South Africa’s biggest business grouping proposed 12 key focus areas that could add 1 trillion rand ($59 billion) to gross domestic product and help the economy overcome the damage wrought by the coronavirus pandemic and restrictions to curb its spread.
The projects, which include ensuring affordable electricity supply, allocating digital spectrum and improving port, rail road and water infrastructure, could also generate 1.5 million jobs and increase tax revenue by 100 billion rand a year, Business for South Africa said in an emailed statement Friday. Its members include Business Unity South Africa, Business Leadership South Africa, the Black Business Council and Banking Association of South Africa.
The proposals are being made with Africa’s most industrialized economy expected to contract between 8% to 10% in 2020, the business group said. South Africa imposed a strict lockdown aimed at limiting the spread of the virus on March 27. That shuttered all activity in the 5.1 trillion-rand economy except essential services for five weeks before a gradual, phased re-opening started.
Its recovery plan will require 3.4 trillion rand in funding over the next three years, which could push public-sector debt to over 6.4 trillion rand during the period, B4SA said.
“This funding need cannot be met by domestic sources, nor is it possible for the South African Reserve Bank to address the shortfall in a responsible and sustainable manner through monetary measures,” the lobby group said. The private sector should help finance and develop economic infrastructure in a regulated and competitive environment.
In the absence of growth-enhancing structural reforms, government debt will top 100% of GDP in 2023, B4SA said. The National Treasury expects gross debt-to-GDP to likely peak at 87.4% in 2023-24 under an “active” management scenario that it is pursuing.
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