The country’s move to lockdown Level 1 will help more South Africans get back to work and will give a boost to the gradual recovery of the economy, writes business organisation Business Leadership South Africa (BLSA) CEO Busi Mavuso in her newsletter of March 1.
She posits that the change to curfew hours will help the hospitality industry, which has arguably suffered the most during the pandemic and restrictions, in particular.
Although there are still capacity restrictions, the industry can now stay open for something closer to normal hours and sell alcohol as normal, Mavuso notes.
The Budget speech of last week, however, showed what a serious uphill struggle the country faces in the wider economy, Mavuso emphasises.
“I was struck in particular by the National Treasury’s comments on infrastructure – both how little is being done, but also how changes are being mooted to regulation that is constraining it.
“Infrastructure rightfully holds the promise of boosting economic growth. It is one sure way to improve economic potential by putting in the rail, ports, energy and other capacity to improve the costs of doing business. President Cyril Ramaphosa has put infrastructure at the centre of his economic policy approach and business has been working on several fronts to support the government in making this a reality.
“However, I was disappointed by figures that showed infrastructure spending by the public sector was far below the levels that had been budgeted a year ago. The outcome for the 2019/20 year showed spending of R187-billion when a year ago it was expected to be R257-billion. That is a R70-billion shortfall in planned spending. There have also been significant reductions in expected spending over the next three years,” she notes.
Mavuso highlights this as “disappointing”, saying the country is drifting further away from the National Development Plan goal of spending 30% of gross domestic product on investment in infrastructure.
“Countries that grow fast invest in infrastructure to expand their capacity. It is what we need to do to turn around our economic fortunes,” she emphasises.
She indicates that this outcome shows that the State lacks the capacity to deliver.
Mavuso also reiterates Ramaphosa’s view that private investment should be at the core of an infrastructure push.
She notes that, on a positive note, the Budget set out the work being done to reform the public-private partnerships (PPPs) process to make it more appropriate to the needs and capacity of the country.
“PPPs should be structured so as to maximise the value for money to the public – reducing the cost of putting in the infrastructure and increasing the value it adds in the long run to the economy,” she says.
Another Budget announcement was a shift in Regulation 28, a draft of which was then released on Friday. This is the regulation that governs what pension funds can invest in. The proposed changes will allow pension funds to have up to 45% of their assets in infrastructure, though they must still stay within limits on traditional asset classes like debt and equity.
This supports the positive role the private sector can play as investors in infrastructure, though the details in the draft may need some development for a final version, Mavuso notes.
“So, I am hopeful. Even though the Budget showed very disappointing actual delivery on the ground, it also showed several positive moves towards fixing the regulatory framework that affects these outcomes.
“Business is excited at the potential – if we get the framework right, we really can bring business capacity to fund, build and operate infrastructure that will grow the economy and deliver better services to our people,” she says.