When Cyril Ramaphosa was elected as our new president, the country had a feeling of renewed optimism, this “Ramaphoria” lead to improved business confidence and investor sentiment, however this was short lived. Investors started to become anxious when they didn’t see any changes being implemented, however this should not be the case. Ramaphosa inherited a country riddled with bad decisions made by the Zuma faction over a decade and fixing this will not happen overnight. Ramaphosa has been working to turn things around by ensuring the policies which will be rolled out, result in the re-ignition of growth and economic recovery. He has embraced the private sector as a partner and not as an irritant, as his predecessor did.
The Economic Stimulus and Recovery Plan is exactly what the country ordered; this plan aims to reallocate existing budget, as well as raise other forms of financing through partnership, as opposed to introducing more debt to fund this stimulus package. This will have the greatest impact on economic growth, domestic demand and job creation, which will be supported by the formation of an Infrastructure Development Plan.
KEY STIMULUS POINTS
• Amendments to visa and travel regulations
Relaxing Visa regimes, aimed to stimulate growth in tourism and business sector
• Reviewing the mining charter
Easing controversial and stringent clauses restricting mining aimed at improving renewed investor confidence in this sector
• Electricity, ports and rail tariff prices
Reviewing tariffs and taxes on local industries and businesses, aimed at making the local industrial sector more competitive to stimulate growth
• Reprioritise agriculture
Implementation of government support measures to assist black commercial farmers to increase production levels and grow the emerging agricultural market leading to high quality agricultural yields
• Land Reform
A 10-person panel appointed to advise government on the implementation of a fair and equitable land reform process, without affecting growth and food security. Included in the panel are economists, attorneys, farmers and technical experts, which allows the debate to be moved away from emotions and towards evidence-based research
• Job creation, upliftment of township economies
Commitment to creating jobs and uplifting lives of South Africans, particularly those living in townships. Sanitisation facilities at schools and in townships would also be prioritised
• Infrastructure development
A R400 billion infrastructure fund (IF) is the most important stimulus, it has the potential to stimulate private sector investment. Capital allocation would be joint decision in the partnership.
What is comforting is that Ramaphosa has gone to great lengths to ensure the expenditure ceiling is not breached and has identified that implementation and effective allocation of funds are the key factors. He has therefore employed a dedicated Infrastructure Execution Team, who has extensive project management and engineering expertise to assist and oversee the operations, which is exactly what is needed to bring back the feeling of “Ramaphoria” and investor confidence.