Private sector funding for myriad projects can help SA out of its low-growth trap, writes Jason Lightfoot
In a world in which governments and central banks have several means available to stimulate the economy, infrastructure spend is a powerful anti-recessionary fiscal policy tool.
SA’s reported GFCF has been historically low, with the exception of the build-up to the Fifa World Cup in 2010. Latest statistics show GFCF as a percentage of GDP was 18.19% in 2019, which is considered far too low for a developing economy. Several studies consider an acceptable norm to be in the region of 30% to 35% of GDP.
Though there are historical reasons for this high debt-to-GDP burden, the government’s finances have also been stretched by the social and economic measures it has needed to put in place to alleviate the economic fallout from Covid-19. A fiscal rescue package of R500bn will add to the already high debt burden and economic lockdowns have already resulted in lower levels of revenue generation, putting the government in a difficult position fiscally.
To a great extent, the renewable energy independent power producer procurement programme met these criteria, enabling the private sector to play an important role; committing about R200bn to the programme to date. REIPPPP is seen as an important success story, particularly in respect of the impressive implementation role that the independent power producers office played in that programme.
The government’s latest engagement with the private sector is a step in the right direction. It crowds in potential private sector investors in a much more co-ordinated manner and includes them in assessing how these various initiatives can be funded.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
State is on right track involving private sector in infrastructure plansPrivate sector funding for myriad projects can help SA out of its low-growth trap, writes Jason Lightfoot
Read more »
Sex, booze and stigma: why people are avoiding state quarantine facilitiesConcerns about access to alcohol and abstinence from sex are among the reasons Covid-19 patients and their contacts in the Western Cape are not willing to quarantine or isolate away from home.
Read more »
State capture inquiry to resume hearings on MondayThe inquiry will hear evidence into allegations of corruption at the Passenger Rail Agency of South Africa (Prasa) for the most part of the week.
Read more »
Thousands bid farewell to former Burundi president at state funeralThousands of Burundians clad in white gathered Friday in the capital Gitega to say a final goodbye to former president Pierre Nkurunziza at a state funeral after his sudden death earlier this month.
Read more »