South Africa unveils raft of reforms to revive moribund economy
Sep 22, 2018 07:04 AM GMT+0530 | 0 Comment(s)
AFP - President Cyril Ramaphosa on Friday unveiled a raft of measures as part of an economic stimulus plan to boost investor confidence after South Africa entered a recession in the second quarter of this year.
The plan includes infrastructure investment and easing of visa requirements in a bid to create jobs in the lucrative tourism sector, which accounts for 10 percent of the economy.
"The measures we are announcing give priority to those areas of economic activity that will have the greatest impact on youth, women as well as small businesses," Ramaphosa said in his offices in the capital, Pretoria.
South Africa's economy tipped into recession as it shrunk 0.7 percent in the second quarter, dealing a blow to Ramaphosa who came to office in February.
He faces elections in 2019 and has been on a drive to attract foreign investment and tackle soaring unemployment, which currently stands at about 28 percent.
His five-point plan centres around re-allocating 50 billion rand ($3.5 billion) of public spending to kickstart economic activity and create jobs.
Priority investment areas include agriculture, small businesses in the townships and the rural areas.
"Our government has limited budget fiscal space to increase spending or borrowing, it is imperative that we make sure that the resources that we do have are used to the greatest effect," he said.
The government under Ramaphosa's predecessor Jacob Zuma was marred by a string of corruption scandals and poor public service delivery.
A public inquiry is currently under way probing allegations that Zuma organised systematic plunder of government coffers in a scandal known as "state capture".
Ramaphosa meanwhile announced a large-scale infrastructure investment plan for 400 billion rand.
"Infrastructure expansion and maintenance has the potential to create jobs on a large scale, attract investment and lay a foundation for sustainable economic expansion," he said.
Labour unions welcomed the proposed interventions.
Ramaphosa announced several changes to South Africa's visa system in a bid to attract more tourists and allow more highly-skilled foreigners to enter the country.
The changes are set to include visa-free travel for citizens of several more countries.
There will also be an easing of visa restrictions for minors -- potentially making it easier for tourists seeking to travel to South Africa with children, as well as for expats.
The Democratic Alliance, the main opposition party, bemoaned that the plan came "too little too late to save the economy from recession".
"In the end the stimulus and recovery plan is likely to have a modest effect on economic growth and job creation," the DA said in a statement.
The leftist Economic Freedom Fighters rubbished Ramaphosa's plan as "nothing new, but an attempt to repackage old neoliberal economic plans that have proven futile".
The conservative and predominantly white Freedom Front Plus said no matter how good the plan looked on paper, it would not bring about growth, "as long as the ANC government continues to drive away investors with policies like (land) expropriation without compensation".
The South African government is planning to expropriate white farms without compensation and redistribute to blacks, a policy expected to spook foreign investors.
The planned reforms have become the country's fiercest battleground ahead of elections next year.
According to Ramaphosa, whites make up eight percent of the South African population and possess 72 percent of farms, while blacks account for 80 percent of the population but have only four percent of farms.