Laggards on chopping block to pay for Cyril Ramaphosa's plan, says Nhlanhla Nene

New York — South Africa’s shifting budget priorities will provide roughly half of the R50bn in stimulus spending it plans to make by the end of its fiscal year in March, Finance Minister Nhlanhla Nene says.

The rest of the funds would come from internal development finance institutions, Nene told Reuters on Wednesday, outlining for the first time the basic structure of the fund.

Nene said half of the funds would come from reprioritising money away from underperforming government programmes and the rest from internal development finance institutions.

“We don’t want whatever is on the chopping block to be announced before the process has concluded,” he said after an investor forum on the sidelines of the United Nations General Assembly meeting in New York.

The government has said it will also launch a R400bn “medium-term” infrastructure fund, that would be spent over three years, Nene noted.

South Africa, under President Cyril Ramaphosa, who spoke at the forum, has launched a campaign to revitalise its economy, which has fallen into a recession and has a 27% unemployment rate.

His stimulus plan, announced last Friday, has been met with scepticism as it does not include increased spending or borrowing to meet the goal of creating jobs and funding infrastructure programmes.

Nene said that while opposition MPs are sceptical, the reception from the business sector at home and in New York has been positive.

Having stagnated for a decade, Africa’s most industrialised economy slipped further in the second quarter, entering recession for the first time since 2009 and putting paid to the optimism prevalent after Ramaphosa succeeded Jacob Zuma in February.

The rand has weakened along with other emerging market currencies. Land and mining ownership reforms were among the main concerns voiced by investors in New York.

Ramaphosa sought to reassure the audience that land reform “is not going to be a land grab”. He said there were more than 600,000 submissions on how to proceed with reducing the concentration of land ownership.

“This will lead to a process of evaluation of proposals,” he said, emphasising that land ownership is critical to the life of South Africa and its people.

On mining, Nene acknowledged there was “an acrimonious relationship” between the government and the mining houses”. But he said a new mining charter is forthcoming, perhaps by the end of November, and a law is being rewritten to remove oil and gas extraction from mineral mining, a major sticking point. “We are now going to separate it,” Nene said.

Reuters