Next Phase of South Africa’s Business-Government Pact Eyes 3% Growth
The next chapter of a partnership between the South African government and business will focus on reviving an economy that’s barely expanded 1% a year over the past decade, the president said.
“We have a unique opportunity to work together through this partnership to place our country on a new trajectory,” Cyril Ramaphosa said at an event to launch phase 2 of the compact that started between business and government a year ago. “We have much work ahead of us” including fixing the nation’s freight logistics system, improving grid capacity, reducing crime and boosting jobs, he said.
Research commissioned by Business Unity South Africa shows “if we expedite reforms, more quickly achieve operational improvements at Transnet SOC Ltd. and Eskom Holdings SOC Ltd., and swiftly mobilize private sector investment – we could see” gross domestic product growth reach over 3% by the end of 2025, Adrian Gore, vice president of BUSA and co-convenor of the partnership, said. “This economic growth can generate around 1 million additional jobs by 2030,” he said. “We think we can do it.”
Phase 2 will aim to unlock 23 billion rand ($1.3 billion) in private sector investment into the energy sector, boost renewable generation capacity to 4 gigawatts and construct 1,000 kilometers of new transmission lines, Gore said.
It will also seek to attract around 28 billion rand investment in rail infrastructure, he said, to improve the amount of freight moved by Transnet to 193 million tons. The embattled state logistics company only managed to move 149 million tons in 2023 and expects to increase the amount to 152 million tons this year.
“These targets are a massive stretch, but we believe we can get there,” Gore said.
The renewal of the pact that in the first phase focused on fixing an energy crisis could also build on the post-election momentum that’s seen consumer confidence surge and household wealth jump.
The African National Congress formed a so-called government of national unit with business-friendly parties after it lost its outright majority in May 29 elections.
“Political stability — including positive sentiment about the government of national unity — normalized inflation and reduced interest rates promote economic confidence and set the scene for future growth,” Gerrie Fourie, CEO of Capitec Bank Holdings Ltd. said in statement on Tuesday while releasing the lender’s earnings.
To capitalize on the goodwill, Deputy President Paul Mashatile is leading a ministerial delegation on a weeklong roadshow to London to attract investors. The team is pitching for investment in energy, water and freight-rail projects, said acting head of Infrastructure South Africa Mameetse Masemola.
South Africa in February amended regulations governing public-private partnerships to make it easier for businesses to invest in them, and as the National Treasury faces constraints on spending as it tries to reduce its debt burden. Total infrastructure investment envisaged by the South African government over the next three years amounts to 943 billion rand, according to the presidency.
Africa’s most-industrialized economy requires 1.6 trillion rand of public-sector infrastructure investment and a further 3.2 trillion rand from the private sector to meet targets set out in the government’s National Development Plan by 2030.
