Announcing his much-anticipated stimulus from government on Friday, President Cyril Ramaphosa confirmed that it would cost R50 billion.
“We are announcing today an economic stimulus and recovery plan. It consists of a range of measures, some financial and some non-financial, to be implemented immediately to ignite economic activity and restore investor confidence.”
The package entails five measures and will give priority to areas that will have an impact on the youth, women, small businesses, infrastructure, and local governments.
The money would come from reprioritising the budget.
“The minister of finance will announce more details next month,” he said.
The plan is in response to the contraction of the economy, high unemployment, sluggish growth prospects, high fuel prices and the rand taking a beating.
The plan will also include the establishment of an infrastructure fund. Deputy President David Mabuza will oversee the infrastructure fund, which is intended to transform the roll-out of infrastructure projects.
There will be more effective and efficient use of resources, according to Ramaphosa.
He said that labour and business were behind the plan, which would culminate with a jobs summit and a major investment conference at the end of October.
“As South Africans we have confronted challenges that are far greater than the challenges we are confronting today.”
The rand appeared to respond positively to the plan and the build-up to it, trading at around 14.22 to the dollar on Friday late morning.
Ramaphosa started by admitting that South Africa’s economic challenges were huge and would take “extraordinary effort and some time” to overcome.
He announced five key measures in total, with the economic stimulus and recovery plan including financial and non-financial measures to ignite recovery, restore investor confidence and prevent job losses.
Amendments would be made to regulations around the travel of minors and the list of countries needing visas to enter South Africa. An e-visa pilot would also be implemented.
He also touched on concerns around the revised Mining Charter, which has already been approved by Cabinet, but not yet been made public.
The president said the revised Mining Charter would provide certainty to the industry.
He said government had begun a process of reviewing electricity, ports and rail tariff prices. The aim, he said, was to reduce the cost of doing business and make the industry more competitive.
He admited government had limited fiscal space to increase borrowing. The state therefore had to reprioritise spending within the current fiscal framework.
Spending would specifically be reprioritised to agriculture, with interventions including support measures for black commercial farmers. The focus would be placed on high-value crops for expert.
He had also appointed a 10-person advisory panel on land reform who would advise government on “the implementation of a fair and equitable land reform process”. The names would be made public, however, in a separate statement.
The state would also work to revitalise the economies of townships, he said.
“More funding will also go to sanitation facilities at schools. The goal is to complete 1,100 sanitation projects.”
He said he was appreciative of how government had received support from the private sector regarding sanitation in schools.
“The minister of health will immediately fill 2,200 critical medical posts,” he added.
Another big part of the plan would be the launch of a “mega-infrastructure fund”.
“It will reduce the current fragmentation of infrastructure spend,” he said. The state fiscus would contribute more than R400 billion to it over the medium term to leverage further investment.
Additional infrastructure funding would also be directed towards roads, human settlements, student accommodation and transport.
Progress on the stimulus package will be measured by the growth generated in the economy and there will be other agencies that will monitor implementation.