Ramaphosa told by advisers to focus on national energy crisis

28th January 2022 By: Bloomberg

President Cyril Ramaphosa was told to cut bureaucracy and focus on fixing the country’s energy crisis if he wants to revive Africa’s most industrialized economy.

Water, transport and port services must be “dramatically improved,” the Presidential Economic Advisory Council (PEAC) said in a briefing note submitted to Ramaphosa ahead of his State of The Nation address next month and seen by Bloomberg. Two additional bidding rounds for the provision of renewable energy should be held this year, it said.

South Africa’s economy, which was already in recession when the Covid-19 pandemic hit, remains stuck in its longest downward cycle since World War II. Its unemployment rate is the highest on a global list of 82 countries and the Eurozone monitored by Bloomberg. Power outages occur on a regular basis and discourage investment.

“Growing the economy is the only viable strategy for getting South Africa out of its current negative situation,” according to the note. “2022 must be seen as a watershed year for our country’s electricity problems. 2022 must be an inflection point.”

Ramaphosa has staked his presidency on enacting economic reforms to reboot a stagnant economy. Limited progress since he took the post in early 2018 has led to a chorus of criticism from opposition parties, business and labor unions.

Tyrone Seale, a spokesperson for the President, declined to comment on the document.

In addition to ordering more electricity plants, the government must ensure that the National Energy Regulator of South Africa does not stand in the way of private companies building their own facilities of as much as 100 megawatts capacity, the advisory council said.

If the government is to encourage growth in the number of black commercial farmers it will need to ensure the turnaround of the troubled Land and Agricultural Development Bank of South Africa is successful, it said. That bank will need to become state funded and will have to provide finance at attractive rates, the council added.

The PEAC also suggested:

* The government should expand the Employment Tax Incentive
* The use of Industrial Development Zones and Special Economic Zones to attract investment should be increased
* Policies to allow companies and municipalities to transport electricity across the national grid should be enacted
* The National Prosecuting Authority should be given a special allocation of funds over the next two years to crack down on corruption