Highlights of the State of the Nation Address 2023 - Economy

Economic growth

“Our economy needs to grow much faster if we are to meaningfully reduce unemployment. In the SoNA last year, we spoke of our intention to forge a comprehensive social compact that would join allsocial partners in a common programme to rebuild our economy and enable higher growth.

“We were not able to conclude a social compact in the timeframe we had envisaged because a number of new circumstances emerged that made it difficult for social partners to forge a consensus.Economy

“The social partners have expressed their intention to conclude a social compact and have continued to work on a framework to enable joint action in key areas such as energy, transport and logistics, employment creation and skills development, investment and localisation, social protection, crime and corruption.

“While we remain committed to forging a new consensus among all sectors of our society, we have also undertaken practical collaboration in specific areas. A number of other compacts have been concluded amongst social partners.

“We see the commitment of all social partners in the compacts that have been forged to fight the COVID-19 pandemic and undertake the largest vaccination programme in our history.

“We have seen it in initiatives like the Solidarity Fund that mobilised society, citizen activism and funding to achieve common goals, and in partnerships to end gender-based violence and femicide (GBVF), and to respond to the effects of climate change.

“We have seen the benefits of this approach to promote investment and to develop master plans in sectors of the economy such as automotive, clothing and textiles, poultry, sugar, agriculture and global business services.

” The master plans that have been concluded are supporting the revival of the relevant sectors, the injection of investment by the private sector and the creation of new jobs and livelihoods.

Government is pleased that social partners, particularly business, has been providing support to implement the Energy Action Plan in the spirit of social compacting. Similarly, government has developed a close working partnership with both labour and community in supporting other aspects of the energy crisis response.

Just as energy is essential for economic growth, so is a reliable water supply and an efficient transport and road infrastructure system.

Bounce-back loan scheme

In 2022, government launched the Bounce-back Loan Scheme administered by banks and other financial institutions, and guaranteed by government, for companies that need finance to recover from the effects of the pandemic.

The Department of Small Business Development will work with National Treasury on how the scheme can be strengthened to assist small and medium enterprises and businesses in the informal sector.

“To address the challenge of youth unemployment, the Employment Tax Incentive has been expanded to encourage businesses to hire more young people in large numbers.” – President Cyril Ramaphosa, SoNA, 9 February 2023, Cape Town City Hall.

Red tape reduction

Last year, the President announced that government would be seeking to reduce red tape so that it can rid the country of the unnecessary bureaucracy that often holds us back. The Red Tape Reduction Team in The Presidency under Mr Sipho Nkosi has been
working with various departments to make it easier to do business. It has taken a collaborative approach, working with departments and agencies in areas such as the mining rights system, tourism transport operator licences, visas and work permits, early childhood development (ECD) and the informal sector.

Support for Small, Medium and Mirco Enterprise (SMMEs)

This year, government will finalise amendments to the Businesses Act, 1991 (Act 71 of 1991) to reduce regulatory impediments for SMMEs and cooperatives, and make it easier for entrepreneurs to start businesses. 

Through the Small Enterprise Finance Agency, government plans to provide R1.4 billion in financing to over 90 000 entrepreneurs. Government, in partnership with the SA SME Fund, is working to establish a R10-billion fund to support SMMEs’ growth. Government is looking at the possibility of providing R2.5 billion for the fund and for the balance of R7.5 billion to be raised from the private sector.

State Bank

The licensing of the PostBank will lay the foundation for the creation of a state bank that will provide financial services to SMMEs, youthand women-owned businesses and underserved communities. As the National Assembly considers the Postbank Amendment Bill, the Postbank is reviewing its service offerings so that it can provide a viable and affordable alternative to the commercial banks.

Women empowerment

Since announcing its determination to direct at least 40% of public procurement to women-owned businesses, government has sought to establish an enabling environment to support women entrepreneurs. It has trained more than 3 400 women-owned enterprises to prepare them to take up procurement opportunities.

Through the Women’s Economic Assembly, government has seen industry associations and companies committing to industrywide gender transformation targets. The Industrial Development Corporation has earmarked approximately R9 billion to invest in women-led businesses.

Other entities, including the Public Investment Corporation and the National Empowerment Fund, have also committed to establish special purpose vehicles to support women-owned businesses.

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Source: State of the Nation Address Highlights [PDF]

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