SA can achieve economic growth of at least 5%, says Ramaphosa
President calls for obstacles such as policy uncertainty and regulatory frameworks to be tackled
SA could achieve its elusive target of growing the economy at least 5% if obstacles to the success and growth of businesses, including policy uncertainty and regulatory frameworks, are reviewed.
President Cyril Ramaphosa told delegates at Business Unity SA’s and economic indaba on Tuesday that the government and business had, through the new public-private growth initiative (PPGI), identified “inhibitors” that constricted the economy over the past nine years.
SA’s GDP growth rate averaged 2.77% from 1993 until 2018, while the IMF forecast the country’s economy to grow 1.4% this year from 0.8%.
The PPGI partnership — led by Toyota Europe and Africa CEO Johan van Zyl, Gordon Institute of Business Science (GIBS) professor Nick Binedell and former constitutional negotiator Roelf Meyer — has done work in 22 sectors, several of which made presentations at the indaba. It also advocates formulation of a five-year, sector-based plan.
Ramaphosa, speaking at the indaba after a meeting of the PPGI on Tuesday expressed confidence “that a higher growth trajectory for the SA economy is within reach between now and 2023, with an investment of at least R500bn achievable in specific economic sectors”.
The initiative also urged the government to deal with inhibitors in sectors such as construction, where lack of infrastructure planning and implementation, alongside high tariffs that reduced SA’s competitiveness, were cited as the biggest stumbling blocks.
Ramaphosa said 18 sectors with the potential to create jobs were identified, describing them as the “holy grail”. These include manufacturing, aerospace, mining, energy, tourism and automotive industries.
“We must remove the obstacles and constraints for growth. SA must go and grasp that high growth. We can do so by working together and addressing the issues,” the president said.
Ayanda Mngadi, who chairs industry body Manufacturing Circle, said at the indaba that the manufacturing sector’s contribution to GDP, which fell from 24% in the 1980s to less than 13% in 2017, would continue to lag those of other emerging markets without serious government intervention. She said more competition from imports, increased labour costs, high energy costs and policy and regulatory uncertainty were just some of their challenges.
The tourism sector had the capacity to create 2-million additional jobs by 2030, said the industry’s Blacky Komani. He said the sector’s exclusion from the 2018 jobs summit was shocking, given its potential. Tourism now employed about 750,000 people.
Struggling state-owned companies also needed to be fixed to achieve the growth envisaged. Busa supported this call, saying it viewed operating models of SOEs as “outdated and unsustainable”, posing the single biggest risk to the fiscus.
Ramaphosa said that if he returned to the Union Buildings after the general election, his number one priority would be to grow the economy to higher levels and tackle high unemployment and poverty through collaborative efforts with social partners.