“Economic reconstruction and recovery must therefore be transformational. It must not merely return our economy to where it was before the pandemic, but must, as ‘Ready to Govern’ says, democratise the economy and lead to meaningful black economic empowerment…
…we have had to implement measures to address the immediate and severe challenges our people face, while advancing the broader transformation of our economy.”
by President Cyril Ramaphosa
As South Africa emerges from the COVID-19 pandemic, unemployment remains our greatest challenge. Low levels of employment and a lack of economic growth have led to a society that reflects deep rooted inequality with economic fault lines that have not fundamentally shifted for the vast majority of black South Africans.
Our young democracy faces a significant threat if we do not lead a radical programme of economic reconstruction and recovery. Building an inclusive programme of economic growth that shifts the character and nature of our economy means we cannot leave anyone behind.
As the South African economy emerges from a prolonged period of low growth and deepening unemployment – and in particular from the era of state capture and the COVID-19 pandemic – we must remain resolutely focused on the goal of a more inclusive economy worthy of Freedom Charter’s call that: “The people shall share in the country’s wealth.”
Inspired by our vision of liberation, we are putting in place the building blocks for a new economy – one that will grow more rapidly, will create more employment and economic opportunities, and will be more inclusive, particularly for those millions of black South Africans who remain locked out of meaningful economic activity.
The policy guidelines contained in the ‘Ready to Govern’ document, which we adopted as we prepared for the democratic transition, still guide our approach. In that document, we said:
“The central goal of ANC economic policy is to create a strong, dynamic and balanced economy that will be directed towards: eliminating the poverty and the extreme inequalities generated by the apartheid system; democratising the economy and empowering the historically oppressed; creating productive employment opportunities at a living wage for all South Africans; and initiating growth and development to improve the quality of life for all South Africans, but especially for the poor.”
Economic reconstruction and recovery must therefore be transformational. It must not merely return our economy to where it was before the pandemic, but must, as ‘Ready to Govern’ says, democratise the economy and lead to meaningful black economic empowerment.
As a first order of implementation, we are dealing decisively with state capture and corruption. We will not flinch from this task. The stench of corruption continues to have serious implications for the ANC’s standing and support among our people and for our ability to renew and unite our organisation.
State capture nearly derailed our programme of social and economic transformation. It is imperative that misdeeds continue to be exposed and that corruption is rooted out. The state machinery is being re-focused to better serve our people, rather than the interests of a corrupt few.
The unexpected and devastating impact of the global COVID-19 pandemic required that we come up with new responses to the devastation that it occasioned. Our economy lost 2 million jobs within a period of one year due to COVID-19. This was the first time that we lost so many jobs in a short space of time since the 2008 global financial crisis. Difficult decisions were necessary to save lives. This included the need to enforce lockdowns and restrictions on many aspects of normal daily life.
To protect the economy and sustain livelihoods, we mobilised billions of Rands in relief payments to support those whose employment was disrupted. We mobilised financial support for the unemployed and we assisted many businesses in distress.
Compounding the negative impact of the global COVID-19 pandemic, we have also been struck by other calamities: violence, looting, destruction of property and economic infrastructure, and extensive flooding. Now, we are contending with the negative economic effects of the conflict between Russia and the Ukraine, including rising fuel and food prices.
Despite all of this, the ANC is staying the course. As we renew ourselves internally and strengthen the capability of state machinery to improve service delivery, we are in effect also strengthening our programme of social and economic transformation.
As we rise above difficult circumstances, as we renew ourselves, we must begin again to ‘make our own history’, taking inspiration from the words of Karl Marx, who wrote in The Eighteenth Brumaire of Louis Bonaparte that: “People make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.”
Advancing economic reconstruction and recovery
In responding to the circumstances of the moment, we have had to implement measures to address the immediate and severe challenges our people face, while advancing the broader transformation of our economy.
In responding to the COVID-19 pandemic, we have moved decisively to implement an Economic Reconstruction and Recovery Plan with a set of decisive interventions to stimulate growth and investment and to accelerate the process of employment creation.
A major objective of the recovery plan is to lift the rate of fixed investment, which has fallen to less than 15% of GDP. To spark sustained levels of economic growth, we are pursuing active measures to lift investment towards the NDP target of 30% of GDP.
Our focus on infrastructure is aimed at mobilising more finance for infrastructure projects through the reform of financial regulations. This is already accelerating public sector investment in basic social infrastructure. These investments will benefit infrastructure built in municipal basic services, transport, sanitation and water, and as well as schools, clinics, sports facilities and police stations.
We are implementing reforms to stimulate increased levels of private sector investment. We are taking steps to overcome the problem of load shedding, which has been a binding constraint on the economy for more than a decade. We are moving decisively to improve South Africa’s energy security, through restructuring Eskom so that it is more efficient and fit for purpose. Through the Integrated Resources Plan, we are facilitating the building of new energy generating capacity from solar, wind, gas, battery and other power sources. We have also made it easier for companies to invest in their own electricity generation capacity up to 100MW in scale and sell it on to other users.
We are leading a just energy transition that will see South Africa, along with the rest of the world, reduce its economy’s carbon intensity to mitigate the effects of climate change. This transition will require significant investment in new energy capacity, as well as programmes and resources to create new employment pathways for workers and communities in coal producing areas. The just transition will also open up the possibility of new upstream and downstream industries and employment opportunities, including in electric vehicles and in the production and export of green hydrogen.
After years of declining investment, South Africa’s mining sector is again being prioritised as a key driver of growth, employment, and technological innovation. We are implementing supportive policies to increase exploration for new minerals, particularly those critical minerals linked to the world’s energy transition.
Even though it has been severely impacted by the COVID-19 pandemic, South Africa’s tourism sector continues to be an important growth sector for increased employment creation. Across all sectors of the economy, we are intensifying efforts to increase impactful Broad-Based Black Economic Empowerment, including through the increased use of worker share ownership mechanisms.
After many years of delay, we have taken steps to unlock investment in under-utilised parts of our telecommunications spectrum. This will enable access to 5G and speedier data access, as well as promote further investment and job creation in data services and improve the economy’s overall competitiveness. Accompanying policy frameworks will work to overcome South Africa’s digital divide, by extending and improving digital access for schools, hospitals and households, including those in rural areas.
Improved access to reliable electricity and data services – as well as reforms to improve the performance of the country’s rail and port services – will assist many small and large firms to grow more rapidly and increase levels of employment. This process is being further supported by initiatives such as the Youth Employment Service, which assists young people in gaining work experience, as well as the extension of employment-linked tax incentives, which make it more attractive for firms to increase employment levels.
These reforms are critical for unlocking the potential of businesses of all sizes to grow, to thrive and to create employment. As we said in ‘Ready to Govern’: “We envisage a dynamic private sector, employing the skills and acumen of all South Africans, making a major contribution to the provision of good quality, attractive and competitively priced goods and services for all South Africans.”
The growth of the private sector must be accompanied by the consolidation of an efficient, capable, competitive and well-capitalised public sector that is able to drive economic and social development.
All of these interventions are important to ensure that we work with the public and private sector in creating jobs and other economic opportunities, especially for young people
Public employment programmes
While a successful economic recovery agenda, as pointed out, is about pursuing multiple objectives, its employment-generating and growth effects are not typically immediate. The nature of the crisis requires immediate forms of intervention as the economy recovers. As a result, government is directly involved in stimulating and enabling employment creation and putting in place policies to support economic activity in the ‘informal sector’. This includes work to initiate new and support existing sectors of our economy to either industrialise or re-industrialise with a keen focus on strengthening manufacturing.
An important component of the Economic Reconstruction and Recovery Plan has been to expand public employment programmes. For example, young people are being employed as teaching assistants in our schools and in labour-intensive programmes to build, maintain and restore water and fire infrastructure. An added benefit of these programmes is that, in addition to creating work opportunities, they are also designed to improve the country’s resilience to the increased threat of flooding and drought due to the impact of climate change.
The productivity of South Africa’s agricultural sector has been growing in recent years, as has employment in this sector. There are several areas where support to small-scale farmers is unleashing farming activity among our people, thus heightening the need to accelerate land reform. This arises from the lived experience of many of our people who are involved in farming activities for more land to participate in gainful economic activity.
Deepening the process of social compacting
We worked very closely with our social partners from business, labour and the communities in developing our responses to the COVID-19 pandemic, as well as in deciding on the interventions needed to take forward the Economic Reconstruction and Recovery Plan. We are now working to deepen this process of engagement with our social partners with the aim of expanding these interventions and finalising a meaningful social contract.
Social compacting should not be regarded as a once off event, but rather as an ongoing process to restore trust among social partners and mobilise society towards common objectives in the national interest. This should include the identification of strategies to increase investment levels and accelerate job creation, as well as creating unity of purpose in restoring energy security and taking forward the country’s just energy transition.
As we emerge from the era of state capture and as we count the economic and social cost of the COVID-19 pandemic, South Africa is experiencing a sustained period of rising unemployment and poverty. Inevitably, there is growing disappointment and anger.
Through our actions to rebuild the economy, the ANC is working to regain the people’s trust. We are determined to provide the kind of leadership needed to take South Africa out of its current economic malaise. We are working to turn the situation around, for the sake of our struggle, for the sake of our people, and for the sake of our country.
In our country, at this time, it is the ANC that is stepping forward to provide leadership of frankness and vigour. The ANC’s leadership role cannot be claimed by right, but must continuously be won, through our commitment to our people, our actions and our hard work.