Five new measures to boost economy

Five fresh measures to deal with the economy were announced by the government and business leaders after a meeting in Pretoria on Monday night. 

They include a R180-billion investment in energy over the next three years.

A joint public and private sector small-business fund on a 50-50 basis was another of the main measures. Already‚ the private sector has pledged about R1.6-billion to the fund.

Initiatives include scaling up investment by using lessons learnt from the Independent Power Producer Procurement Programme for renewable energy. This model would be extended to gas and coal.

Co-investment by the private sector in infrastructure and the strengthening of crisis-ridden state entities were other measures agreed to by business-government working groups set up in February to tackle the slowdown in the economy.

A credit rating working stream will meet to identify potential areas of reform and other interventions to avert a credit downgrade next month.

“We will work to reduce policy uncertainty and shore up the confidence in government’s ability to deliver on its promises of boosting growth‚” President Jacob Zuma said.

The possibility of private sector involvement in state-owned entities was agreed to even after Zuma said on Friday that the cash-strapped South African Airlines was not for sale.

Part of the package announced on Monday was the appointment of “service providers” to help “consolidate airline businesses”.

In response to questions about Zuma’s comments‚ Deputy President Cyril Ramaphosa said the government was looking at various models to see how the private sector could “participate in some way” as they had a “great deal to offer”.

A framework for state-owned companies was set to be developed and “principles of disposal of nonstrategic assets” were under development‚ he said.

The government would also develop “economic regulators” to improve certainty and increase efficiency and healthy competition‚ such as a single transport economic regulator.

“Appropriate mechanisms to strengthen state-owned entities will be developed so that we reduce the risk they pose for the fiscus and can play a stronger role in driving development‚” Zuma said.

The meeting came after South Africa was given a reprieve by ratings agency Moody’s on Friday night.

Standard & Poor’s (S&P) will be in South Africa from next Monday‚ when government and its business and labour partners will again have to show that the country is up to the task of reviving a moribund economy.

Fitch is set to conduct its probe in the coming weeks. Both S&P and Fitch‚ which rate South Africa just one notch above sub-investment grade‚ will release their reviews early next month.

Earlier on Monday‚ Finance Minister Pravin Gordhan told a public finance management conference in Johannesburg that he was “optimistic” the team effort by the government‚ business and labour had helped South Africa avoid a ratings downgrade by Moody’s.

“I’m very optimistic that the Team SA approach is one that we can extend to the next two ratings agencies that are going to come and look at our economy‚” he said.