South Africa is to spend R372-billion over the next three years to implement the much-anticipated Accelerated and Shared Growth Initiative of South Africa (Asgisa), President Thabo Mbeki confirmed in his State of the Nation address in Parliament on Friday.

While figures such as R370-billion have previously been mentioned by top government figures, including Deputy President Phumzile Mlambo-Ngquka, who has been handed responsibility for the initiative, Mbeki yesterday provided some more insight into the aims of Asgisa and the specific interventions it will involve.

Asgisa is designed to raise South Africa's average growth rates to 4,5% a year between 2006 and 2010, and then to the well-publicised 6% for the period 2010 to 2014.

The country has also committed to achieving the targets set out in the UN's Millennium Development Goals, which include halving unemployment and poverty by 2014.

The government has identified particular economic sectors for accelerated-growth microeconomic interventions; these include business-processs outsourcing, tourism, chemicals, biofuels, metals and metallurgy, wood, pulp and paper, agriculture, the creative industries and clothing and textiles.

Mbeki said in his speech that, to implement Asgisa, State-owned enterprises and the public sector as a whole, working in some cases through public private partnerships, would make “large investments” in order to meet the country's demand for electricity; improve logistic infrastructure; expand and modernise the telecoms infrastructure; and satisfy the nation's demand for water.

However, he emphasised that Asgisa was not intended to span all elements of South Africa's development.

“Rather, it consists of a limited set of interventions that are intended to serve as catalysts to accelerated and shared growth and development,” Mbeki said.

Part of the R372-billion would also be spent on accelerated infrastructure investment in underdeveloped urban and rural areas through existing initiatives, such as the Municipal Infrastructure Grant and the Expanded Public Works Programme, to improve service delivery in the areas of the second economy.

This investment would take the form of the provision of roads and rail, water, energy, housing, schools and clinics, sports facilities and various government service centres, Mbeki said.

The last year has seen escalating levels of protests and discontent with service delivery, particularly on a local-government level, and Mbeki's speech comes at a crucial time, with local government elections to take place in less than four weeks.

He added that supervision of infrastructure projects undertaken by government would be improved, to ensure that capital budgets were spent without roll-overs, that labour-intensive methods were prioritised and that the necessary training of workers is carried out to provide them with the necessary skills.

The President also singled out the skills shortage in the country as a key factor, which would, “negatively affect the capacity of both the public and private sectors to meet the goals set by Asgisa”.

Mlambo-Ngcuka has, over the last few months, held consultations with government and representatives of the public and private sectors, as well as labour and civil organisations, to promote the initiative and to discuss the specific interventions and forms which Asgisa should involve.

Mbeki said that further constraints to growth and development identified during the Asgisa process included the cost of doing business and the “unnecessarily high cost of intermediate inputs”.

However, he added that work is already under way to address challenges such as the cost of telecommunications and import-parity pricing with regards to steel and chemicals.

Engineering News reported last month that Cabinet had, in fact, taken a decision to end import-parity pricing, but no official announcement has yet been made and there are no details as to how or when the process would be phased out.

Government did, however, this week publish a new version of its plan of action for the economic cluster, ambiguously identifying March as a key date for “completing the first phase of pricing agreements”.

On the promotion of small, micro and medium-sized enterprises, government will reform its procurement programme to access some of its goods and services from SMMEs, and will ensure that it will pay promptly for its purchases, Mbeki said yesterday.