Policy certainty and a conducive business environment are critical to support the confidence of businesses and households. A robust monetary policy framework has provided certainty but needs to be complemented with a range of reforms that are within government’s control and do not require significant funding. These would help to raise long-term growth.
The paper titled Economic Transformation, Inclusive Growth, and Competitiveness: Towards an Economic Strategy for South Africa, which the National Treasury released in 2019, has begun a vigorous national debate on the reforms required to raise growth. The interventions consider (i) strengthening network industries, such as road and rail, (ii) enhancing South Africa’s export competitiveness to boost exports, employment and innovation, and (iii) promoting greater competition within the economy, enabling small firms to grow and compete with dominant players. Several reforms that do not require significant state resources include:
- Tourism: reducing the cost of traveling to South Africa, and cutting red tape
- Power generation: granting licences for small-scale power generation projects
- Telecommunication: allowing for the rapid expansion of fibre infrastructure
- Lowering the cost of doing business: automating various regulatory processes
Medium-term reforms also need to begin immediately in transport, water, telecommunications, and industrial and trade policy, although they will likely only be completed over the next three years.
Improving the pipeline of infrastructure projects with the Infrastructure Fund
Over the past year, government has made progress in setting up a blended-finance Infrastructure Fund. The fund’s implementation unit has been established and is housed within the Development Bank of Southern Africa (DBSA). Its aim is to fast-track the development of projects and programmes by drawing on existing capacity in the Presidential Infrastructure Coordinating Commission, the National Treasury, the Government Technical Advisory Centre (GTAC) and the Independent Power Producers Office.
Government set aside R100 billion over a decade to co-finance programmes and projects that blend public and private resources, with R10 billion in the baseline for the next three years. Pilot projects, including the Student Housing Infrastructure Programme and Small Harbours Programme, receive R529.8 million in the current year. The implementation unit is developing a pipeline of projects for funding that includes proposals from government, the private sector and the DBSA. To date, the implementation unit for the Infrastructure Fund has identified possible projects and programmes amounting to more than R500 billion.