South Africa has significant efforts to advance its economic recovery despite its projected gross domestic product (GDP) growth rate of 3.2% in 2021 and the encouraging R 791.2 billion allocated for infrastructure development, the says Industry organization South African Institution of Civil Engineering (Saice) CEO Vishaal lutchman.
Finance minister Tito Mboweni During his 2021 budget review on February 24, he noted that the GDP forecast of 3.2% follows an estimated 7.2% decline in 2020.
He also highlighted efforts to develop infrastructure and the importance of public-private partnerships (PPPs), adding that the government will continue to work with the private sector to expand infrastructure through initiatives such as the Blended Finance Infrastructure Fund.
“More work needs to be done to formalize and mature such intentions by respecting the need for social compromise.
“The minister’s review contained many of the key ingredients for revitalizing the economy, but it also needs to take into account the 32.5% unemployment rate, the highest in 13 years at 7.2 million. This is evidence for Economic decline hinders our ability to improve our socio-economic circumstances when the country’s plans do not lead to meaningful and well-executed projects.
“In addition, the tax breaks are welcome and reassuring, but we need similar measures in view of rapid economic growth. In other words, how can we move forward and stimulate the growth debate,” notes Lutchman.
However, he says the minister’s call for intensive cooperation through PPPs to enable economic growth is encouraging.
“Endorsing and recognizing the importance of partnering with the private sector is a step in the right direction,” says Lutchman. However, he believes that real success requires developing active, strong, strategic and collaborative partnerships based on trust, good governance and trusting strong and improved procurement processes.
Lutchman was further encouraged by the country’s goal of improving access to African markets by modernizing the six busiest border posts using the PPP model. The first project is the modernization of the 92 year old Beitbridge border post, which was last modernized in 1995.
In the meantime, he is waiting for the details of the “more modern risk-based capital management system” and the new regulations to be released by the Reserve Bank for the African Continental Free Trade Agreement (AfCFTA), part of which will take effect earlier this year.
According to Lutchman, the AfCFTA will prove extremely beneficial to the country if South Africa can strengthen and expand its manufacturing capacity.