In his weekly presidential newsletter, President Cyril Ramaphosa has described the green shoots in the economy as an indication that South Africa is a “country and an economy on the rise”.
Ramaphosa cited the recent downturn in unemployment and strengthening of government finances as an indication that the country was moving towards a place of strength.
“Unemployment is down. Data from Statistics South Africa shows that the official unemployment rate fell to 31.9% between July and September this year, down from 33.2% recorded in the previous quarter. Nearly 250 000 more people were in employment in the third quarter. Of these, around 130 000 were added in the construction sector,” Ramaphosa said.
“The Medium-Term Budget Policy Statement delivered last week points to a sustained turnaround in government finances. We are on track to achieve a third consecutive primary budget surplus. This means that, excluding interest payments on our debt, we are collecting more in revenue than we are spending. This is a sign of prudent financial management, giving us space to steadily reduce our debt to sustainable levels,” he said.
Furthermore, the country’s sovereign credit rating was upgraded by S&P to ‘BB’ from ‘BB-’ and the local currency long-term sovereign credit rating to ‘BB+’ from 'BB’.
“This is the first such upgrade from the agency in nearly two decades. An improved rating generally leads to lower borrowing costs, which allows for more funds to be invested in the economy and in meeting social needs,” Ramaphosa said.
“Among the factors S&P cited for the positive outlook were Eskom’s improved performance, strong tax collection, and the broad structural reform momentum having picked up pace.”
President Ramaphosa noted that Operation Vulindlela – government’s driving force behind reforms – had been initially launched as a mechanism for the implementation of “transformative reforms and [to] boost economic growth”.
Initially, focus was on the network sectors, as well as immigration reform.
“We are seeing steady progress in the logistics sector, notably with respect to improved performance at our ports. Measures to allow private sector companies to operate on the national freight rail network are also at an advanced stage.
“The most noteworthy improvements have been witnessed in the energy sector, with Eskom now on the road to recovery, massive investment in renewable energy generation, and vastly improved electricity supply.
In support of South Africa’s ratings upgrade, S&P cited the recently launched Phase II of Operation Vulindlela, which is focusing on changes in local government, digital transformation, visa regimes, spatial inequality and others.
Ramaphosa said modelling by the University of Stellenbosch’s Bureau of Economic Research estimated that the potential impact of Operation Vulindlela’s full implementation could “lift South Africa’s long-term growth rate by as much as 3.5%”.
“In citing this modelling, the analyst JP Landman writes that ‘the reforms are a journey, but they have started working. Step by step, South Africa is opening its economy, modernising infrastructure and rebuilding credibility.’ Despite considerable headwinds that have (included) a global pandemic, a debilitating energy crisis and, more recently, a difficult global trade environment, we have stayed the course on economic recovery and are now seeing this pay off,” he said.
Ramaphosa reflected on the country’s emergence from a “ruinous period of economic stagnation” and state capture.
He said despite this, “we have been able to achieve sustained progress in a relatively short period of time”.
“This is in no small part owing to the strength of the partnerships forged between government, business, labour and civil society. These far-reaching economic changes have a direct and material impact on the lives of every South African, on their ability to lead dignified lives, to access public services, to secure employment, and to provide for their families.
“We are determined to sustain the momentum of this economic recovery so that we can drive inclusive growth, create jobs and improve the lives of our citizens,” Ramaphosa said. – SAnews.gov.za
