Ramaphoria is back as government targets 3.3% growth by end 2025

Government and business have thrown their combined weight behind a push to get the economy back above 3% growth by the end of 2025, creating around 400 000 youth jobs in the process.

This is well above the 1.5% for 2025 forecast by the South African Reserve Bank and the 1.2% expected by the International Monetary Fund.

The 3.3% growth target won’t be easy, concedes Business for SA (B4SA) vice-president and Discovery CEO Adrian Gore – speaking at a Government Business Partnership media presentation on Tuesday – but it is achievable.

Research commissioned by the Bureau for Economic Research suggests it can be done, “if we expedite reforms, more quickly achieve operational improvements at Transnet and Eskom, and swiftly mobilise private sector investment – we could see GDP growth reach 3.3% by the end of 2025, providing a crucial uplift from the current baseline,” says Gore.

“This economic growth can generate around one million additional jobs by 2030. Sentiment is crucial because it underpins fundamentals, and the work we are doing to foster a more positive narrative is beginning to yield results.”

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Scorecard so far …

The government-business partnership was launched more than a year ago to focus on three work streams: energy, transport and logistics, and reducing crime and corruption.

It’s reckoned that Transnet’s deteriorating performance wiped 5% off GDP in 2023, while crime and corruption costs 10% of GDP each year. Fixing these areas is expected to ignite massive economic returns, if done right.

The most obvious milestone from the collaboration between business and government is the achievement of nearly 200 days without load shedding, which has contributed to a modest resurgence in business confidence.

Business contributed R250 million in cash and more than 350 subject matter experts towards the three work streams, with 57 companies contributing more than 9 000 hours to Eskom alone.

Just as important was the R700 million in investments in key rail corridors and deployment of more than 500 security personnel for Transnet Freight Rail, resulting in a 50% reduction in security incidents on the coal line to Richards Bay.

Another R57 million was invested in a forensic analysis centre to assist in the campaign to expedite prosecutions for corruption and get SA removed from the grey list.

That was Phase One of the collaboration.

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Aiming higher

Phase Two now kicks off with even more ambitious targets, including growing tourism by reforming the tourist visa system, creating work-ready digital skills, promoting small business and the township economy, and addressing youth unemployment through targeted interventions.

Speaking at the media presentation in Sandton on Tuesday, President Cyril Ramaphosa said the benefits of the collaboration between business and government are evident in the performance turnaround of key power stations, rail corridors and port terminals.

“We have seen the benefits of meaningful collaboration that brings together the strengths and capabilities of both the public and private sectors. We have seen the impact of the deployment of engineers and project managers.

“We have seen this collaboration in the return of units at Kusile, in the safety improvements on the coal line and in the establishment of a state-of-the-art forensic analysis centre.”

Over next 100 days, ambitious plans are being put in place to set the economy on a fast-growth track.

“I want us to raise our gaze to aim for much higher goals. The actions we have presented here demonstrate the extent of our growing ambition. They are focused, practical and achievable,” added Ramaphosa.

To facilitate structural reform, the president pointed to the laws recently passed: the Electricity Regulation Amendment Act, the Economic Regulation of Transport Act, and the National Prosecuting Authority Amendment Act.

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Energy

The goals include adding 4GW of additional power to the grid – 1GW more than previously planned – and building 1 000km of transmission line in 2025. This will require R23 billion in private sector investment.

To achieve this, government plans to accelerate private investment in generation capacity through new projects and agreed frameworks for third-party wheeling while fast-tracking procurement of new generation capacity through Bid Window 7 of the Renewable Energy Independent Power Producer Procurement Programme.

The plans include strengthening energy regulator Nersa, establishing a wholesale electricity market, and modernising the energy distribution infrastructure.

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Transport

A further R28 billion in private sector rail investment should see freight transport volumes increasing to around 193 million tons (Mt) from the current 170Mt.

Key initiatives include expediting the final Network Statement and pricing schedules to facilitate private sector investment, and launching open access for third-party operations on the rail network by Q4 2024. The process of creating the position of an independent infrastructure manager for rail and ports has already started, together with the formation of the Transport Economic Regulator Board to oversee critical structural reforms.

The Bureau of Economic Research believes this could lead to a sustained economic turnaround and create an additional one million jobs by 2030.

Another key target is getting SA removed from the Financial Action Task Force grey list, which will restore investor confidence and attract much larger foreign capital inflows, a precursor to large-scale job growth.

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Crime

To expedite SA’s removal from the grey list, business is assisting in establishing a digital evidence unit to assist the National Prosecuting Authority, on an arm’s length basis, in its prosecution of state capture cases.

“We need to mobilise additional funding and resources to deliver on key tangible outcomes,” said Martin Kingston, chair of the B4SA steering committee.

“The achievements of Phase One have shown that when we unite with purpose, we can deliver real progress. This partnership is about laying the foundation for long term prosperity and social stability.

“By focusing on key priorities, we are investing in the future of our country, and there is no time to waste.”

This article was republished from Moneyweb. Read the original here.