16 October 2020

BUSINESS UNITY SOUTH AFRICA (BUSA) ON THE ANNOUNCEMENT OF THE ECONOMIC RECOVERY & RECONSTRUCTION PLAN BY PRESIDENT CYRIL RAMAPHOSA

BUSA welcomes the release of an Economic Recovery and Reconstruction Plan (the plan) by President Cyril Ramaphosa at a joint sitting of Parliament and the National Council of Provinces on 15th October 2020. We commit to continue engaging government and working with social partners to do what we can do encourage government to urgently implement critical areas of the plan that can be actioned immediately! These include the issuing of an RFP for the 5th tranche of renewable energy projects, the release of spectrum, intervention at the Durban port to increase efficiencies and resolving licensing issues for mining exploration. Urgent action on these, and others, will begin to create the environment for the private sector to invest and kick-start economic growth!

BUSA has been a central part of the engagement at Nedlac to produce a document, presented to the President on 15th September, that identified the critical immediately actionable areas. We are now appealing to government to work with social partners to resume these engagements, so that we can jointly track progress in implementation of the plan and, very critically, engage on the fundamental structural economic reforms necessary to enable investment, profitable business growth, ease of doing business and improving our competitiveness. These are critical elements to put our country onto a sustained and inclusive economic growth trajectory. We are also keen on resuming the engagements so that we can address our severe fiscal crisis. The President made several commitments in the plan, but there is no indication of how these commitments will be funded. Our economy was in recession pre-Covid and SARS had forecasted a R 200 billion shortfall in tax revenues for the 2020 fiscal year. The Covid crisis has exacerbated our economic situation and the revenue shortfall is significantly bigger. We are also rated as a sub-investment grade country. We will thus have difficulty raising funds in capital markets and will be competing for these funds with other emerging countries also seeking to rebuild their economies. The engagements on the fiscal crisis will also have to take tough decisions on reductions in government expenditure.

Our country has come together to manage the social, health and economic impacts of Covid-19 and a compact of sorts has taken shape. We need to continue working together to now re-purpose our economy to be inclusive, competitive, and business and investment friendly. These are the recipes for sustained growth, which must include the majority of our people in the fruits of such economic growth. We welcome the plan, but the issues raised above are critical and urgent! We have run out of time and further delays in implementing the short-term actions and resolving the structural and fiscal conundrums will make the rebuilding of our economy exponentially more difficult!

We urge the President to lead the country on this critical path. We urge government to continue engaging with, and consulting, social partners, but, we also urge that government takes decisions urgently after such consultations and acts decisively to create the environment for investment, growth and fiscal discipline, all critical to sustained inclusive socio-economic growth!

BUSA CEO Cas Coovadia