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Malusi Gigaba's 14 'Action Interventions' To Boost The Economy

"Failure to set the economy on a higher and more sustainable growth path" is undermining government's efforts, said the finance minister.

13/07/2017 13:10 SAST | Updated 13/07/2017 14:05 SAST

Finance Minister Malusi Gigaba presented government's inclusive growth action plan consisting of 14 key areas of intervention to turnaround an economy in the grips of technical recession.

The plan presented at the JSE in Sandton on Thursday provided a set timeline for interventions across multiple sectors and stipulated cabinet ministers in charge of each respective "action intervention".

Gigaba said the interventions were a response to prolonged slow growth, rising government debt, inefficiencies in high-costing state-owned enterprises, along with policy uncertainty and low business and consumer confidence.

South Africa's economy has suffered multiple blows in 2017, including being downgraded to junk status by international ratings agencies and, shortly after, entering a technical recession. The country's unemployment rate was also the highest it has been in 13 years.

Gigaba acknowledged that "failure to set the economy on a higher and more sustainable growth path" is undermining government's efforts to rapidly lower unemployment, inequality and poverty.

These are the 14 areas of focused intervention presented by Gigaba:

1. Fiscal policy

Government should finalise a sustainable wage agreement and infrastructure budget facility by February 2018 and October 2017 respectively.

2. Financial sector and tax policy

Gigaba said a Financial Sector Summit would need to be convened to quantify transformation targets by the end of this year. Implementation of Twin Peaks legislation needs to be completed by February 2018 to reduce banking costs.

The finance ministry should also work with the Department of Trade and Industry on targeted debt relief for the "most vulnerable" also by February next year.

3. Leverage public procurement

Small Business Minister Lindiwe Zulu must finalise a complementary government fund aimed at financing SMMEs during their start-up phase by February next year. Preferential Procurement Regulations, which took effect on 1 April this year, will need to be implemented by July.

The Public Procurement Bill must also be finalised by March 2018.

4. Recapitalisation of state-owned entities and government guarantees

The Minister of Finance is responsible for conducting a detailed audit of "non-strategic assets of SOEs" and developing a framework to eliminate non-core assets by March 2018, both of which are aimed at strengthening SOE balance sheets.

Recapitalisation of the Post Office and embattled national carrier, South African Airways, will need to be finalised by August.

By October, Cabinet would need to reduce government guarantees granted to SOEs for operational reasons and agree on consequences for SOEs that do not adhere to guarantee conditions.

5. Broader state-owned entity reforms

By March 2018, the remuneration framework and private sector participation framework must be implemented along with a framework for the proper appointment of SOE boards. A Shareholder Bill should be drafted by the same date along with a framework for costing of developmental mandates.

6. Private sector participation framework

Interventions including engaging other government departments on the PSP framework and deciding whether sector-specific PSP frameworks are needed. Both of these must take place before the end of the year.

Potential PSP projects must be presented to line departments, Technical Task Teams and Inter-Ministerial Committees by all SOEs before the end of November.

7. Costing developmental mandates

The Minister of Finance is required to consult SOEs on costing developmental mandates by August, roll-out the template for inclusion in the 2018 corporate plans by September, and monitor implementation through quarterly and annual reports by March 2018.

8. Energy

Eskom will be required to consult the national energy regulator (NERSA) regarding its "hardship" and develop a case for "soft support" until tariff adjustment in 2018 which it must submit to Treasury by the end of July.

The Minister of Energy by February 2018 must finalise the lowest possible cost Integrated Energy Plan and Integrated Resource Plan, and consider "extensive comments" received during public consultation.

A strategy to increase the participation of black industrialists must be developed by August.

9. South African Airways

A new CEO for the national carrier must be finalised by the end of this month and negotiations with lenders to extend the term of debt must take place by October.

A 5-year turnaround plan for the airline must be finalised and implemented, with the finance minister at the helm, by December 2019.

10. Telecommunications

By the end of this month, the Competition Commission must be directed to investigate the high cost of data in the country. The SA Connect Broadband programme's phase one roll-out should begin shortly after in August.

The country's spectrum needs need to be determined through a "high level study", and spectrum licensing must be completed by the end of 2018.

11. Postbank licensing

Existing legislation must be amended for the licensing of the Postbank by December this year.

12. Minerals and Petroleum Resources Development Act Amendment Bill

The MPRDA Amendment Bill should be finalised by the end of the year in a manner that "reflects the inputs of civil society, labour and industry".

13. Broad-based socio-economic empowerment charter for the SA mining and minerals industry

The recently gazetted Mining Charter, which raised the ire of the Chamber of Mines, demands further engagements also with civil society, labour and industry. Gigaba mentioned the Charter has already been gazetted and he did not indicate a specific date by which further engagement is required.

14. Regulation of Land Holdings Bill

The Minister of Rural Development and Land Reform must ensure the Regulation of Land Holdings Bill is tabled in parliament by October 2017.