New Finance Minister Enoch Godongwana says topping his “to-do list” to bolster SA’s economic growth includes reforming the country’s electricity supply, addressing spectrum issues and improving logistics infrastructure and capacity at ports.
He reiterated government’s commitment towards addressing major structural economic issues, effectively backing his predecessor Tito Mboweni’s Operation Vulindlela reform plan, in a speech on Thursday at the Sunday Times National Investment Dialogue virtual event.
Godongwana struck a pragmatic tone, saying that an inclusive economy led by local investors is central to the country’s economic recovery plan.
He added that this is key to addressing the high unemployment, poverty and inequality challenges the country faces.
“The [reform] plan envisages new investments in energy, water and sanitation, roads and bridges, human settlements, health and education, digital infrastructure, and public transport,” he said.
“We need investment, particularly domestic investment,” Godongwana stressed.
The minister acknowledged that the country has increasingly become unattractive to investors, citing never-ending red tape as the common deterrent. He said there needs to be a move to remove the regulatory burden that comes with investing in the country for an increase in the appetite for investment.
Godongwana said the country’s economic recovery should prioritise attracting local investors and making the investment environment conducive for them before looking to global investors.
“One of the things we’ve got to do is to deal with the practical [ways] of making sure that business[es] that want to do business in South Africa can do it before we can travel and go and invite other people from overseas.”
“People in South Africa want to go about their business and invest and we must allow them to invest and then we can tell others they must come and invest in South Africa,” he added.
Fellow panelists offering a business perspective during the webinar concurred that government is not short of good ideas and policies, but fails at implementing them. This they agreed had contributed to the country’s continued sluggish economic growth.
Stimulus central to growth
Colin Coleman, co-chair of the Youth Employment Service (YES) and board member of retail giant TFG, said providing stimulus to the unemployed and to small businesses – and improving competitiveness, productivity and the cost of doing business – are necessary to stimulate economic growth.
“I have personally echoed the voices of countless others in civil society calling for income support for the 12 million unemployed,” Coleman added.
“This is not a radical, socialist idea; this has been trotted out by just about every western democracy – centrist or social democratic party – around the world.”
According to Coleman, these proposed cash interventions will be redirected back into the economy, supporting the unemployed and businesses, and stimulating growth.
“If we don’t grow, there will be nothing to share, no nation to transform and our national debt will be the least of our problems,” he added.
However, Alexander Forbes chief economist Isaah Mhlanga held a different perspective, saying that further investment is the only way to generate growth and boost job creation.
“Social welfare cannot be achieved through cash transfers such as the basic income grant – we need savings and investment as the more sustainable way to actually achieve social welfare and that is the discussion we need to have,” Mhlanga said.
Another key sentiment expressed at the event was that an accelerated vaccination programme will remain a key driver of economic growth and that South Africa’s programme is just not moving at the desired pace.
Seven months into its vaccination programme, only 14.5% of the country’s adults are fully vaccinated. This is significantly lower than fellow Brics (Brazil, Russia, India, China, SA) members Brazil and India.
Brazil has reportedly fully vaccinated 42.2% of its adult population, while in India the figure stands at more than 17%.
“The truth remains that vaccines are the single most important weapon we’ve got right now to combat the virus and to return to some form of normality,” said Dr Stavros Nicolaou, senior executive at Aspen Pharmacare.
“There’s no doubt that the vaccination programme of our country is at the centre of our economic recovery aspirations.”
Nicolaou added that South Africa needs to capitalise and build on the country’s vaccine manufacturing capabilities to remain attractive to global investors.
“We have strong technical capabilities in this country that can be harnessed to solve not only local and continental but also global problems,” he said.