Finance Minister Nhlanhla Nene
Finance Minister Nhlanhla Nene announced on Thursday that government was “building a pipeline of investment opportunities and infrastructure projects” as part of redoubled efforts to address low levels of investment, which had been identified as the main inhibitor of growth in the recession-afflicted South African economy.
Speaking at the Moody’s annual Sub-Saharan African summit in Johannesburg on Thursday, Nene again confirmed that President Cyril Ramaphosa would be announcing the growth package “in due course”.
He stressed, however, that government’s participation in the stimulus programme would be “through existing budget resources”, with a focus on unlocking efficiencies within the public sector.
“Cabinet has already agreed that fiscal sustainability must remain the focus of government’s efforts in public finance management. This should be a statement that makes clear government’s intention to pursue a prudent fiscal policy that stabilises the debt-to-gross-domestic-product ratio over the long term.”
Nevertheless, infrastructure backlogs in cities were sapping the economy of “dynamism” and government had, therefore, identified 64 projects through the Budget Facility for Infrastructure. A total of 38 of these projects had already been subjected to “rigorous financial and technical evaluation”.
“Institutions like the Development Bank of Southern Africa, the Industrial Development Corporation, the New Development Bank as well as commercial banks and other financiers, will be critical to ensure that we leverage concessional finance along with the project implementation capacity and governance expertise that these institutions can bring to address our infrastructure backlogs.”
Other initiatives under way to address South Africa’s poor economic performance and government’s fiscal imbalances included:
- Governance reforms at highly indebted State-owned companies (SoCs);
- The commission of inquiry into the governance of the South African Revenue Service, which would make recommendations on improving the institutions’ efficiency.
- And, the Private Sector Participation Framework, which provided for alternative financing strategies to enable infrastructure investment in partnerships with SoCs.
“At a time when global interest rates are rising, all public sector institutions need to be more prudent in their borrowing and ensure that these funds are matched to projects with high returns and high development impact.
“Government, business, labour and society as a whole need to work together to lay the foundation for faster growth by narrowing the budget deficit, stabilising debt, strengthening governance and making the necessary investments for faster growth in the future,” Nene said.