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Ferial Haffajee: 8 months and little to show for Ramaphosa's economic stimulus plan

May 29 2019 06:55
Ferial Haffajee

In Nigeria, President Muhammadu Buhari is known as Baba Go Slow because all the promise of his first term went from fizz to popped.

Does a similar fate behold President Cyril Ramaphosa, whose weekend inauguration was met with universal welcome? If he is not careful and if efficiency in the Presidency is not improved, this could very well happen to the new number 1 citizen. Why?

In September last year, Ramaphosa announced a short-term stimulus plan to get the economy growing. Eight months in, there is zero to little progress on it, according to a Fin24 tracking plan.

Instead, the SA Reserve Bank last week said its new growth expectations for 2019 are now at one percent, while unemployment figures in the last week show there is little structural improvement to an expanded unemployment level now north of 40%. The 2018 stimulus plan was widely welcomed as sensible and achievable, but little appears to have been achieved.

Moreover, getting information out of the Presidency reveals another weakness: while it is large, there is no evidence of policy co-ordination in the Presidency. An entire department in the Presidency, the department of Performance Monitoring and Evaluation, does not provide regular or public accounts of its work to assess whether the stimulus plan is being implemented.

Here is Fin24’s eight-month assessment.

Centralised infrastructure fund capitalised at R400bn run out of the Presidency

Not started.

Infrastructure execution team across 57 pilot municipalities

No information.

Budget reprioritisation

Not achieved largely due to Eskom’s debt bill and an unchanged state wage bill. 

Review administered prices

Not done. Electricity tariffs for 2019 set at an average five percentage points above inflation and higher.

New national minimum wage

Done. But this is still subject to opposition in manufacturing sector.

Expand VAT exempt basket

Done.

Township and rural entrepreneurship fund

No information.

2 200 critical health posts to be filled

Budgets set aside, but no information on whether posts are filled.

Finalise mining charter

Partially achieved. The Minerals Council has announced it will return to court as the designated negotiating period on the once-empowered, always empowered principle came and went without being finalised.

Resolve land expropriation without compensation

A new expropriation law has been finalised, but is not passed yet, and it has been poorly communicated. There is still significant investor uncertainty about this aspect of law and policy.

Advisory panel on land reform 

Started.

30-year leases to farmers

No information.

Spectrum allocation to bring down the cost of broadband

Not achieved. Outgoing minister of Communications, Stella Ndabeni-Abrahams, was at loggerheads with the Universal Services Agency of SA (Usasa) on aspects of the spectrum auction. The telco industry has told Fin24 there is no guarantee that spectrum allocation will bring down the cost of data.

Simpler, better and faster visa regulations, including e-visas

Not achieved.

Fin24 has attempted to check on progress with regard to the stimulus plan from the Presidency since its inception in October without success. The macro-economy, however, tells the story, as there is no evidence of even green shoots to suggest the stimulus plan may have begun to bear fruit.

By and large, the business community is still waiting for evidence of policy certainty and direction with regard to what will happen with Eskom’s unbundling as well as with regard to expropriation of land.

These two elements are dampening down business confidence, as is the fact that the governing party still has a resolution to nationalise the SA Reserve Bank on its books. While this, in practice, only means a buy-out of private shareholders who hold no sway over monetary policy, the constant threats by a faction of the ANC to make good on this resolution puts the scares on investors who do not understand the detail.

It is likely that a significant reorganisation of the state through Cabinet changes could further slow things down as it takes time for new ministers to settle in and to arrange staff before they get moving.

While it is likely that Finance Minister Tito Mboweni is likely to stay in his position, he could get a new deputy. Significant changes are afoot at the Department of Trade&Industry (DTI) where Rob Davies is on his way out (he did not make the party cut for a seat at parliament) and the Economic Development department could be absorbed into the DTI.

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