been made public. 

And the fact that Parliament has decided to shelve the contentious Mineral and Petroleum Resources Development Act Amendment Bill - which has been criticised by the Minerals Council South Africa - would also boost confidence.

3. Allocate high-demand radio spectrum 

As expected, the president announced that government has started a process for the allocation of high-demand radio spectrum to enable licensing.

"This will unlock significant value in the telecommunications sector, increase competition, promote investment and reduce data costs," he said. 

4. Boost spending on agriculture 

Ramaphosa said part of the reprioritisation of spending would flow to agriculture, which has "massive potential for job creation". 

He announced a package of support measures for black commercial farmers to "increase their entry into food value chains through access to infrastructure like abattoirs and feedlots".

While he did not say what this would cost or what exactly the package would contain, he said funding would boost the production of export-oriented crops that are highly labour intensive.

He also announced the establishment of a 10-person advisory panel on land reform, which will support the work of the the state's current Inter-Ministerial Committee on Land Reform chaired by Deputy President David Mabuza.

5. Kick-start the economies of townships 

Together with agriculture, Ramaphosa said reprioritised funding would go towards kick-starting economic activity in townships and rural areas.

"We have prioritised the revitalisation of three regional and 26 township industrial parks as catalysts for broader economic and industrial development in townships and rural areas," he said.

"A township and rural entrepreneurship fund is being established to provide finance to either scale up existing projects or provide start-up capital for new projects."

6. Fill 2 200 critical medical posts

The president said that, as part of the plan, funding is being made available immediately to buy beds and linen to equip hospitals facing shortages. 

He said the minister of health and the National Health Council would also "immediately fill 2 200 critical medical posts", including for nurses and interns. 

7. South Africa Infrastructure Fund

The president announced the establishment of a R400bn South Africa Infrastructure Fund, which he said would "fundamentally transform our approach to the roll-out, building and implementation of infrastructure projects".

He said over the medium-term expenditure framework period, the state will contribute more than R400bn to the fund, although it was unclear how much of this would be new spending.   

The fund, he said, would also seek investment from finance institutions, development banks and private institutions.

The DA's finance spokesperson David Maynier said in a statement that the R400bn was not new spending. "[The funds have] already been allocated to expenditure on public infrastructure in the existing budget over the medium term between 2018/19 and 2020/21," he said. 

Ramaphosa said an Infrastructure Execution Team in the Presidency would help oversee the implementation of the fund. 

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cyril ramaphosa  |  stimulus  |  stimulus package
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