Finance Minister Tito Mboweni has invited the public to comment on a paper aimed at stimulating South Africa’s economic growth.
The paper titled: ‘Economic transformation, inclusive growth, and competitiveness: Towards an economic strategy for South Africa’, is an attempt to translate the broad outcomes of inclusive growth, economic transformation, and competitiveness into specific programmes and draw on a range of domestic and international literature to support these policy priorities.
“This paper considers the contribution of specific growth reforms that can achieve the outcomes of economic transformation, inclusive growth, and competitiveness,” National Treasury said.
This paper is a detailed examination of the structural reforms that can reverse the downward trend in South Africa’s growth potential and competitiveness.
Weak growth over the last six years is a function of both cyclical and structural factors, although structural factors have dominated, including sharply declining competitiveness, which saw South Africa’s position in the Global Competitiveness rankings fall from 44th to 67th between 2007 and 2018.
National Treasury said a series of cyclical once-off shocks such as political turmoil, drought and most recently load shedding by Eskom have further exacerbated the depth of the slowdown.
“Together, these have served to compound and prolong the effect of weaker confidence, leaving us with an economy that has almost 30% unemployment,” Treasury said.
The paper draws on the National Development Plan to outline six themes and the contribution of growth reforms within each theme that prioritises economic transformation, inclusive growth, and competitiveness.
The themes include:
· Modernising network industries to promote competitiveness and inclusive growth.
· Lowering barriers to entry and addressing distorted patterns of ownership through increased competition and small business growth.
· Prioritising labour-intensive growth: agriculture and services.
· Implementing focused and flexible industrial and trade policy to promote competitiveness and facilitate long-run growth.
· Promoting export competitiveness and harnessing regional growth opportunities.
· Quantifying the impact of proposed growth reforms.
The report says a bulk of the interventions are realistically executable in the medium term and include reforms in the telecommunications, agriculture, services, and transport industries.
“Short-term interventions are important as they lay a foundation for other reforms, while long-term interventions address competitiveness. In the long term, the combined scenario (taking into account short, medium, and long term interventions) can add as much as 2.3 percentage points to gross domestic product growth and create over one million job opportunities," the report said.
However, National Treasury said all this is dependent on the successful implementation of the short term reforms as well as complementary policies in place to address the constraints currently faced by the economy, including insufficient skills and capital availability.
“The contributions of the primary and secondary sectors are expected to moderate as services’ growth accelerates. Insufficient availability of skilled workers and capital can hasten this shift, as the constraint causes a reallocation of resources from the primary and secondary sectors, to the services sector,” said the report.
Comments on the paper may be sent to Rita.Coetzee@treasury.gov.za by 15 September 2019.
The full paper can be found on http://www.treasury.gov.za/comm_media/press/2019/Towards%20an%20Economic%20Strategy%20for%20SA.pdf. - SAnews.gov.za
