Government has recognised the vital role that business plays in creating employment, and committed to putting in place an enabling environment.
“We all know that government does not create jobs. Business creates jobs,” says President Cyril Ramaphosa, presenting the State of the Nation Address (SONA) last night (10 February).
“Around 80% of all the people employed in South Africa are employed in the private sector,” he says. “The key task of government is to create the conditions that will enable the private sector – both big and small – to emerge, to grow, to access new markets, to create new products, and to hire more employees.”
He acknowledges, however, that the problems in the South African economy are deep and they are structural.
“When electricity supply cannot be guaranteed, when railways and ports are inefficient, when innovation is held back by a scarcity of broadband spectrum, when water quality deterioriates, companies are reluctant to invest and the economy cannot function properly.
“With a view to addressing these challenges we are accelerating the implementation of far-reaching structural reforms to modernise and transform these industries, unlock investment, reduce costs and increase competitiveness and growth.”
A precarious electricity supply is one of the greatest threats to the economy and consequent social progress, Ramaphosa says.
“Due to our aging power stations, poor maintenance, policy missteps and the ruinous effects of state capture, our country has a shortfall of around 4 000 MW of electricity.”
Government has taken some steps towards bringins additional generation capacity online and has committed to several new energy generation projects over the next few years.
These include:
- Over 500 MW from the remaining projects in Bid Window 4 of the renewable energy programme, which are at advanced stages of construction;
- 2 600 MW from Bid Window 5 of the renewable energy programme, for which the preferred bidders were announced last year;
- Up to 800 MW from those risk mitigation power projects that are ready to proceed;
- * 2 600 MW from Bid Window 6 of the renewal energy programme, which will soon be opened;
- 3 000 MW of gas power and 500 MW of battery storage, for which requests for proposals will be released later this year;
- An estimated 4 000 MW from embedded generation projects in the mining sector;
- Approximately 1 400 MW currently in the process of being secured by various municipalities.
“In addition to closing the energy supply shortfall, we are implementing fundamental changes to the structure of the electricity sector,” Ramaphosa adds.
“Among these are the Eskom unbundling, which is on track to be finalised by December 2022, and an intensive maintenance programme to reverse many years of neglected maintenance and underperformance of existing plants.
“To regulate all of these reforms, Cabinet has approved amendments to the Electricity Regulation Act for public comment,” he says.
“These far-reaching amendments will enable a competitive market for electricity generation and the establishment of an independent state-owned transmission company.”
The state of South Africa’s ports also came under scrutiny, and Ramaphosa says Transnet is focused on improving their operational efficiencies with new equipment and processes.