[[{"type":"media","view_mode":"media_large","fid":"404905","attributes":{"class":"media-image","id":"1","style":"margin-left: 3px; margin-right: 3px; float: left;;","typeof":"foaf:Image"}}]]South Africa’s sound economic footing places it on course to emerge stronger and more resilient. While our recent quarterly growth figures reflect only a marginal increase, they point to an economy with strong fundamentals that can hold its own under difficult circumstances.
The economy has come under immense strain as a result of strikes in the platinum and manufacturing sectors, and slower growth in the economies of our major trading partners. While production in our two major economic sectors, mining and manufacturing, fell sharply in the second quarter, the economy still registered 0.6% growth.
Our resilience is the outcome of the solid economic fundamentals we have painstakingly laid over the past 20 years. Our prudent fiscal management and monetary policies have given rise to macroeconomic stability, promoted competitiveness and increased the economy’s outward orientation.
Taxes have been reduced, tariffs lowered, the fiscal deficit controlled and exchange controls relaxed. This prudence has allowed the economy to remain robust where other countries have buckled.
For example, Argentina’s finances are in the doldrums as it suffers a debt crisis after it recently entered "selective default" for failing to make a deal with creditors. Brazil has recorded two consecutive quarters of economic contraction, thrusting it into recession. Many eurozone countries are caught in a struggle to kick-start their economies as they deal with new threats of financial calamity.
The government is optimistic about our economic potential and has been driving growth in the areas it can influence. For example, the annual volume of capital investment by public enterprises has increased more than 260% in real terms in the past 10 years.
Annual infrastructure spending by local government has doubled in real terms since the late 1990s, while the public sector has invested more than R1-trillion in infrastructure since 2009.
We recently unveiled plans as part of our first phase of Operation Phakisa to develop the ocean economy to help realise the full potential of the country’s marine resources. It uses Malaysia’s Big Fast Results methodology to fast-track development in marine aquaculture, marine transport, offshore oil and gas exploration, and marine protection.
Our oceans have a potential to contribute up to R177bn to the economy by 2033 and drive job creation through sustainable opportunities in fishing, ocean and river transport, tourism and recreation, and environmental protection. It is estimated that the blue economy can create 788,000 to 1-million jobs by 2033.
While we still have much work to do, the economic foundation is in place to take advantage of any revival in the world economy. We have a clear vision of what needs to be done in the National Development Plan (NDP). The government is fast-tracking the NDP to address the structural challenges in the economy.
In this regard, we are investing heavily in infrastructure such as electricity, transport, water, roads, schools and hospitals to build a platform for faster, more inclusive economic growth.
Over the next three years, the government would have invested more than R840bn in infrastructure.
Moreover, the economy has been declared an apex priority in our medium-term strategic framework. We are on track to bring about radical economic transformation that will see rapid and sustained growth, higher investment, reduced inequality and the deracialisation of the economy.
We are targeting growth in the core productive sectors of manufacturing, mining and agriculture, and opening new areas of economic growth such as the oceans economy, the green economy and shale gas exploration.
The government is making every effort to promote a positive environment for economic growth and development so that we can break the back of poverty, unemployment and inequality.
A broader recovery in the economy and in business confidence depends largely on improving the operating environment in mining and manufacturing. The government will continue to work with business and labour to create an environment conducive to investment and economic growth.
We are confident growth in the second half of the year will be stronger as the mining and manufacturing sectors recover. South Africans have every reason to be confident in SA’s growth prospects.
Nhlanhla Nene is Minister of Finance.
