South African President Cyril Ramaphosa said his new multi-party administration will prioritize economic growth by tackling structural reform, fixing badly-run municipalities, cutting red tape and ramping up infrastructure investment.

In his first major policy speech since elections in May stripped his party of its parliamentary majority and forced it to form a coalition with rivals, Ramaphosa said other key focuses will be on tackling high living costs and a shortage of jobs.

“We have decided to place inclusive economic growth at the center of the work of the government of national unity and at the top of our national agenda,” Ramaphosa told lawmakers in Cape Town on Thursday.

“We have a clear intention to turn our country into a construction site, as roads, bridges, houses, schools, hospitals and clinics are built, as broadband fibre is laid and as new power lines are installed.”

Africa’s most industrialized economy has been hamstrung by an energy crisis and a collapse of its rail, ports and other infrastructure that were exacerbated by almost nine years of misrule under former President Jacob Zuma.

Ramaphosa, who replaced Zuma in 2018, initiated several reforms to address those constraints in his first term, but faced criticism by investors that he wasn’t implementing them fast enough.

Gross domestic product expanded by an average of less than 1% over the past decade — well short of the level needed to reduce a 32.9% unemployment rate, one of the world’s highest, and address a yawning inequality gap.

The speech is likely to be cheered by investors when domestic markets reopen on Friday, said Melanie Verwoerd, an independent political analyst. The rand drifted weaker in after-hours trade on Thursday, trading 0.3% softer at 18.2569 by 8:44 p.m. in Johannesburg.

‘Market-Friendly’

“This was a very market-friendly speech, with amongst others emphasis on growth and emphasis on infrastructure development,” she said. “I haven’t for a long time seen the president so enthused and energized.”

Among other measures announced by Ramaphosa were additional funding to address racially skewed land-ownership patterns, while more state land will be made available to those that need it.

The government will also seek to cut red tape that constrains job creation, he said, reiterating a pledge he’s made several times before.

The government intends to reindustralize the country, following years of decline in its manufacturing capability, in order to create more jobs, Ramaphosa said.

“We will drive growth in labour-intensive sectors such as services, agriculture, green manufacturing and tourism,” the president said. “We will also focus on processing our minerals so that we export finished products rather than raw commodities.”

To address rising living costs, the government intends to review prices set by the government, including that of fuel, and expanding the list of food products that are exempted from value-added tax.

Reforms to the nation’s visa system will continue, with a view to enabling the country to attract more skills.

Budget Backing

Ramaphosa’s address followed a weekend meeting of his new cabinet, which drew from members of South Africa’s unity government — a coalition that includes his African National Congress and nine other parties. Six ministers are from the market-friendly Democratic Alliance, previously the official opposition.

The cabinet emerged from that meeting with a broad consensus on the budget framework set out by the previous administration in February, Finance Minister Enoch Godongwana said on July 15.

The spending plan set a target of stabilizing state debt at 75.3% of gross domestic product in the 2025-26 fiscal year. It’s currently at 74.1%, well above the emerging-market average of about 59%.

“We will manage public’s finances, with a view to stabilizing debt,” Ramaphosa said. “We are firmly committed rather to steadily reducing the cost of servicing our debt, so that we can redirect funds towards other critical social and economic needs.”

Key to unblocking economic growth is a new model to deal with state-owned companies that have cost the nation R520 billion in bailouts since 2008.

The last administration failed to pass a bill that seeks to establish a holding company to house those entities, and it will fall to the new parliament to resuscitate the legislation.

The move will help enhance South Africa’s capacity to establish a sovereign wealth fund, Ramaphosa said.

“This has been done successfully by other countries whose sovereign wealth funds have built up capital from the high performance of the state owned enterprises rather than from the fiscus,” he said.

The president’s speech coincided with the 106th anniversary of the birth of former President Nelson Mandela, who led the ANC to its watershed victory in 1994 when the country held its first democratic elections and died in 2013.

The number of seats held by the ANC in the 400-member National Assembly fell to 159 in the May vote, from 230 five years earlier, amid widespread discontent over chronic unemployment, widespread inequality and rampant crime and corruption.

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