South Africa has significant work to do in driving its economic recovery despite the forecasted 3.2% gross domestic product (GDP) growth rate for 2021, and the encouraging R791.2-billion committed to infrastructure development, says industry organisation South African Institution of Civil Engineering (Saice) CEO Vishaal Lutchman.
Finance Minister Tito Mboweni revealed during his 2021 Budget Review on February 24 that the 3.2% GDP forecast follows an estimated 7.2% contraction in 2020.
He also highlighted the drive towards infrastructure development and the importance of public-private partnerships (PPPs), adding that government will continue to partner with the private sector to roll out infrastructure through initiatives such as the blended finance Infrastructure Fund.
“There needs to be more work done to formalise and to mature such intentions through respecting the need for social compacts.
"The Minister’s review presented many of the key ingredients needed to revitalise the economy, but consideration must also be given to the 32.5% unemployment rate, which is the highest in the last 13 years with 7.2-million people unemployed. This is a testament of the economic decline impeding our ability to improve our socioeconomic circumstances if the country’s plans do not translate into meaningful and well implemented projects.
"Further, the tax relief measures are welcome and comforting but we require similar type of measures in terms of fast-tracking economic growth. In other words, how do we move ahead and incentivise the growth discussion,” notes Lutchman.
However, he says that the call from the Minister to strongly collaborate through PPPs as an enabler of economic growth is encouraging.
“Advocating and recognising the importance of partnering with the private sector is a step in the right direction," says Lutchman, but he believes true success will require development of active, strong, strategic and collaborative partnerships that are underpinned by trust, good governance and strong and improved procurement processes.
Lutchman was further encouraged by the country’s aim to improve access to African markets with the upgrade of the six busiest border posts using the PPP model. The first project is the upgrade of the 92-year-old Beitbridge border post, which was last upgraded in 1995.
Meanwhile, he says he is awaiting the details around the “more modern risk-based capital management” system and new regulations, that will be published by the Reserve Bank, for the Africa Continental Free Trade Agreement (AfCFTA), part of which came into effect earlier this year.
Lutchman says that if South Africa can strengthen and develop its manufacturing capacity, the AfCFTA will prove hugely beneficial to the country.