Pres. Cyril Ramaphosa (Photo: Presidency / X)
Pres. Cyril Ramaphosa has warned that South Africa’s economic recovery is threatened by international conflict, a global oil crisis and a drop in employment, even as the government presents major investment and infrastructure plans.
Ramaphosa said in his budget speech about the presidency that the macroeconomic environment had improved; tax collection remains strong; public finances are in better shape; and public debt stabilized.
He also referred to Moody’s, which adjusted South Africa’s rating outlook from stable to positive, as well as S&P, which raised South Africa’s credit rating six months ago for the first time in two decades.
According to Ramaphosa, the sixth South African investment conference yielded investment pledges of more than R890 billion. He says a significant part of that comes from local investors, which he says shows confidence in the country’s economic prospects.
“Economic growth is not an end in itself. Its purpose is to create jobs, restore hope and expand opportunity,” he said.
However, he warned that events outside South Africa’s borders could hamper the country’s economic recovery.
“The attack by the United States and Israel on Iran – and the conflict that has now engulfed large parts of the region – has caused a global oil crisis. The effects of higher oil prices, as well as the rise in prices of other essential supplies such as fertilizers, are likely to undermine the progress made in reducing inflation and the cost of living.”
He says these developments can slow economic growth in the short term and hinder the government’s efforts to create jobs.
“We have to expect conditions to be difficult for the next little while.”
Ramaphosa also said the latest employment figures from Statistics South Africa show a drop in employment in the previous quarter. He says that although it often takes time for investment to translate into economic growth and ultimately jobs, the decline remains worrying “because it is about people’s lives and livelihoods”.
Presidency defends its role
The president defended the presidency’s role in government and said it is not a service delivery department that itself builds roads, delivers water or supplies medicine to clinics.
According to him, the presidency is the “strategic center” of the government which must drive implementation, resolve bottlenecks, mobilize partnerships and ensure that government promises are transformed into tangible results.
He said the presidency’s work focuses on three main priorities: inclusive growth and job creation, reducing poverty and the high cost of living, and building a competent, ethical and development-oriented state.
Big plans for infrastructure
Ramaphosa also said the government had embarked on “the biggest infrastructure building program in South Africa’s history”. Over the next three years, according to him, the state will invest R1 billion (“trillion”) in building and repairing roads, dams, schools, hospitals and clinics, as well as energy, logistics and transport infrastructure.
On energy, Ramaphosa said that thanks to the work of the National Energy Crisis Committee, Eskom, government departments and social partners, South Africa has not experienced any load shedding for more than a year.
He says Eskom has returned to financial and operational viability, while new capacity, including from renewable energy, continues to be added to the national grid. However, he admitted that shift reduction still occurs in several municipalities and said that work is being done to end it.
Water crisis and municipalities under scrutiny
Ramaphosa also highlighted the water crisis in various parts of the country. He says the National Water Crisis Committee has been established and has already started to implement the National Water Action Plan.
According to him, the national government will intervene directly in municipalities where serious water problems occur in the short term. In the medium and long term, the water delivery model will be revised, among other things by obliging municipalities to use water revenue exclusively for water services so that money paid for water is reinvested in pipes, reservoirs and pumping stations.
Ramaphosa described local government as one of the most urgent priorities of his administration.
“The true test of government is not what happens at the Union Buildings or in parliament. The true test is whether water flows from a tap, whether a street light works, whether garbage is removed, whether a road is maintained and whether a community feels safe.”
He further said the government continues to strengthen law enforcement agencies, security services, the National Prosecuting Authority and specialized anti-corruption bodies.
Corruption, crime and immigration
According to Ramaphosa, 80% of the 60 actions in the government’s implementation plan after the State Creation Commission have been completed, substantially completed or on track. He says more than R17 billion related to the work of the commission has already been recovered by law enforcement agencies.
“There will be zero tolerance for corruption, regardless of position, status or political affiliation,” he said.
Ramaphosa also said the government is taking stricter action against illegal immigration. According to him, these include more workplace inspections, prosecution of employers who violate labor laws, better border security and closing loopholes in immigration laws.
However, he warned that this action must not degenerate into xenophobia, violence or vigilantism.
The president further said that the National Youth Service will be expanded to 100,000 community service jobs in the current financial year. The presidency also supports the private sector’s Youth Employment Service initiative, which connects unemployed young people with work experience opportunities.
Ramaphosa said the government was also working to reform the skills system, including moving TVET colleges to vocational qualifications with built-in work experience, reforming the Seta system and adjusting the National Skills Fund.
He said the progress that has already been made is not accidental, but the result of “deliberate state action” to drive structural reform with government, business, labor and other social partners.
“Even as our economy recovers, there is still much that needs to be done. Our people need jobs and the economy needs to grow at a rate that it can create.”