Cape Town – Finance Minister Pravin Gordhan says to get the country on a path of better growth, all sectors of the economy should work with government in a manner that promotes inclusive growth.
Economy through inclusive growth
The Minister said this when he briefed the joint Standing Committees on Appropriations and Finance, on Thursday, following his Medium Term Budget Policy Statement in Parliament, on Wednesday.
“The singular focus needs to be on inclusive growth. How do you create conditions for growth in this economy? Whether it is confidence building, whether it is increases in investment by the state, whether it is encouraging private sector investment, or foreign investment,” the Minister said.
When he tabled his budget at the National Assembly, the Minister revised growth projections downwards to 0.5% for 2016, which was lower than the February estimate of 0.9%.
The Medium Term Budget Policy Statement cited low growth margins on global pressures, as well as low levels of investor confidence and structural constraints in the domestic economy.
In this difficult period, the Minister undertook a tough balancing act – first by reducing the expenditure ceiling by R10 billion next year and adding R13 billion in revenue measures.
A further proposal was made to reduce national departmental budgets by 1.1%, asking them to use existing resources to optimise delivery.
In addition, to the R16 billion added to higher education funding in the February budget, National Treasury proposed a further R9 billion to be added to the National Student Financial Aid Scheme (NSFAS) over a three year period and in the process, raising its funding by over 18% per year.
The Minister said these fiscal measures, as well as other reforms proposed in the medium term budget, were not enough.
“The fiscal issues need to be complimented by what we call a multi-faceted approach. Firstly, get the growth dynamic going.
“Secondly, build confidence, investment and partnerships. Government cannot do all the things that need to be done on its own. Thirdly, ensure that our government programmes like the nine-point plan are actually implemented.
There must be concrete evidence of milestones and delivery and action assures government and others that we are a government at work.
“Fourthly, we need to undertake the reforms that we said we are going to undertake…”
National Treasury Director-General Lungisa Fuzile said with decisive action, South Africa will emerge from a period of economic weakness.
He said this would enable government to provide greater support to the economy and boost employment.
“Government’s economic reform programme is guided by the National Development Plan and, over the short term, the nine-point plan announced in February 2015.
These efforts aim to create a more just society and ensure that benefits of transformation are shared as broadly as possible,” he said.
He also said implementation reforms must be accompanied by efforts to tackle corruption.
“The benefits of empowerment should be accessible on an equal basis, not limited to connected insiders.”
SA can grow the economy better
Earlier in the day, the Minister said South Africa has come a long way to improve the lives of all South Africans.
Speaking at a breakfast briefing News24 FrontLine, which was organised by the media group, the Minister said the country has done well to get where it is today.
“If you take the past 22 years, take Stats SA numbers and SA Race Relations numbers, the numbers indicate that in terms of access and in terms of quality, we have done extremely well as South Africa.
“The number of middle class people would indicate that, your media group and what it serves and who it serves and what you see in the market, will show you shifts in the LSMs over the years as well.”
However, the Minister said more still needs to be done to put a dent on unemployment and alleviate poverty and inequality.
“What we pointed out in the speech, and it has been clear for quite a while now, is that we need a combination of efforts. We need macro stability, we need fiscal measures and monetary measures.
“Secondly, we need confidence and a clear unmitigated focus on growth and so everybody has to ask – what is my contribution to investing, to creating confidence, to creating jobs, to helping new enterprises develop?”
He said the SA economy was too concentrated and did not allow for enough competition, which he said needs to change. – SAnews.gov.za