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S.Africa unveils raft of reforms to revive moribund economy
PRETORIA, Sept 22, 2018 (BSS/AFP) – President Cyril Ramaphosa on Friday
unveiled a raft of measures as part of an economic stimulus plan to boost
investor confidence after South Africa entered a recession in the second
quarter of this year.
The plan includes infrastructure investment and easing of visa
requirements in a bid to create jobs in the lucrative tourism sector, which
accounts for 10 percent of the economy.
“The measures we are announcing give priority to those areas of economic
activity that will have the greatest impact on youth, women as well as small
businesses,” Ramaphosa said in his offices in the capital, Pretoria.
South Africa’s economy tipped into recession as it shrunk 0.7 percent in
the second quarter, dealing a blow to Ramaphosa who came to office in
February.
He faces elections in 2019 and has been on a drive to attract foreign
investment and tackle soaring unemployment, which currently stands at about
28 percent.
His five-point plan centres around re-allocating 50 billion rand ($3.5
billion) of public spending to kickstart economic activity and create jobs.
Priority investment areas include agriculture, small businesses in the
townships and the rural areas.
“Our government has limited budget fiscal space to increase spending or
borrowing, it is imperative that we make sure that the resources that we do
have are used to the greatest effect,” he said.
The government under Ramaphosa’s predecessor Jacob Zuma was marred by a
string of corruption scandals and poor public service delivery.
A public inquiry is currently under way probing allegations that Zuma
organised systematic plunder of government coffers in a scandal known as
“state capture”.
Ramaphosa meanwhile announced a large-scale infrastructure investment plan
for 400 billion rand.
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“Infrastructure expansion and maintenance has the potential to create jobs
on a large scale, attract investment and lay a foundation for sustainable
economic expansion,” he said.
Labour unions welcomed the proposed interventions.
Ramaphosa announced several changes to South Africa’s visa system in a bid
to attract more tourists and allow more highly-skilled foreigners to enter
the country.
The changes are set to include visa-free travel for citizens of several
more countries.
There will also be an easing of visa restrictions for minors —
potentially making it easier for tourists seeking to travel to South Africa
with children, as well as for expats.
The Democratic Alliance, the main opposition party, bemoaned that the plan
came “too little too late to save the economy from recession”.
“In the end the stimulus and recovery plan is likely to have a modest
effect on economic growth and job creation,” the DA said in a statement.
The leftist Economic Freedom Fighters rubbished Ramaphosa’s plan as
“nothing new, but an attempt to repackage old neoliberal economic plans that
have proven futile”.
The conservative and predominantly white Freedom Front Plus said no matter
how good the plan looked on paper, it would not bring about growth, “as long
as the ANC government continues to drive away investors with policies like
(land) expropriation without compensation”.
The South African government is planning to expropriate white farms
without compensation and redistribute to blacks, a policy expected to spook
foreign investors.
The planned reforms have become the country’s fiercest battleground ahead
of elections next year.
According to Ramaphosa, whites make up eight percent of the South African
population and possess 72 percent of farms, while blacks account for 80
percent of the population but have only four percent of farms.
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