Sceptics and doomsayers cannot be allowed to determine South Africa’s economic fate.
This is the word from Finance Minister Pravin Gordhan, introducing the 2016 Inclusive Growth Debate in Parliament, who says that pulling together might avoid an immediate ratings downgrade and establishing common projects with concrete outcomes which benefit all sections of our people.
“We have begun the conversation we need, to break this cycle of disappointment. In the past few months, the growth challenge and our transformation agenda have brought government, business and labour leaders together,” Gordhan says.
“We have begun to form a new narrative, of support for new enterprises, of revitalising agriculture, of investing in our cities, of private sector participation in our state-owned companies.
“But the conversations are just a beginning. There is hard work still to come. The work and the struggle to get things done will require strong leadership and a collaborative spirit,” he adds.
Gordhan points out that the National Development Plan sets an aspirational growth target of 5,4% a year.
“We set ourselves an ambitious target because we deeply appreciate the primacy of growth in helping us expand work opportunities for the millions of our fellow citizens who are left behind because they can’t find work.
“For growth to be inclusive, it must create jobs. It must generate hundreds of thousands small and medium enterprises. This has very practical implications. But our growth also has to be sustainable, taking account of, for example, climate change.
“Behind the noise and clutter of financial commentary and concern about ratings downgrades, there are very basic economic trends and vulnerabilities at stake.”
The responses cannot be business as usual, he adds, with government, business and labour working together to help strengthen short term confidence and reinforce long term growth.
Gordhan says these stakeholders have been focusing on three key areas:
* Restoring confidence and boosting investment by local and international investors.
* Unblocking obstacles to faster employment growth in key sectors.
* Identifying fiscal and regulatory reforms and strengthening state-owned companies.
“So we have adopted a clear fiscal consolidation path, to avoid the burden of debt that might cripple investment flows and government spending capacity,” he says.
Other steps that have been taken include:
* A Small and Medium Enterprise Fund is being established, with over R1-billion already committed and complemented by mentoring by seasoned business leaders for start-ups.
* The task team has looked at various sectors that carry potential for faster economic growth and employment. Tourism and agriculture have been identified as sectors with potential quick wins. Recommendations have been compiled as are been canvassed with various departments.
* With regards to infrastructure and state-owned companies, options for co-investment are being explored, to leverage the strengths of the private sector both in terms of their expertise and balance sheets. This supports the work of the inter-ministerial committee (IMC) on investment led by the Deputy President. Work is being pursued to find ways to reduce youth unemployment, and boost skills development. A new stream of work on youth unemployment has been created following a progress report to the President on 9 May. Several Jobs Fund projects have piloted approaches to work-seeker support and enterprise development that can now be more widely implemented.
These efforts by the private sector leverage and complement ongoing reforms package as part of the National Development Plan and the nine-point plan implementation programme, Gordhan says.