South Africa’s economic reconstruction and recovery plan offers little new

SOUTH AFRICA - Report 19 Oct 2020 by Iraj Abedian

The third and last phase of South Africa’s response to Covid-19, the economic reconstruction and recovery plan, was delivered by President Ramaphosa on October 15. The first two phases outlined at the beginning of the pandemic response were themed "preserve" and "recover". The former comprised health spending, both fiscal and monetary support of the economy, and the phased conclusion of lockdowns. The latter has basically been a continuation of the health response, a shift to boost the economic recovery as restrictions on domestic activity ease, and the implementation of a fiscal re-prioritization (this was included in the 2020 Supplementary Budget presented on June 24). The final phase has two components: the first is returning public finances towards sustainability, while the second one comprises positioning the economy for structurally higher growth.

Understandably, plans for the repositioning of the South African economy towards higher growth were expected to be more radical in approach given the dire state of the economy, which had already entered into a technical recession during the second half of 2019. Furthermore, the government has not had a good track record when it comes to implementing previous plans meant to pull the South African economy out of its now decade-long slump. The preparation of the recovery plan has been undertaken within the structures of the National Economic Development and Labour Council (Nedlac), an organization of government, labor, business and the civil society. This was largely to ensure both participation and buy-in by the key stakeholders within the economy. The governing African National Congress (ANC) 2020 National Executive Committee (NEC) meeting that was concluded at the beginning of the month was also dominated by the economic recovery plans. Despite all of this preparation and build-up, the reception for the final plan has been rather lukewarm as it was regarded underwhelming due largely to lack of measurability as well as specific timelines.

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