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South Africa’s Ramaphosa woos investors, to speed up economic reforms, fix power

Cyril Ramaphosa
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It is only a week since being elected but South African President Cyril Ramaphosa is not leaving investors wondering what his key economic agenda will be as Africa’s second largest economy seeks to break out of a logjam of slow economic growth and rising social inequality.

The president credited with a sound business acumen said Wednesday he would use his new five-year term to speed up economic reforms and fix ailing state power firm Eskom, a week after his African National Congress party was re-elected with a reduced majority.

In Nigeria business leaders and investors continue to hope that President Muhammadu Buhari will provide clarity on what he will do to move forward stalled economic reforms required to boost economic activity and create jobs in the continent’s most populous nation where despair is rising especially among the youths.

Analysts have said reforms like cutting red tape and overhauling Eskom should be post-election priorities for the ANC, after a decade of slow growth and rising joblessness in Africa’s most advanced economy.

“We are in an economy that has not been growing … in an appreciable way. That troubles us,” Ramaphosa told investors at a conference in Johannesburg, acknowledging that South Africa’s regulatory framework had discouraged investment.

“We have to embark on the reforms, speed up,” he added. “We are going to ensure that the certainty that investors want to see is there.”

The ANC’s 57.5% share of the vote was its worst result in a parliamentary election since it swept to power at the end of apartheid in 1994, but it was an improvement on a worse showing in local government elections in 2016.

Ramaphosa said he would give more details on his reform plans in a state of the nation address scheduled for next month.

Analysts say an early barometer of Ramaphosa’s ability to push through change will be whether he manages to trim a cabinet comprising more than 30 ministers and deputies.

Ramaphosa said on Wednesday that he would announce a “reconfigured cabinet structure” soon but did not specify that numbers would be cut.

South Africa’s economy grew by an estimated 0.8 percent in 2018 after recovering from recession. Growth is forecast at 1.5 percent this year.

One factor in hitting that target will be how the government manages a restructuring of power utility Eskom after severe power blackouts earlier in the year that dragged on growth.

The government has pledged a 23 billion rand ($1.6 billion) a year bailout for Eskom over the next three years. The utility had around 420 billion rand of debt last year.

“We have to address the issue of Eskom’s debt, which is precisely what we are doing now with our Treasury, with our lenders, because (Eskom) is too big to fail,” Ramaphosa said.

The president also reassured investors that the government’s land reform policies would not result in “land grabs”.

“There is no way we can invite foreign investors to come to our country — we say come and invest — and tomorrow we take your land away, that is not going to happen. That is not sensible,” Ramaphosa said.

 

Reuters

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