JOHANNESBURG — As part of ongoing efforts to create an enabling environment for sustainable and inclusive growth, the South African government will continue to focus on stabilizing debt and debt-service costs, investing in infrastructure, and supporting the most vulnerable households.
According to South African Government News Agency, Dr. Duncan Pieterse, speaking at the Bureau for Economic Research (BER) conference on Wednesday, “Our strategy for addressing the enormous challenges of accelerating growth, creating jobs and reducing poverty relies on a clear and stable macroeconomic framework, implementing structural reforms, and investing in infrastructure.” Pieterse highlighted that these elements are crucial for boosting growth, enhancing inclusivity, and setting the economy on a more sustainable trajectory.
Pieterse explained that these efforts will generate more fiscal space by increasing revenue, enabling private sector participation, leading to more productive public spending on infrastructure, and creating a virtuous cycle that supports inclusive economic growth. The BER conference, held in Johannesburg, delved into South Africa’s economic history, drawing from seven decades of survey data.
The government intends to continue with structural reforms to improve productivity and competitiveness. These reforms aim to make it easier and cheaper for businesses to operate and invest in South Africa, employ people, and support growth in government revenue. “Historically, we have seen strong linkages between microeconomic developments like energy provision and logistical capability and overall growth outcomes,” Pieterse said, noting that declines in total factor productivity, which include innovation and technological improvements, have been due to binding constraints to growth.
To address these constraints, Phase 1 of Operation Vulindlela, launched in October 2020, has focused on accelerating structural and economic reforms to drive growth and job creation. “By the end of Phase 1 of Operation Vulindlela, 94% of reforms were either complete or progressing well. These reforms have generated investment potential of R500 billion,” Pieterse said. He noted that the bulk of this investment is in the energy sector, with significant projects in embedded generation and other renewable energy sources.
Reforms in the logistics sector will enable greater investment in the rehabilitation of the rail network and rolling stock, as part of the freight logistics roadmap. Additionally, reforms in the telecommunications sector aim to increase network speed and quality, expand broadband access, and reduce costs.
As the government moves into Phase 2 of Operation Vulindlela, it aims to maintain the momentum across key sectors and explore new areas for growth. Investment in infrastructure remains a priority, with efforts to mobilize private sector resources to augment public sector capability and finances. Planned infrastructure budgets are expected to increase by 4.9% over the medium-term, driven by energy and transport sectors.