Not all doom and gloom with economy

26 August 2015

Opinion piece by Minister Faith Muthambi

It is not all doom and gloom on the economic front, as some of the naysayers would have us believe. The government has moved swiftly to counter economic headwinds and the country’s plan to ignite growth and jobs has improved our economic prospects.

Economic growth is expected to increase steadily to at least 3 per cent over the next three years as the obstacles to growth are addressed through the Nine-Point Plan.

President Jacob Zuma unveiled the plan in his 2015 State of the Nation Address and recently updated South Africans on progress made to improve the country’s prospects.

The plan targets the key constraints in the economy, many of which have been heightened by the prolonged global economic turbulence, labour disputes and the electricity challenge.

While this is not where we would have wanted to be in our growth trajectory, we remain in a much better position than many developed countries.

The constrained electricity supply is currently the biggest inhibitor to the economy, costing the country at least 1 per cent in economic growth.

The government is also aware of the impact of load shedding on the daily lives of all South Africans. We appreciate the many sacrifices made by ordinary South Africans to deal with it.

The President highlighted that substantial progress was made through Short-Term Power Purchase Agreements to counter the shortfall due to maintenance and to match demand during peak periods.

Through our Renewable Energy Independent Power Producer Programme, which recently added 13 new power producers, we have brought an additional 1800 MW onto the national grid.

The government expects that within the next two-and-a-half years the 92 projects of the renewable energy programme will bring 6237 MW to the grid. Furthermore, 800 MW will be added through co-generation.

To overcome the cumbersome regulatory process that often delays domestic and international investment, the government has established a One-Stop Shop at the Department of Trade and Industry.

It will identify bottlenecks, remove administrative barriers and reduce regulatory inefficiencies to make doing business in the country easy. We expect an improvement in turnaround times as well as the better coordination and fast tracking of investment enquiries.

The rollout of the Special Economic Zones programme is also helping improve regulatory efficiency and turnaround times.

Importantly, the Nine-Point Plan looks for growth opportunities in the country in the revitalisation of the agriculture sector, minerals beneficiation and unlocking the potential of small businesses.

It will also spur the industrial sector to higher levels, tap into new growth areas such as the ocean economy and help stabilise the labour market.

Through simultaneous action in these key areas at a scale that is large enough to constitute a ‘Big Push’, government is certain that it can move the economy forward.

President Zuma said: “As a collective effort, the Nine-Point Plan could potentially accelerate the growth of the economy by as much as 0.8% in the short-term and 1% in the medium to long term, in addition to the projected growth of 2% in 2015.”

In the agriculture sector we have already made progress in the development of Agri-Parks, with 43 of the 44 sites having been identified. The government is preparing to launch its first Agri-Park in North West.

Through our Agricultural Policy Action Plan we are supporting existing small-scale farmers and exploring ways to substantially expand the number of agricultural producers in the country.

The greater participation of small business in the economy could have a massive impact on growth and jobs. In this regard the government is increasing the access to markets and is implementing a 30 per cent set-aside policy to support them.

An area that is receiving government’s immediate attention is the late payment of suppliers in the public sector. The Department of Planning, Monitoring and Evaluation is investigating cases where there is late or non-payment of suppliers despite the submission of a legitimate invoice within 30 days.

The mining leg of Operation Phakisa will identify the constraints that limit growth and development in the sector. A shared vision and growth strategy for its long-term development and transformation will be developed.

We will create new manufacturing sectors through the mining value chain.  An agreement with mines is being finalised to procure up to 70 per cent of mining inputs from local manufacturers.

To further scale up industrial development we are developing 100 Black Industrialists to transform the manufacturing sector and unlock the potential of black entrepreneurs.

The government has made available R1 billion to fund the initiative while the Industrial Development Corporation will make R23 billion available over the next three financial years.

These initiatives present every reason to be confident in the economy and provides an opportunity to partner with government. The Nine-Point Plan shows that there is a clear strategy to overcome the hurdles, guide the country through these tumultuous times and take the economy forward.

Faith Muthambi is the Minister of Communications