Weekly Presidential spokesperson media briefing statement and programme update Presidential Economic Advisory Council

13 January 2023

On the 11th of January 2023, President Cyril Ramaphosa, chaired the meeting of the Presidential Economic Advisory Council (PEAC). This was the first meeting of the PEAC for 2023. In his opening remarks, President Ramaphosa acknowledged the difficulties that confront the global economy which invariably impact on South Africa’s growth prospects. 

The President reflected on the IMF’s ‘darkening outlook’ for the global economy in 2023, which is being fuelled by slowdowns in the US, China and EU economies, the ongoing war between Russia and Ukraine, the residual effects of the COVID-19 pandemic, increases in natural disasters around the globe, persistently high inflation and the global cost of living crisis.

Despite South Africa being snared by its own strong headwinds with devastating floods, the rising cost of living and the energy crisis, there was however encouraging signs of recovery as demonstrated by an increase of economic activity during the third quarter of 2022.

Promising activity in the agricultural, finance, insurance real estate and business services sectors enabled real GDP to expand by 1.6 per cent, and the size of the South African economy now surpasses pre-pandemic levels.

The meeting noted several recovery drivers that need to be sustained going into 2023 and beyond, these are;  

- 1.5 million Jobs were created over the past year, and in the year to the third quarter of 2022 total employment increased by 10.4 per cent.

- The Presidential Employment Stimulus, reached over one million participants.

- The structural reforms aimed at raising growth, attract investment and create more jobs. 

- Key reforms in the energy, IT, ports, rail, water and other sectors that are currently underway which will continue to improve the business operating environment as well as South Africa’s competitiveness as an investment destination. 

- The Just Energy Transition Investment Plan that will pave the way for additional investments into renewable based energy infrastructure.

- The R2 billion blended finance program launched by the Department of Agriculture Land Reform and Rural Development (DALRRD) working collaboratively with the Land Bank. The Blended Finance program is designed to address many challenges emerging farmers face. 

- The Presidential Employment Stimulus Initiative launched as part of the recovery package from Covid-19 shock, enabling subsistence and small-scale farmers to buy the inputs they need (about 100 000 farmers were assisted). This intervention helped to improve household food production.

The Council agreed that all social partners need to work hard on the expansion of areas of economic opportunity and employment and to find practical and sustainable solutions to mitigate load shedding, drawing from international experience and to alleviate poverty.

National Energy Plan update
 
President Ramaphosa deeply regrets the current energy situation which has placed the country into stage 6 load shedding. The President acknowledges the frustration of households, parents and learners who have commenced the school calendar year facing power shortages. The devastation to small businesses and the adverse impact to the economy remains severe for South Africa’s recovering economy. 

On the 15th of December, President Ramaphosa convened a National Energy Crisis Committee comprising of Ministers and various technical work stream leads. Whilst the President acknowledged some of the progress made in the executing elements of the National Energy Plan, he further demanded more urgency and speed in the implementation of all priority areas and actions laid out in the National Energy Plan. 

To date President Ramaphosa remains seized with finding a sustainable solution to the current energy crisis. The President has been regularly briefed on the situation at Eskom and on the roll out of the National Energy Plan. More engagements are scheduled for today and tomorrow for a review of the situation and direction on urgent measures that must be undertaken in order to mitigate against the impact of load shedding. 

Despite the current gloomy state of load shedding the National Energy Crisis Committee work streams continue to make progress on serval areas aimed at ensuring the stability of the grid and finding additional megawatts. Herewith are some of the areas of progress that are noteworthy.

- We have removed the licensing threshold through amendment to Schedule 2 of the Electricity Regulatory Act. This was gazetted on 15th December 2022.

- A dedicated team in the Department of Public Works and Infrastructure (DPWI) has been established to work closely with Eskom Transmission to expedite expropriation and servitudes. The Minister of Public Works and Infrastructure has in the last two months signed notices of intent to expropriate for 27 parcels of private land. 46 servitudes on DPWI land are being processed, of which 22 will be finalized in January 2023.

- Eskom has identified up to 1000 MW of additional power to be imported from Mozambique and other countries in the SADC region, pending negotiations and regulatory approvals. This is in addition to the 300 MW already secured through the Southern African Power Pool.

- Significant potential capacity has already been identified for the standard offer and emergency generation programme (potential of 1600 MW) developed by Eskom – this will be implemented as a matter of urgency by the utility as no NERSA concurrence is required. 

A net billing framework, and later a feed-in tariff, is being developed to credit customers for any surplus energy they are able to feed into the grid, this is targeting residential as well as commercial and industrial installations. Further consultations are planned for the current month of January to finalise arrangements with a broad range of stakeholders.

- Independent team has been assembled to diagnose challenges at power station level (including former Power Station Managers), starting with Duvha, Kusile, Kriel, Tutuka, Hendrina and Matla. This team is working with the management and board of Eskom.

- The process to improve the availability of spare parts & expertise from Original Equipment Manufacturers (OEMs) through more agile procurement is underway to source services from OEMs at Tutuka, Majuba, Kendal and Kusile.

- The process of excluding transmission infrastructure from the requirement to obtain environmental authorisation country wide in areas of low & medium environmental sensitivity has been completed. 

- NATJOINTS is coordinating the work of multiple agencies to address sabotage, theft and fraud at Eskom. Some arrests have been made, with progress driven by increased deployment of private security by Eskom.
  
World Economic Forum – Davos, Switzerland

On Tuesday 17 January 2023, President Ramaphosa will lead a delegation of Ministers and South African captains of industry to Davos, Switzerland, where he will participate at the World Economic Forum (WEF) events, in which he will lead the promotion of South Africa as an investment destination of choice. 

This year’s theme is "Cooperation in a fragmented world”. The President will be accompanied by Ministers Pandor, Gondongwana, Patel, and Kubayi.  

The South African delegation to WEF will add the country’s voice to discussions about global issues, with the overall aim to position the South Africa as a competitive business destination.

President Ramaphosa will participate in the Dialogue on Economics of Women’s Health, the Annual Welcome Dinner hosted Prof Klaus and Hilde Schwab, the dinner brings together heads of state, government and international organizations as well as members of the Board of Trustees, the International Business Council and Strategic Partners.

The President will also form part of the Annual Breakfast Meeting of the African Heads of State/Government entitled Africa Continental Free Trade Area. The AfCFTA is the largest free trade area in the world, by area and number of participating countries. 

Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. The engagement at WEF will explore how public-private partnerships can support the implementation of the AfCFTA. 

The President will also attend the annual meeting on Investing on Infrastructure for Resilience. Details on bilaterla meetings will be provided in due course. 

Issued by Vincent Magwenya, Spokesperson to the President, 13 January 2023