5 minute read
ECONOMIC RECOVERY
from African Leader 2022
2022:
THE YEAR FOR DELIVERY
Given the state of our economy, gross domestic growth of six per cent seems a far way o , but that target is no utopian dream, writes Busisiwe Mavuso, CEO of Business Leadership South Africa
Dramatic change of attitude from government – where it addresses all our critical issues as emergencies rather than with the tortuously slow pace that seems to be its default mode – would accelerate the time to reach a fast-growing economy.
We should demand from government that it ensures 2022 is the year of delivery. e important reforms that have been agreed upon by Cabinet are all being implemented far too slowly, such as the roll out of the infrastructure drive. ese are critical to kick-starting our economic recovery and blockages need to be removed to accelerate implementation.
en, as recently as February this year, there was a breakthrough with the gazetting of the new critical skills list for skilled immigration. It’s important that the list matches the areas where we lack expertise. ere’s still much to do in this area though, in particular, streamlining the visa application process, which takes two years, as well as making the critical skills list a more dynamic process that adapts faster to the changing needs of businesses.
SOME GREAT STRIDES HAVE BEEN MADE
What does make me optimistic is that we have made some fantastic strides so far. at’s sometimes easy to forget as frustrations escalate at the government’s overly lethargic approach. But we have come a long way, particularly in the energy sector and with the restructuring of our ports to create an independent national ports authority and allow private sector operations within docks. Successful and e cient implementation of the reforms just in those two sectors would certainly make a huge contribution to accelerating gross domestic product (GDP) growth in the short term, though it won’t get us to six per cent.
Of course, the most dramatic changes have come in the energy sector. Raising the limit for private companies to generate their own electricity to 100MW was a truly momentous event in liberalising the sector and generated much optimism that the government was serious about getting the economy on a strong growth path. ere has been other progress in energy: Eskom’s restructuring, where it is being split into three entities – generation, transmission and distribution – and the h round of the Renewable Energy Independent Power Producers’ Programme (REIPPP) has been held and energy from the new plants will start feeding into the national grid in two to three years’ time.
Busisiwe Mavuso
GREATER URGENCY REQUIRED IN TRANSFORMING THE ENERGY SECTOR
Rather ironically though, energy is also the sector where the most frustrating delays are occurring. Given the importance of securing a stable electricity supply that meets demand so that we can nally end
the load shedding that causes massive economic destruction, these delays need to be addressed urgently. Minerals and Energy Minister Gwede Mantashe promised in October last year that the sixth bid window would be announced by end-January this year, but we’ve heard no explanation about why this hasn’t happened. And the “emergency procurement round” for an extra 2 000MW has become bogged down, with the latest postponement to reach nancial close being implemented with no adequate reason provided.
Apart from e ciently implementing these approved processes, we’d also like to see a greater sense of urgency in coming up with faster ways of getting new energy onto the grid. Perhaps it is time to restructure the REIPPP programme so that it meets the entire renewable energy quota in the Integrated Resource Plan of 6GW of new solar PV capacity and 14.4GW of new wind power capacity, rather than holding successive bid windows inde nitely into the future. ere may be other, quicker methods of stabilising our energy supply, and this is where policymakers should focus. Load shedding is estimated to cost the national economy about R500-million per stage per day. In the rst week of February alone, the power cuts would have wiped out R6-billion in value, a staggering amount given our strained scus. What’s more alarming is that this will happen repeatedly, until energy supply meets demand.
Achieving a stable supply of energy is the rst priority because, without it, our economy simply will not be able to grow fast enough to create jobs.
INFRASTRUCTURE DEVELOPMENT INTERVENTIONS NEEDED
e next priority in the short term is to roll out the infrastructure programme. e long-term bene ts will be felt through improved and more e cient state services, ranging from ports and roads to schools and health clinics, but the short-term stimulatory e ect of injecting more than R1-trillion worth of construction activity will be massive, creating both short-term and long-term job opportunities.
To accelerate this process, Business Leadership South Africa has presented government with research ndings highlighting that complicated bureaucratic procedures and lack of expertise are two elements that hold up infrastructure development. e government can make a big di erence quickly by streamlining processes and ensuring quali ed people are in key roles – at the top in the relevant government departments and through all levels of government, down to each municipality.
What is also needed is to simplify approval processes for public-private partnerships, which are subject to onerous bureaucracy. is is a central problem that should be addressed through new interventions to support public infrastructure procurement.
OTHER AREAS DEMANING URGENT ATTENTION
For business, the next priority area is one that is not yet even on the table: labour legislation reform. Our unemployment rate is at such critical levels that the country is now considering dramatic measures such as a basic income grant and excluding foreign nationals from certain jobs. But what is not even being considered is loosening regulations to make it easier to hire people, as well as focusing on labour laws that are constricting to small and medium enterprises.
Reforms in many other areas have been agreed up, from improving the ease of doing business, particularly for small businesses, to simplifying mining investment regulation. Some are being implemented, but a sense of urgency from government is needed to accelerate things. e bottom line is that government needs to get on with things. I fear that, in some areas, there’s a lack of appreciation of the urgency of the situation. A dramatic change of attitude by the government is probably the one single factor that would transform our recovery attempts in the quickest possible time.
