GOVERNMENT’S ACTION PLAN IN RESPONSE TO THE RECESSION

By Malusi Gigaba

Earlier this month, we announced government’s action plan linked to the 9-Point Plan for Economic Growth as our response to the recession. It aims to accelerate progress, coordinate government efforts and act as a mechanism for accountability. The 14-point action plan, which has strong support from the President and Cabinet, has realistic, achievable objectives set against realistic and firm timelines.

Since assuming the Finance portfolio, we have engaged extensively with business stakeholders – across sectors, established and emerging – on our economic growth programme. The key message that has emerged from those engagements was that two broad sets of actions were required to revive business confidence: provide policy certainty in a range of areas where key decisions and legislations have been pending for years (mining, telecommunications spectrum, broadband rollout, land reform), and revitalizing key state owned companies (SOCs), especially Eskom and SAA, and stabilising their governance.

With respect to policy certainty, business has said to us, understandably, that for it to invest in these areas, it needs to know what the policy landscape is going to be. In the case of telecommunications spectrum, the state needs to exercise its licensing function to unlock economic activity.

As the department responsible for managing government guarantees of SOC debt, we are acutely aware of the need to ensure that our SOCs are well governed and managed, and have sustainable business plans. Further urgent reforms are required in the governance of our SOCs in order both to establish public confidence in them and to place them on a solid footing to make the socio-economic contribution we expect of them.

Our discussions with business reinforced our own analysis that much of what needs to be done to restore the confidence of economic actors to spend and invest has already been identified. The 9-Point Plan is our economic growth and reform agenda; we need to improve its implementation, not replace it.

This speaks to valid criticisms that have been levelled at government for years. Stakeholders have complained that we generally develop sound policies but are let down by slow decision-making and poor implementation, that departments work in silos and often at cross purposes, or that we too often come up with new programmes without implementing the ones we have. There is often lack of accountability for non-action. This has tended to put into question the leadership of the government and raised doubt as to strong government support for the economic reform programmes to be implemented.

These criticisms are valid to various degrees. We do have to work within the constraints of government, in accordance with legislation and regulations which are time-consuming to enact and amend. Still, government can and must work better to achieve our development objectives and there must be accountability for agreed programmes and set timelines.

In several intensive engagements with the President and fellow Ministers after the recession was confirmed, we spoke frankly about the concerns raised by business and other stakeholders. We all shared a sense of urgency to accelerate the pace of structural reforms, to lay the platform for higher growth. The President asked departments to commit to the shortest realistic timelines for the 14 key actions which were identified and made it clear that he expects these timelines to be met. They have been communicated to the public so that stakeholders can hold departments accountable for delivering on these. In this way, we can hold our feet to the fire.

What is important about the action plan is not whether the actions therein are new. Most are not and we make no pretense that they are. However, what is important is that it represents unity of purpose, an action-oriented approach, and enables accountability. It is an economic support package to enhance 9 point plan – mobilising public and private resources around common targeted objectives

We believe that by completing these structural reforms, we will lay a platform for higher growth, by improving business and consumer confidence, and removing binding constraints. It will not happen overnight. Government must do what it has to do to create an enabling environment for business to invest and thus drive growth and employment in the economy.

We have made progress in resolving the energy challenge, moving from scarcity to surplus, and improving labour relations. Economic capacity that was lost due to electricity constraints and workplace conflict will take time to reconstitute.

Our economy has significant advantages compared to our peers which we sometimes overlook. As we continue to remove binding constraints and promote key sectors, we are confident that growth will resume, and more sustainably so.

We have often said that improving business confidence is the cheapest economic stimulus that government can implement. A first step towards achieving this is for government to deliver on its to-do list. By the medium-term budget policy statement in October, we will be in a better position to look at our economic forecasts, and announce a further economic support package, building on this action plan.

To enhance implementation, an advisory council on economic growth comprising of government, labour, business and civil society chaired by the President is being considered. We know we have a long way ahead, but with concerted effort and coordinated action we can turn our economy around, help it grow faster, bigger, on a sustainable basis and in an inclusive manner. Despite our many challenges and sometimes differences, we must be able to act together towards a common direction, bearing in mind that below are the commitments the public and the masses of our people will hold us to account on our actions.

Malusi Gigaba is a member of the ANC National Executive Committee and Minister of Finance

 

 

Intervention
Responsible authority Timelines
Fiscal Policy
  • Finalise a sustainable wage agreement
Minister of DPSA February 2018
  • Finalise infrastructure budget facility
Minister of Finance October 2017
Financial sector and tax policy
  • Convene Financial Sector Summit to quantify transformation targets, including for low-income housing and transformational agriculture
Minister of Finance December 2017
  • Bring down banking costs by implementing Twin Peaks
Minister of Finance February 2018
  • Work with DTI on targeted debt relief for most vulnerable (e.g. in cases of reckless lending)
Minister of Finance February 2018
  • Introduce micro-insurance framework and review Cooperatives Bank framework
Minister of Finance February 2018
Leverage public procurement
  • Implement Preferential Procurement Regulations, which took effect on 1 April 2017.
Minister of Finance July 2017
  • Finalise Public Procurement Bill
Minister of Finance March 2018
  • Finalise complementary government fund aimed at financing SMMEs in start-up phase
Minister of Small Business
  • February 2018
Recapitalisation of SOEs and government guarantees
  • Continue engagements on framework for the disposal of non-core assets
Minister of Finance March 2018
  • Conduct detailed audit of non-strategic assets of SOEs aimed at strengthening SOE balance sheets
Minister of Finance March 2018
  • Finalise recapitalisation of South African Airways and South African Post Office
Minister of Finance August 2017
  • Reduce the issuance of government guarantees, especially for operational reasons
Cabinet October 2017
  • Determine the consequences of SOE non-adherence to the guarantee conditions
Cabinet October 2017
Broader State Owned Entity (SOE) reforms 
  • Implement private sector participation framework
Minister of Finance March 2018
  • Implement the remuneration framework
Minister of DPE March 2018
  • Finalise the board appointment framework
Minister of DPSA March 2018
  • Table draft Shareholder Bill
Minister of DPE March 2018
  • Implement a framework for the determination and costing of developmental mandates
Minister of Finance March 2018
  • Approve ToR for implementation of the Remuneration Standards oversight committee
Cabinet September 2017
Private Sector Participation (PSP) Framework
  • Engage other departments on PSP framework
Minister of Finance July 2017
  • Provide broader guidance on sectors or asset classes for PSP and decide whether sector specific PSP frameworks are needed
All Shareholder Ministries October 2017
  • Present potential projects for PSP to line departments, Technical Task Team and Inter-Ministerial Committee
All SOEs November 2017
  • Approve PSP projects as outlined in the governance framework proposed in the PSP framework
All Shareholder Ministries March 2018
  • Include PSP projects in Shareholder Compacts and Corporate Plan for subsequent implantation
All Shareholder Ministries March  2018
Costing Developmental Mandates
  • Consult other SOEs on costing of developmental mandate
Minister of Finance August 2017
  • Implement mechanisms to effect outcomes through Corporate Plans (e.g. Instruction notes)
Minister of Finance August 2017
  • Roll-out the template for inclusion in the 2018 corporate plans
Minister of Finance September 2017
  • Monitor implementation through quarterly reports, annual reports and corporate plans
Minister of Finance March 2018
Energy
  • Approach NERSA regarding Eskom hardship
Eskom July 2017
  • Develop the case for Eskom soft support until tariff adjustment in 2018 and submit to Treasury and Eskom Board
Eskom July 2017
  • Finalise lowest cost IEP and IRP, taking into account extensive comments received during public consultation
Minister of Energy February 2018
  • Review the pace and scale of rollout under the circumstances of Eskom hardship and overcapacity up to 2021
Minister of Energy August 2017
  • Review the level of participation by black industrialists and develop a strategy to increase it
Minister of Energy August 2017
South African Airways (SAA)
  • Finalise CEO Appointment
Minister of Finance July 2017
  • Finalise and implement 5 year Turnaround plan
Minister of Finance December 2019
  • Negotiate with lenders to extend debt to longer-term
Minister of Finance October 2017
Telecommunications
  • Conduct high level study on WOAN spectrum needs with a view to license the remainder to the industry
Minister of DTPS (CSIR) August 2017
  • Issue policy directive mandating ICASA to commence the licensing process
Minister of DTPS December 2017
  • Complete the spectrum licensing process
Minister of DTPS December 2018
  • Direct Competition Commission to investigate the data prices
Minister of DTPS/EDD July 2017
  • Commence rollout of phase 1 of SA Connect Broadband programme
Minister of DTPS August 2017
Postbank Licensing
  • Amendment of the enabling legislation for licensing of Postbank.
Minister of DTPS/Minister of Finance December 2017
Minerals and Petroleum Resources Development Act Amendment Bill
  • Finalise MPRDA Amendment Bill in a manner that reflects the inputs of civil society, labour and industry solicited through the public consultation process
Minister of Mineral Resources December 2017
Broad-based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry
  • Conduct further engagements with civil society, labour and industry
Minister of Mineral Resources Charter gazetted
The Regulation of Land Holdings Bill
  • Table Regulation of Land Holdings Bill in parliament (after processing by a multi-disciplinary Ministerial Think Tank, the NJSC and NEDLAC)
Minister of Rural Development and Land Reform October 2017
Posted in Viewpoints.

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